Dark pools and high frequency trading (HFT) generated significant debate on the second day of the 2013 Australian Securities and Investments Commission (ASIC) annual forum.

Debate centred on the impact of upcoming legislation around dark pools and HFT, slated to be introduced in mid-2013. There was also discussion around ASIC’s new research into these topics, released last week.

The research found the order-to-trade ratio in dark pools in Australia is mostly below 4:1. In contrast in the US this figure is 50:1. In addition, 3.6 per cent of all untraded orders in dark pools are less than $500. The median trade size is $400.

In Australia there are 20 dark pools, 16 of which are run by investment banks. Significantly, operators trade as principals in eight pools and account for 30 per cent of trades in dark markets.

Belinda Gibson, deputy chairman, ASIC, told delegates dark pools are “very market like.” She took pains to stress ASIC’s research found dark pools trade in an orderly manner.

“Most of the activity in dark pools is okay. We do have some concerns about getting clarity about how they work; sometimes the pool is not as dark to the operator and their friends as others,” she said.

Gibson stressed dark pools are run efficiently: “I want to say we didn’t see any fundamental degradation in the quality of markets as a result of HFT and dark pools.”

She said the study found no systematic abuse of markets as a result of dark pools and HFT and that the regulatory framework around dark pools was working well. The research found spikes in market prices were by and large not attributable to HFT.

Nevertheless, ASIC is proposing some changes to the regulatory structure around dark pools, especially in relation to price discovery. Problems can arise when market participants make a number of very small trades, giving them the ability to discover prices in the market and use these insights for future trades – effectively giving them information about an ostensibly dark market other participants do not have.

To this end, ASIC is proposing a minimum order threshold for dark markets of 10 per cent of the market, to reduce the risk of participants discovering prices and perverting trading in dark markets.

Gibson said ASIC is also proposing to ban small orders less than $500 that sit in the market for less than half a second. “What this means is that people will need to adjust their algorithms,” she explained.

She said the regulator was committed to keeping on top of market developments and was poised to introduce a new market supervisory system that was “HFT-like.”

Professor Carole Comerton-Forde, Professor of Finance, University of Melbourne, who conducted the research for ASIC, told delegates the study had found a shift in dark liquidity away from ‘block trades’ valued at around $1 million. Block trades are large trades.

This is significant because one of the reasons dark pools were established was that so institutions that needed to process a large order through the market could do so without that order affecting market prices.

“Numbers of non-block trades have increased by about 400 per cent,” Comerton-Forde said. This showed institutions were now using dark liquidity to manage trading costs. She also said markets need better understanding about the impact of dark pools on price discovery.

“There’s a big difference between the impact of block and non-block trades [on price discovery in dark pools]. Blocks have no impact on price, but there’s a tipping point with non-block trades. Low levels of dark trading in non-blocks are okay. But when the number of [non-block] trades is above 10 per cent we see harm on price discovery.”

Greg Cooper, chief executive officer, Schroder Investment Management, representing the buy-side of the debate, said his cohort of fund managers had been relatively quiet about issues to do with dark liquidity and HFT until now.

“The buy side until recently has been pretty quiet in this debate – partly due to the fragmentation of the market and a lack of understanding. It’s not at the forefront of fund managers’ minds,” Cooper said.

“When you look at the debate, some of it has been uninformed – calling for banning of HFT misses point. It’s here to stay and difficult to define,” he said.

Cooper said his business’s participation in the debate about HFT is framed by two considerations. “The first is what the function of a marketplace is about. It’s to allow for efficient allocation of capital to businesses. That is a long-term exercise – it’s not about short-term turnover. You make those decisions on a long-term basis. The second frame of reference is the total cost of changing that allocation from one business to another. That’s our focus,” he explained.

According to Cooper, in 2012 Schroder executed AUD8.5 billion in Australian equity trades, with an average length of an order of between 600 and 2000 minutes. He said it can take days to execute a change in allocation of capital from one business to another. In the debate about HFT and dark pools, his focus is on how they change transaction costs for fund managers.

Cooper agrees with Gibson that HFT is not a major issue in the Australian market: “largely as a result of actions ASIC taken; it’s worked to prevent HFT taking over in our market.”

He said any further regulation should focus on making sure no one player has an unfair advantage in dark markets. Commenting on the findings of the ASIC study, he said: “we do have issues with principals trading in dark pools and we’re surprised by the finding that 38 per cent of dark pools [involve] principals trading. We require dark pool operators to turn off principal trading.”

Paul Hilgers, chief executive officer, Optiver Asia Pacific, also praised ASIC’s approach in using market data as a catalyst for regulating dark liquidity and HFT. Optiver is a proprietary derivatives trader and active in dark markets around the world.

“Other regulators can learn from this approach. For instance, German HFT regulations are driven politically, without empirical research,” he said.

In his address, Hilgers focused on the need for market participants and market operators to develop sound risk management frameworks around HFT and dark pools to maintain market integrity.

“Market participants need to build systems concerning risk – not just comply with the minimum requirement of operators. Market operators are also more than just a matching engine and need to take a stronger role in market integrity,” he noted.

Hilgers made the point that execution of orders involves a complex chain of processes. He said market participants need to establish pre-trade filters with minimum standards to prevent participants playing risk arbitrage between markets.

“Minimum standards are another layer of defence and will improve market integrity,” he said, acknowledging many dark pools have addressed this by introducing measures to protect integrity such as kill switches.

Said Hilgers: “the most critical capability is a testing environment to allow for improved simulated testing of algorithms.”

Elmer Funke Kupper, managing director and CEO of ASX Limited, said it was important to be honest about what was going on in markets when introducing new regulatory requirements around dark pools. His perspective was that market fragmentation was a negative and that trades should go to a ‘lit’ market “unless there’s a good reason not to go there.”

“The challenge is to regulate markets so that everyone has access to the same price discovery measures – not just members of broking firms.”

Funke Kupper said he supported measures to introduce trading thresholds of $250,000: “possibly higher.”

He said some behaviour by participants in dark markets does undermine confidence. “We don’t think today that it’s about speed it’s about proliferation; the number of trades.  ASIC has already taken action around this. [We should] maintain a setting that works, add controls for small orders and avoid costly, ineffective controls.”

“The key message is that Australia has strong fundamentals and is one of the most successful markets on planet. We continue to believe ASIC is doing a good job.”

http://www.complinet.com/global/news/news/article.html?ref=163064

According to new research by global workplace provider Regus, one of the main reasons why people get promoted is because they help their company win new business. Let’s take a look at some of the other reasons why people attain seniority in their workplace.

1. You can do the job

Regus’s research found ability to do the job was a main factor in decisions to give a promotion 97% of the time. The lesson is if you want to get a leg up in your workplace, do your existing job well.

2. You’ve been in the job for a while.

According to the same study, in 30% of cases, time in the role was a factor in the decision to promote someone. What this means is that you will need to stick it out in your current role – as well as do a great job – if you want to rise through the ranks.

3. You put the hours in

In 19% of promotion decisions, the candidate’s willingness to spend time in the office was a factor taken into consideration by bosses when promoting someone. What this means is that you need show you’re prepared to work hard, as well as engage with others both more senior and more junior, to move higher up in the business. But don’t be tied to your desk 24/7. You still need to have a life outside the office to perform well when you’re at work.

4. They don’t want to lose you

The other factor that determines whether someone is promoted is the threat of the staff member leaving the business. If you really want a promotion, the idea is to let your supervisor know you will look elsewhere if you’re not given the opportunity to attain seniority.

5. What doesn’t count

It’s also worth understanding factors that are not key to a decision to promote someone. According to Regus’s research these include a strong personal relationship between the boss and the staff member, a sense of humour and also physical attractiveness.

As country head of Regus Australia Jacqueline Lehmann says, “In days past, seniority, hard work and developing a good relationship with your supervisors were seen as the best ways to secure a promotion. However, in today’s digitally enabled workplace, hours spent in the office are trumped by the ability to demonstrate tangible benefits to their employer.”

http://blog.commbank.com.au/your-career/5-tips-to-help-you-get-a-promotion-at-work/

The Bank of Japan’s recent signal that it will continue to relax monetary policy has provided opportunities for currency dealers, with US dollar/Japanese yen positions one of the more popular trades in recent times.

“The US dollar/Japanese yen has been a renewed favourite amongst traders,” says Francisco Solar, head of FX Asia Pacific for currency house Easy Forex.

“The recent strength of the US dollar and the green light seemingly given to the Bank of Japan by the global community to continue its loose monetary policy has meant all eyes are on the US dollar against the Japanese yen,” he explains. Solar says the currency markets are looking for the dollar to move beyond 94 yen towards 100 yen to the US dollar.

According to Solar there has also recently been a focus by traders on currency pairs that have demonstrated a strong trend or increased volatility.

“The British pound versus the US dollar has been one currency pair that has been trending lower recently due to the strength of the US dollar and, more importantly, due to increased worries about the health of the UK economy,” he says.

In contrast, Phil Usher, who trades currencies for his own investment portfolio, is currently long on the euro against the US dollar, with a stop loss set at 1.2995. The stop loss represents a seven-month low set in July 2012.

“A longer term target is well above 1.3500. I’m looking for the daily bar trendline to form a new high from the one set in early February at 1.3645,” he says.

Usher is also looking to sell the Australian dollar against the US dollar. “The pair has had a number of declining weeks so when the correction has finished I will be looking to go short the Australian dollar with a long term target of 97 cents. I anticipate that the Reserve Bank will lower interest rates next month, which should boost the position.”

But, says Usher, “Given the Italian election I am cautious trading euro-based currencies so will sit on the sideline for these types of trades at the moment. As the US budget sequester creates a clearer picture I’ll be looking to sell rallies across the board.”

In general, when it comes to trading currencies, Peter Mathers, director of Trading Lounge, an online trading house, says there’s no right or wrong way to trade foreign exchange or any other market

“Many traders tend to drift towards reading events or price action. Forex king George Soros apparently just did well on the Bank of Japan decision, so reading events is an important role in trading forex. Professionals like George can make it look very easy. But being in the market can create anxiety about knowing when to get in and when to get out and how to protect profits,” says Mathers.

“Market swings can be quite an emotional roller-coaster, especially without a set of robust trading rules. Most traders use a form of technical analysis, which boils down to price and volume,” he says.

Mather says although many analysts consider foreign exchange markets to be efficient, they actually move in an emotional manner. “They tend to move from A to B, that is from one price to the next price of the same degree. Older traders call these sticky numbers.”

According to Mathers, the most common mistake he sees traders make is trading too often. “The addiction of being glued to streaming price data is a trap. Choose the battles you understand, look for trade set ups that you are highly familiar with and every trade ask yourself what you have learnt.”

http://www.afr.com/p/currency_pairs_create_opportunities_liAXh5PzFBppSLRoyJqWOL

You can use your self-managed super fund to collect almost anything of value – but there are strict rules about what you can do with these assets once they are inside the trust, say SMSF experts.

Kane Munro, director of accountancy practice Accountancy Online, says there is a virtual treasure trove of assets you can collect in your super fund, including most artwork, jewellery, antiques, artefacts, coins, postage stamps, memorabilia, some motor vehicles and wine or spirits.

“A Black Caviar print signed by Peter Moody or the Shroud of Turin could both theoretically be held in an SMSF provided you don’t break the SMSF rules,” says Munro.

“As long as you have a legitimate and documented investment rationale behind holding the specific asset and also comply with the ever narrowing rules on how you hold it, then most collectibles and valuables are capable of being held inside an SMSF,” he explains.

John Kelly, director, Self Super Insurance, says when it comes to collecting valuables in an SMSF, the law distinguishes between personal use assets and non-personal use assets.

According to Kelly, non-personal use assets include land, shares in a company, rights and options, leases, units in a unit trust, goodwill, licences, convertible notes, your home (although there are certain exemptions), contractual rights, foreign currency and any major capital improvement made to certain land or pre-CGT assets.

The main rule around investing in personal use assets is that the investments must be made for genuine retirement purposes, rather than being used on a daily basis by the fund’s members.

Glenn Roberts, divisional manager, wealth management, HLB Mann Judd explains in more detail how the rules around collecting valuables in a SMSF work. “Since 1 July 2011 collectables have not been able to be displayed or stored in the private residence of a related party.”

Says Monro: “so obviously you can’t hang or store that Black Caviar print in your house or business or leave it for safekeeping with any related party like your mum or your sister. And you certainly can’t use the Shroud of Turin as a throw rug as you’re getting the benefits of the asset now.”

He says staying inside the rules can be onerous and expensive. The auditor of your fund must obtain sufficient evidence on where the collectable is stored, keep documentation on the decision for storing it, and also maintain records on the insurance cover for the assets and any lease documents, if the assets are leased out.

Trustees also need to ensure they comply with the rules when they decide to sell any personal use assets. “If they wish to sell the item to a related party they must arrange a professional valuation. These rules apply to any items acquired after 1 July 2011.  If the items were acquired before 1 July 2011 the fund has until 1 July 2016 to comply with new rules,” says Kelly.

If you have personal assets in your SMSF at the moment and you or a relative are enjoying a valuable painting on the wall of your house, or swanning around wearing diamonds that belong to the fund the message is clear: you need to re-evaluate how you store these investments or you could receive an unwelcome knock on the door from the ATO.

“There are two consequences if you break the rules; one is relatively minor, the other is more serious,” says Kelly.

If a trustee of the fund contravenes the personal use assets regulations he or she will be liable to a fine of 10 penalty units. One penalty unit is currently $170, so the fine would be $1,700.

More worryingly, the fund could lose its status as a complying super fund if the trustee seriously breaches the rules. This means it would also lose all the taxation advantages super funds enjoy such as the tax-free status of assets inside the entity. “A fund losing its complying status is a disaster,” says Kelly.

When considering action taken by SMSF trustees, the ATO looks at the seriousness of the breach, the behaviour of the trustees and the tax consequences.

It may even look at prosecution for major and ongoing transgressions. A maximum penalty of $220,000 and/or five years’ imprisonment could apply if a trustee is prosecuted for a serious breach of the rules and is found guilty.

http://www.smh.com.au/money/planning/beware-storing-treasures-in-your-super-fund-20130328-2gvkr.html

It’s a horror story: what started as a perfectly good commercial arrangement ends up not just in court, but in the appointment of liquidators, as a result of non payment of debts.

This is exactly what happened to Richard Burne, founder of PR and marketing firm Max&You.

“We are in the final stages of winding up a non paying client. We have been chasing the debt for two years. Initially we used our own systems, then got our lawyers involved, went to a magistrate and debt collectors. We’ve now instigated wind up proceedings resulting in liquidators being appointed,” he explains

Experts say the best way to avoid ending up in this situation is to put in place the proper procedures to reduce the risk of bad debts in the first place.

Angela McDonald, founder of debt recovery business Optimum Recoveries, says when it comes to debt, prevention is always better than time consuming cures such as court action.

“Putting in place the right credit application processes, appropriate terms and conditions when offering credit and knowing who you are dealing with is paramount,” McDonald says.

“You need solid foundation documents as a way of establishing a clear legal relationship from the beginning. The document should state your terms and conditions of trade, provide security, capture full details of the credit applicant and give the right authorities for you to be able to validate the details provided,” she explains.

There are lots of free tools available to small businesses to check creditor information. For instance the Australian Securities and Investments Commission’s ASIC Connect service allows users to verify whether a company is registered, how long it has been registered and current insolvency actions taken by other creditors.

Another useful tool is Veda’s Business Credit Express web site, which allows businesses to check a potential customer’s credit history cost-effectively. The site gives users the means to review a company’s credit history including the directors behind it, confirm an organisation’s details such as its ACN and registered address and find out if the company’s directors have ever been declared bankrupt or involved with past failed entities.

McDonald says early and constant follow up when an account falls due is another way to prevent bad debts.

“Sometimes business owners are reluctant to push their best customer for payment of a debt. But if they are not paying their bills they’re not a good customer. If the business owner doesn’t feel comfortable chasing debts it’s an idea to get someone else in the business to do it or even outsource credit management. Whatever your choice take some action as there is a clear connection between the age of a debt and the likelihood you will be able to collect it,” she says.

The Federal government’s Personal Property Security Register is another useful tool for creditors that are relying on access to a debtor’s assets as security against goods sold on credit. This web site allows creditors to register their interest in a debtor’s personal security and check if any other entity has registered an interest against the same asset.

McDonald says when it comes to collecting accounts best practice is to be pre-emptive when an invoice is about to fall due and send a reminder to the client.

“This allows you to head off problems such as incorrect invoices before they become an issue and is an important way of improving cash flow,” she says.

Another tip, says McDonald, is nominating a specific payment date on invoices, rather than merely stating terms are 14 or 30 days.

“You also need to ask for payment in the right way and make sure you comply with privacy regulations. There are very specific guidelines set down in Debt Collection Guidelines for Collectors and Creditors, published by ACCC and ASIC. The tone of voice you use, the time of day you call and the number of calls you make, as well as the message you leave can help determine whether and when you will be paid,” she says.

Unlike debts incurred by consumers, McDonald says there are no prescribed timings about when to commence proceedings against a commercial debtor.

“It’s more about good general processes such as confirming goods were received in working order, making pre-emptive contact and having a sound call and letter program,” she says.

Non payment of a debt is, however, not always the fault of the debtor. Jo Ucukalo, CEO of Handle My Complaint says the most common complaint his business receives from customers who are late in paying is that their invoice is incorrect.

“The second most common complaint is that the business didn’t communicate effectively with their customer when there was a problem. As a business, you can combat pay delay by only sending invoices that are correct, communicating with the person in the business responsible for paying bills and by getting tough with repeat offenders,” Ucukalo says.

http://www.afr.com/p/how_to_put_lid_on_bad_debts_xATkc3C55yaBAhLUHA891O

A hacker attack on a web site can be ruinous for a small business, as David Robinson, who has the Australasian licence to distribute Turn On Love Drink, found out recently.

On the Tuesday after the Australia Day long weekend Robinson went to log into his web site only to find a message telling him hackers had hijacked the site and he needed need to wire $5,000 to a Western Union account for the site to be re-instated.

There’s been plenty of publicity about the product, which is yet to hit shelves here, and Robinson has been doing the rounds of hotels, convenience stores and pharmacies to sign distribution deals. He’s relied on the site as a place where potential suppliers and distributors can go to get information.

The site’s in-built Facebook functionality has also allowed him to develop an online community of people interested in being able to get hold of the product as soon as it’s available.

“It was panic stations when I saw the message. We’d sent more than 1,000 presentations to distributors who were all going to the site to know more. [After the attack] there was nothing there for them. It was a disaster for us,” says Robinson.

The site was being managed in the US and was built on the Ning platform. As soon as the attack happened Robinson got in touch with the US tech support team.

“They took it very seriously and thought everything would be ok because it was backed up,” explains Robinson.

Tech support took about six hours to get back to Robinson with the news that the problem was much worse than they first thought. It took them a week to get the site back up and running.

“We obviously didn’t pay the ransom. But [when the site was down] we were incommunicado with customers, potential customers and followers,” Robinson says.

“Luckily we could use social media to keep in touch with people. But it’s hard to track what this has cost us in potential sales,” he says, adding that a ballpark figure of lost sales would be “in the high tens of thousands.”

Robinson is now working through a plan to get back in touch with suppliers and customers. “But it’s looking like we’re going to have to start from scratch. We’re going to have to go back to basics to start driving traffic to the site again. We’re back to square one,” he says.

Internet strategist Nigel Burke from web developers AVS Networks says having a great relationship with your web developer is the first step in being able to recover from an online attack.

“Make sure you have their contact details on hand and that they are familiar with your site. The webmaster should preferably be the person who made the original site. But if not, make sure the webmaster is familiar with the platform the site is built on and has the username and password to reduce the recovery time,” says Burke.

He says it’s also essential to have a plan in place in case of attack and to make sure staff know what that plan is in case the business owner isn’t around when the site goes down.

There are also lots of tools available to reduce the impact of an attack. For instance, says Burke, Google’s Webmaster Tools sends a message to the site administrator whenever a virus is found on a site. SiteLock is another tool that will notify the site manager if an external party makes changes to a site.

“Businesses also have to keep backing up their site, especially if it’s an e-commerce site, which should be backed up on the same day. If you lose a week’s worth of business as a result of an attack you might lose 700 orders, which would be critical to the business.”

Having a pre-written email that can be sent to customers in the event of attack to let them know what’s happening, as well as putting up an interim web site, are other ways to let the world know the business hasn’t disappeared.

Burke’s other advice is not to take an attack personally. “Ninety-nine percent of attacks are untargeted. Web crawlers look for vulnerable sites and when they find a site they break into it automatically. Hackers aren’t trying to bring you down – they don’t care who they get.”

http://www.smh.com.au/small-business/hackers-spike-turn-on-love-drink-site-20130210-2e6h3.html

The ‘next Google’ will never be built in Australia, according to early stage venture experts. This is because start-ups will never be able to find Australian investors with the appetite to fund a speculative tech venture with a potential global reach.

“You need a bigger market to fund something like a Google. Although it has become much easier over the last five years to grow a global business with world-changing ambitions from here,” says Phil Morle (OK), co-founder of start-up incubator Pollenizer.

“Because of the size of our market, its capacity to reach customers and lack of access to capital start-ups have to make a decision about which path to fund, global or local,” he adds.

Pollenizer was part of a consortium of firms including Deloitte Private, Australian start-up publication From Little Things and global research group Startup Genome Project that recently released the report Silicon Beach: A study of the Australian Startup Ecosystem.

The research showed Australian firms struggle to access capital to grow and find it tough to build businesses that have the potential to expand internationally.

Morle rejects the idea Australian start-ups are not looking to operate on the global stage. “Australian entrepreneurs are ambitious. It’s just that the context here means they have to go offshore.”

“When we do scale a business it’s incredibly robust and unlikely to fail because we’ve struggled so much to get it there.”

Dr Jana Matthews (OK) is the managing director of ANZ Innovyz START, an accelerator program for companies starting up the growth curve. She says one of the reasons Australian start-ups are not scaling up to take on the world is the relatively young ecosystem to support them in this country.

“We don’t have as many entrepreneurs who have already built start-ups who can recycle their experience. There are also fewer service providers and angel investors with experience dealing with growth companies,” she says.

“We need to educate people so they know what it means to invest in early stage ventures.”

Matthews also says entrepreneurs need to understand starting a business is very different to growing a business. “To grow you need to delegate, bring people in, figure out your market and focus on it.”

She believes entrepreneurs looking for investment funds need to understand investors don’t just want a dividend, they want several times their money back

One Australian that has his sights firmly set on the global stage is Alex French (OK), CEO of The Captioning Studio.

French has developed a video search engine that allows users to search for spoken words within millions of videos and navigate instantly to the point they wish to watch.

To date, the business has been largely self-funded – it has also been through the ANZ Innovyz START program. It has received about $120,00 in seed funding from private investors to develop a prototype product. It is currently raising $1.5 million in funds, which will be used to take the product to market.

“We’re in discussions with investors and we’re speaking to a couple of venture capitalists. The process is about each side getting to know each other because it’s also about what the investor can bring to the table.” French found the contacts through the ANZ Innovyz START program where one of his mentors has now become an investor and chair of the business.

“We need to find funds to scale up and launch a huge product,” says French, who has his eye on international growth as well as domestic markets. “We’d love to be doing this in Australia but it we may need to go overseas.”

Long-term, French is hoping to win a slice of the global search engine market, as well as develop other products. He agrees it’s important to create a strong start-up infrastructure in Australia.

“We need to create the same ecosystem as there is in the States, where investors are prepared to invest in start-ups. People are much more cautious here.”

Another entrepreneur with global ambitions is Alexander Stamp (OK), who is establishing a global online livestock market called CloudHerd. Stamp’s strategy is to make the business work in Australia before establishing it overseas.

“The idea is to start small and blow up internationally,” he says.

Once he is ready to tackle international markets he plans to develop networks and connections from here before establishing a team offshore. “That way when we launch we’ll already have the pedal to the mettle.”

Stamp raised initial funding for the business through Incubate, the University of Sydney Union’s funding program for early stage ventures.

In the future he will explore raising capital in the US. “Raising capital in the US is easier for me because I’m an American citizen. It’s easier to go global if you’re prepared to go to the US and it’s harder to raise money here.”

http://www.smh.com.au/small-business/startup/well-never-be-home-to-the-next-google-experts-20121211-2b786.html

More than half of would-be Australian franchisees only want to invest $100,000 or less, a new study has found.

A survey of 600 franchisees by FranchiseBusiness.com.au – the official directory of the Franchise Council of Australia – also found almost 30 per cent of respondents expect to earn between $50,000 to $100,000 in their first year.
The site’s sales manager, Raffael Fernandes, said a key reason why franchisees were conservative in their investments was muted bank interest in lending to novice franchisees.

“There are lots of qualified, skilled people looking at franchising who see it as a viable career. Five years ago you could get a $350,000 loan, but now you can’t get the finance,” he said.

But Mr Fernandes said the growth of franchises in service sectors that did not require a retail shop or stock meant there were now more opportunities to invest in lower-cost franchises. “You don’t necessarily need to invest large amounts because essentially you’re buying intellectual property and the brand. All you need to get going is good business acumen, a phone and a laptop,” Mr Fernandes said.

He said buyers were showing strong interest in gym, beauty and training franchises.
Phil Blain, franchise expert and co-author of The Franchisee’s Guide, said he was surprised by the survey findings.

“There are a number of blue-collar franchises such as Jim’s Mowing and VIP Home Services you can get into for under $30,000, so I thought the 55 per cent figure would be higher,” he said.
Mr Fernandes said an increased interest in cheaper franchises was leading to more competition among existing brands, and making it more difficult for new brands to enter the market.

Mr Fernandes said buyers could realistically expect to break even in the first year or earn up to $50,000 as they built the business.

Blain said buyers spending $50,000 to $80,000 could ”probably expect to get the majority of your money back in the first year”.

“But if you’re spending $450,000 it might take you three years to get your money back. If you’re at the lower investment level you have to expect to be earning at least $40,000 a year, or why do it? It’s about return on investment – are you buying a job or building an asset to sell?

”The more you spend, the more chance you have of capital gain.”
Tasmanian Darrin Karnatz invested in a franchise called Optimo Awnings early this year. He is also Blain’s son-in-law, who recommended the franchise to him after advising the business how to establish itself as a franchise.

Mr Karnatz said business was slow during the colder months but is now picking up.
He spent less than $100,000 to become the company’s first franchisee, and believes he’s made a solid investment. The cost covered a work trailer, tools, iPad and ongoing training, marketing and support.
“The business had been going for five years before I bought in and I had seen what they had done and liked the product,” he said.

Victoria’s Joe Pingiaro spent $70,000 on an Appliance Tagging Services franchise in 2008. The business provides an electrical safety testing and tagging service. “A lot of people ask how long it takes to get your initial investment back. But I look at it as an investment that will be returned when I sell the business,” he said.
Mr Pingiaro said it was realistic to expect an income of between $40,000 and $50,000 in the first year. “In five years I’ve more than doubled that, which is a good place to be. People expect the world in their first year, but it takes time to build up a client base.”

Read more: http://www.smh.com.au/small-business/franchising/franchisees-keen-for-lowentry-investment-20121029-28dnb.html#ixzz2AwdnpT6R

Megan Bromley, employee experience manager at RedBalloon, says lifting the game of underperforming staff is completely dependent on regular communication.

RedBalloon sells gifts and experiences online. Its clients regularly use its services to incentivise staff and the business prides itself on having a leading approach to performance management.

“Lifting productivity is all about what you do before it gets to the stage where staff are underperforming. You need a regular process of check-ins with staff and one-on-ones to maintain performance across the business,” says Bromley.

“Don’t leave it until the review period, by then it’s too late,” she says.

Bromley says the key to addressing underperformance is getting rid of any misconceptions both the business and employees may have. “We set expectations about performance called ‘personal promises’, which are like KPIs,” she explains.

If underperformance is uncovered, a team leader will initially talk to the individual involved and set up a one- to two-month performance improvement plan that addresses specific problems. The team leader and the staff member then meet fortnightly to talk about how the staff member is progressing.

“Although it’s not overly common here, we’ve had a mix of cases involving underperformance over the years at RedBalloon, and one thing that has emerged is how important it is to ensure roles are clearly defined. A couple of times we’ve had to let people go because we’ve found that once the role has been more clearly defined that person realises it’s actually not the job for them,” she explains.

Kellie Rigg from recruitment firm Randstad says underperformance should not come as a surprise in an environment where there is effective performance management.

“Before you label someone as underperforming it’s important their manager has fostered a relationship with that person and given feedback so it’s not a surprise to the individual. You also need to be able to define underperformance so they have an understanding of how they are expected to perform and can monitor how they are tracking,” says Rigg.

“The danger is less experienced mangers will just tell a staff member they are underperforming without being specific about what that means. The interaction then becomes emotional. It’s essential managers come to the conversation with clear data and examples so the conversation is factual, otherwise the employee will become defensive,” she adds.

Rigg says getting someone to improve their output after identifying they are underperforming is about setting goals and outlining exactly what they need to achieve within a certain timeframe.

“There needs to be mutual agreement about what needs to be done. You also need to be clear about what will happen if they don’t achieve the performance you expect.”

According to Rigg punishing someone for poor performance through docking their pay or taking their annual leave away is rarely effective. At the same time, rewarding a poor performer when they achieve certain milestones can also send the wrong message to staff who routinely perform to or beyond expectations, but who don’t receive the same rewards.

Although sacking someone is usually a last resort, small businesses that are in this position need to be aware of the rules around unfair dismissal. There’s a Small Business Fair Dismissal Code published by Fair Work Australia that outlines rules that apply to small businesses that need to sack someone. Under the code a small business is defined as having fewer than 15 employees.

Malcolm Burrows, legal practice director at Dundas Lawyers, says dismissals are considered fair as long as they are done in accordance with the code.

“The code is about communicating what has to be done to manage staff and dismiss them safely without repercussions. From the employee’s side it’s about ensuring they know what they are doing wrong and can’t argue they were not told what they needed to do to avoid being dismissed.”

Burrows says determinations by Fair Work Australia suggest around three weeks is a reasonable time in which to expect an employee to respond to directions to improve their performance, whereas asking them to do this within a matter of days is likely to be considered unfair.

He also says the ‘three strikes and you’re out’ rule of performance management – that is employers must give poorly performing employees three warnings before they can be dismissed – is a myth.

Megan Bromley’s final piece of advice to businesses in which staff are underperforming is not to be afraid to have tough conversations.

“They are not fun but they have to be done. Because if you don’t you could well find overall business performance declines.”

http://www.smh.com.au/business/momentum/how-to-fire-up–or-fire–underperforming-staff-20120912-25rh8.html

Katy Plummer has a policy: if something’s a good idea, don’t just think it, do it. So rather than just pondering on an idea to organise something to help support the 99-year-old owner of a miniscule haberdashery shop, she sprung into action.

Plummer owns Manly’s Desire Books second-hand bookshop, which is right next to Fay Morley’s Park Lane Haberdashery. Last Saturday she organised a ‘cash mob’ to inject some energy and revenue into the button and ribbon-filled shop.

A cash mob is similar to a flash mob, only with money. A flash mob involves people performing an impromptu and sometimes choreographed dance or performance in front of a surprised audience at an every-day location such as a shopping mall. A cash mob is similar, except the idea is for the group to descend on a shop and spend a small amount of money to help assist the enterprise.

Plummer set up a Facebook page to spread the word about the cash mob, encouraging people to spend just $5 at Mrs Morley’s shop. More than 100 people registered to attend the event. When Fairfax arrived to check out the action, there was a queue of people waiting in line to go into Mrs Morley’s store. Trade appeared to be pretty brisk at Desire as well, where brightly coloured bunting, popcorn and cordial lent a festive air.

Mrs Morley ordered new stock in preparation and Plummer had also borrowed an urn so Mrs Morley could sell cups of tea in the event the cash mob cleared out the shop of stock.

Mrs Morley still works five-and-a-half days a week and has run the shop for 17 years.

“I lived in the country but when my sister-in-law died suddenly the kids said why don’t you run the shop,” she explains.

“ I don’t do that much business, and I don’t make the rent but [running the shop] is therapy really because I meet such nice people.”

Mrs Morley has no plans to retire and prides herself on allowing customers to buy just one button, if that is all they need.

“I never sell packet stuff. If mum wants just enough elastic for a pair of kid’s pants that’s fine. Kids are our future and I have to keep things going because it’s hard to raise kids. If [what I’m doing] helps then it suits me [to keep running the shop].”

Plummer came up with an easy way for Mrs Morley to understand how she used Facebook to drum up interest in the cash mob.

“How do you describe Facebook to someone who was a grown up when the [Sydney harbour] bridge was built? How I explained it was that I’d invited my friends, and they’d invited their friends, who’d also invited their friends,” she says.

Cash mobs appear to be a phenomenon that has only sprung to life over the past year. A WordPress blog (http://cashmobs.wordpress.com/) claims the first cash mob was held in Buffalo, New York State on 5 August 2011 and organised by a local blogger Christopher Smith. He arranged for more than 100 people to cash mob a local liquor store, City Wine Merchant.

Since then cash mobs have happened across the US and around the world to support local nurseries, bookshops and craft shops, among others.

Here are some of the rules of cash mobs, according to the above WordPress blog:

•  The mob date and meeting location must be announced at least a week in advance via Twitter, Facebook and/or email.
• The amount to spend will not be more than $20, although people can spend more if they wish.
• The business must have products that cost less than $20 for both men and women.
• The business must be locally owned and independently operated.
• The business owner must give back to the community in some way.
• The business owner must approve the cash mob before the mob is announced.
• The business must be within one block of a locally-owned watering hole.
• Cash mobbers must have celebratory drinks after the successful mob.
• The cash mob will occur during the evening on a weekday or on a weekend.
• Parking or public transportation must be available.

http://www.smh.com.au/small-business/trends/a-very-modern-boost-for-a-bright-button-20120820-24ha3.html

The ability to sell can make or break a start-up. If a business in its early years can’t sell its products or services, it hasn’t got much chance of success. So what’s the most effective way of selling when you’re growing a business? Here are some of the common approaches to selling and their pros and cons.

David Cunningham is the founder of an online start-up community called ipitch.com.au. He says under no circumstances should a start-up use the old school, hard sell approach. “This simply does not work in the twenty-first century. No one wants to be sold to.”

Cunningham is also not convinced other popular sales approaches – the salesperson that will act like your best friend to win the sale and the charismatic charmer – work for early stage ventures.

“On the plus side, these are two ways you can build up trust, but some people will spot the lack of authenticity so the sale will not happen,” he says.

He says the understated approach is possibly a better option for a start-up. “When you’re a start-up getting sales is about educating the market about what you’re doing. The idea is to become the thought leader in your field and the sales will come. But the drawback of this approach is that it requires patience and cash to survive as closing a deal can be a slow process.”

Simon Harris, managing director of The Business Coaching Centre, has identified four types of salespeople – but only one is suitable to use in a start-up.

His salespeople profiles include the product pusher, the order taker who waits for an order to come through, the over-seller who promises the world but rarely delivers and the problem solver. He says people are much more inclined to buy from problem solvers.

“If you are a product pusher, an order taker or an over-seller you will die – but if you are a problem solver you will survive,” says Harris.

He uses someone starting up a personal training business as an example. The business owner could try to sell his or her products and services based on their own level of fitness, or based on the industry awards they have achieved, or even by bullying people into working with a personal trainer.

But a more effective approach will be to interview people about why they want to use a personal trainer – perhaps to lose weight, or reduce the risk of diabetes, or to increase their confidence – and sell the business based on providing a solution to meet those needs.

“The trainer can then set out a training and eating plan and set weight goals to solve the problem,” says Harris.

Echoing this sentiment, sales expert Aaron Sansoni says it’s not so much about the personality type of the business owner or salesperson. Rather, he explains successful selling in a start-up is much more about understanding your buyers’ personalities and motivations.

“You need to understand what your buyer responds to and change your approach accordingly. In our training we have identified a number of different buyer profiles, including assertive, analytical, negative, timid and ‘how much?’ buyers. The idea is to understand the full profile of your buyer and match your selling approach to that.”

Sansoni uses someone searching for a cosmetic surgeon as an example. It would seem logical for a start-up cosmetic surgery clinic to hire people with a great deal of compassion so they can empathise with potential clients.

“But this approach won’t work if someone is a ‘how much?’ buyer and has contacted the clinic after first visiting a number of others and is really only interested in finding out the price of treatments,” says Sansoni.

“So if you’re running a start-up don’t focus so much on the type of salesperson you are trying to hire. Although this can work if you operate in a very niche market, it’s better to hire people who have high emotional intelligence and the ability to identify and work with the buyer types,” he says.

Trent Leyshan, CEO of Boom Sales, says successful selling in the start-up phase requires four key attributes. The first he terms ‘hustle and street smarts’.

“Entrepreneurs by nature have a unique ability to create something from nothing. They circumvent the safer waters knowing they are a sure path to mediocrity,” says Levshan.

He says entrepreneurs should be constantly progressing, relentlessly searching for new ways to approach tasks to gain an edge. “They harness fresh ideas that are sometimes radical, that cut-through to fresh markets and open up new opportunities. They tap into their trusted network to bounce ideas and connect with key people that can advance their cause. They are seldom afraid to call in favours when necessary.”

“Entrepreneurs sense what’s current and hear what’s working successfully for others. They take ideas from everywhere and evolve them to suit their specific needs. They make the most of every opportunity, knowing it’s critical to take a chance early in the game. They draw on social and free forms of media to promote their message cost effectively and create innovative ways to promote their business.”

According to Levshan, the second approach to sales that is common among successful entrepreneurs is the student-teacher dynamic. “They are inspired to teach and empower others. They educate people with critical, game-changing information and insights, inspiring their customers to gain a competitive edge. Always learning and forever growing, they spend their free time advancing their knowledge and skills. They take an insightful approach to selling, which means they immerse themselves in their chosen subject matter.”

The third dynamic Levshan identifies of those who can successfully sell a start-up is self-aware rather than self-conscious behaviour.

Like Sansoni, he says the best entrepreneurs can rapidly adapt their approach to connect with varying personality types. “Talented listeners, they customise their approach and communication to fit their audience and unique demands of their customers. Both confident and commanding without being pushy or egocentric, effective entrepreneurs are never crippled by fear of rejection, they are prepared to get in your face when they need to, to share their insights and what they believe in.”

Finally, says Levshan, entrepreneurs who can successfully sell are disciplined, persistent and resilient. “They value actions not distractions and are not easily deterred from achieving their goals. They are laser focused and fully committed to their endeavours, and believe in what they do and their unique ability to influence. Mistakes and adjusting are part of the game; all carefully acknowledged and reviewed as key stepping stones in their learning pathway.”

 This article first appeared in StartupSmart.

Market volatility and the continuing sideways movement of the All Ordinaries has made the buy-and hold investing strategy that was so prevalent until the recent financial crisis much less attractive. In its place, investors are starting to more regularly re-evaluate their portfolios. Shorting stocks is also gaining popularity.

“Investing for the long term is always the most popular strategy but we are seeing more and more people interested in day trading. The reason is because everyone is becoming keenly aware of the risks of increased uncertainty and heightened volatility in the markets and they want to have better control of their positions,” says Kathy Lien, director, global research and analysis, GFT.

“Investors who used to hold positions for months at a time are re-evaluating their exposure week-to-week. Shorter-term traders have become even more short-term focused, looking to hold onto their positions for only a few days if not hours,” says Lien.

But day trading is not for the feint hearted. “Overnight news flow ends up killing a lot of traders. When Australians go to sleep, Europe and the US are in full swing and big rumours or announcements are made, sending shares and currencies into a whirlwind when trading opens. This type of dynamic makes it very important for people to use stops,” says Lien. A stop is an order to buy or sell a stock when it reaches a pre-determined price.

Anthony Skotnicki who is the head of JBWere’s markets desk says although there is less appetite among traders for buy-and-hold strategies, investors do still take positions with a long term view. “But there is a need to constantly review why you have bought a stock and we are increasingly seeing more activity around portfolios.”

Skotnicki says shorting stocks is becoming more popular with investors, although he says it’s usually more sophisticated investors who use this approach.

“People are tending to short stocks if they have an outright negative view around the long-term structural challenges facing a sector or stock. They also short to neutralise the volatility of a portfolio – although we tend to use options to achieve the same effect. The other reason people short is when they are pairs trading,” he says.

Pairs trading is when an investor goes long in one stock and shorts another, usually in the same industry sector, for example if they believe the stock in which they have taken a long position has the potential to take market share from the stock that has been shorted.

Chris Weston, head of institutional dealing with IG Markets, says investor interest in short selling has increased dramatically over the past six months.

Weston says “given the fears around Europe, there has been a huge pick up in shorting every asset class.”

“There has always been scepticism in Australia around shorting because people didn’t understand how to short something they don’t own. A minority also didn’t want to profit from a company’s misery. But now people understand how to borrow a stock and sell it back. As markets have traded sideways people have become more sophisticated in how they invest. People are viewing the world with fresh eyes,” he says.

Investors must be aware of the risks of shorting. “The biggest one is the unlimited loss scenario if the stock goes up and you have to buy it back at a price higher than you expected – there are no limits as to where the price could go,” says Skotnicki.

Lien says it can be difficult to avoid being ‘caught short’ when shorting a stock. “The only tip I have for anyone unsure of their position is to reduce exposure,” she says.

Having the right information is critical to short effectively. Investors need to stay on top of economic or earnings releases that could threaten trades in the short-term, as well as the liquidity the instrument has.

“Less liquidity and trading activity could make the stock more vulnerable to a short squeeze,” advises Lien.

The most market moving economic releases tend to be the jobs figures, GDP and inflation reports, along with the central bank rate announcements. For Asia, Chinese economic data is also critical to watch because it can set the tone for the general market.

Originally appeared in the Australian Financial Review 20 March 2012

Sydney is often seen as a destination for the summer months. To counter this perception, The Vivid Sydney Festival was developed in 2009 to attract visitors during winter.

Destination NSW’s CEO Sandra Chipchase says it wanted to secure an event that would reinforce Sydney’s brand and the perception of Sydney as a key creative hub during the cooler months.

“We wanted an event that had the potential to grow year-on-year and become a hallmark Sydney event,” says Chipchase.

When the event was first launched, Chipchase says it was important to identify key players that would need to work together to make the event a success.

They included the City of Sydney, the Protocol and Special Events branch of the NSW Department of Premier and Cabinet, NSW Police, NSW Roads and Maritime Services, the Sydney Harbour Foreshore Authority, Sydney Ports Corporation and Destination NSW.

“The imprimatur of government really helps open doors,” says Chipchase.

Key venues including the Sydney Opera House also had to be engaged and a core team that included Events Sydney (which is now part of Destination NSW) and events company Mi5 initially worked together to grow the event.

“Once we had engaged all the different parties it was a process of selling people on the concept and seeking input into the program,” says Chipchase.

Originally, international curators put together the event, which Chipchase says was to help give Vivid Sydney a global platform.

In the first year Vivid LIVE! (a component of Vivid Sydney comprising the music program and lighting of the Opera House sails), was curated by former Roxy Music member Brian Eno. In the second year Vivid LIVE! was curated by experimental performance artist Laurie Anderson and rock musician Lou Reed. Ignatius Jones has been the key creative consultant since 2011, although he has been involved from the start.

“By using international curators we were able to tap into their networks, which was a deliberate strategy to build Vivid’s profile,” she says.

There are now three festival directors under Jones who each look after light, music and ideas. “If you just have one festival director they usually have expertise in only one area. If you have three you have access to a deeper pool of skills,” she says.

The three directors are Anthony Bastic, festival director, Vivid Lights, Jess Scully, festival director Vivid Ideas and Fergus Linehan, festival director Vivid LIVE!

Chipchase says the fact locals now largely curate Vivid reflects the maturation of the event and the fact Australian curators have their own coterie of international contacts that can be tapped into to build the profile of Vivid around the world.

In terms of assessing the suitability of Sydney’s infrastructure to stage an event such as Vivid, Chipchase says successful events such as the annual New Year’s Eve celebrations, as well as the Sydney 2000 Olympics, are proof the city has the right infrastructure to deliver an event that takes place over three weeks and draws hundreds of thousands of visitors into the city.

“We’re Australia’s major event capital and we have a great track record in running events like Vivid,” she says.

Chipchase says extremely detailed risk, crowd management, emergency and communication strategies help to ensure the right processes are in place to make Vivid a success.

She says the event is focused on central Sydney because Vivid is an international event and international visitors immediately identify the centrepiece of the action, the Opera House, with Sydney.

“We do want to grow the event to encompass a wider area and this year we are extending the lighting sculptures to the new arts precinct of Walsh Bay,” explains Chipchase, adding that in the future it’s likely Vivid will extend through to Barrangaroo and eventually Cockle Bay, Darling Harbour and Chinatown.

The festival has become one of the key creative events of the year. Chipchase says many of the 150,000 people who work in Australia’s creative industries – film, music, performing arts and the media – are employed in some capacity through Vivid.

“It’s also a source of revenue for the tourism sector and for the hotels and restaurants around Sydney. The Sydney Harbour Foreshore Authority tells us restaurants and retailers do phenomenal business during Vivid.”

Originally appeared in the Australian Financial Review 17 May 2012

We’ve all done it: come back from a holiday to some exotic locale filled with ideas about moving there permanently to start a business or venture.

But long-term expat entrepreneurs of one popular tourist destination, Bali, suggest hanging out a shingle on the idyllic tropical island is no walk in the park.

Australian-born Asri Kerthyasa moved to Bali in 1977 and subsequently married a Balinese prince. The couple opened a small hotel in Ubud called the Tjetjak Inn in 1978 and initially split their time between Australia and Bali.

“Then in 1995 we knocked it down to build a luxury boutique hotel, Ibah Hotel, before leasing it out in 2006, although we still own it. But after the bombs you really needed a marketing machine behind you.”

Kerthyasa and her son now run a successful café in Seminyak, Biku. “It’s taken off in a big way.”

From the start Kerthyasa had an advantage given her Balinese husband had connections in government and commercial circles that allowed them to operate businesses without having to make facilitation payments. “If you don’t have connections everything is going to cost a lot more.”

She says staffing and navigating the Indonesian bureaucracy are two of the biggest challenges of operating a business in Bali.

“Foreigners who come here also have unrealistic expectations and think they don’t have to follow the rules or pay tax. But you need to follow regulations as you would in any other place.”

Australian-born Made Wijaya who runs a successful interior design and landscaping business P.T.Wijaya Tribwana in Bali has one piece of advice for Australians returning from a holiday to Bali brimming with business ideas: “Noosa’s nice this time of year.”

“Australians have been successful in the building and construction industry here, but not before enduring bitter experiences involving prevailing attitudes regarding fair play and level playing fields. Australian architects and project specialists have helped development. But an influx of unscrupulous real estate developers has contributed to the degradation of the environment and the dumbing-down of the island’s tourism.”

He says the lack of regulations and respect for standard business processes such as AGMs and arbitrary decision-making is rife. “Both feudal and colonial attitudes prevail in Bali – both are foreign to the egalitarian Aussie. But at the same time too many free-range Aussies now choose Bali as a bolt-hole and arrive with shockingly arrogant attitudes.”

“Indonesia is an ancient, complex and rather messy country. Bali’s western-friendliness is real but the government’s ‘open’ policy to foreign businesses on the island is a fairly new post-monetary crisis approach; in many ways they are the patient landlords putting up with us unruly tenants. Any day the policy may change.”

One expat who has made a success of her Balinese business despite the odds is British interior designer Diana von Cranach who purchased undeveloped land in Pemuteran, north-west Bali in 1987. She opened her boutique resort Puri Ganesha in 1997.

“I was the first foreigner to buy a piece of barren beachfront land in Pemuteran. Because of the location, possible investors were not interested – I even contacted and met directors from the Aga Khan’s hotel company. I gave up and forgot about my purchase, thinking it must have been a huge mistake. Then when my husband left me after 22 years of marriage in 1995, I took a one way ticket, a packing case and a suitcase, U$200 and of course the ‘deeds’ to the piece of land I had bought and emigrated to Bali at the age of 48, leaving everything behind.”

von Cranach says setting up a business in Bali was the most difficult experience of her life. “I came as a woman alone, not speaking the language or knowing the rules and regulations for setting up a foreign investment company. Not being able to own land in Indonesia also means that you have to trust the person who holds the titles implicitly. My Balinese husband now owns everything that remains after serious altercations with the people who were my partners from the outset.”

Her advice to other businesses setting up in Bali is to “be extremely careful and try not to trust anyone, no matter how charming they may be. Also be prepared for setbacks, lots of surprises and remember that if you do manage to get through all the trials and tribulations, being able to call Bali your home is a wonderful thing.”

“The most important point to remember is one basic cultural difference. We bules – foreigners – tend to plan for the future while most Balinese live in the here and now.”

There’s an awful lot of hype around about cloud computing, but so far very little take-up. Research by Optus shows that only four per cent of small businesses use cloud solutions in their business.

But experts say 2012 will be the year small businesses truly embrace this new technology model.

Rhys Evans from IT consultancy Thomas Duryea says one of the reasons why 2012 will be the year of the cloud for small businesses is because computer hardware increasingly comes with cloud-based applications installed.

“These days when you buy a laptop or a phone, cloud-based applications like Google Apps and Dropbox are already installed,” says Evans.

Another trend Evans thinks will characterise 2012 is the adoption of mobile payment systems by small businesses.
“We will start to see an increasing number of small businesses offer near field communication payment systems like Paywave to their customers,” he says.

According to Evans, IT security for small businesses will also gain more prominence this year.

“Again, cloud platforms will increasingly be used by small businesses to back up their data in a more secure environment. It’s much safer to put your information in the cloud than on an external hard drive in the boot of your car,” he says.

Rohan Ganeson, managing director of Optus Small and Medium Business, says in 2012 small businesses will be focused on increasing efficiencies through cloud-based applications.

“There is a huge opportunity in 2012 for small businesses to evaluate how technology can help them better manage costs, grow their business and respond to evolving consumer behaviours,” says Ganeson.

“As the economy remains tight and uncertain, the cloud represents a potential for cost and efficiency savings small businesses can use to stay competitive.

But according to Optus data, many small business owners don’t really understand what cloud computing is. Its research shows 59 per cent are unaware or unsure of cloud solutions. Only eight per cent admit to fully understanding the cloud.

“Traditionally, technological developments have been viewed by SMBs as having more relevance for larger corporations. It’s my vision though, that 2012 will be the year SMBs adopt the great potential available to them,” says Ganeston.

William Willems, a vice president at serviced office business Regus, says IT disaster recovery is top of mind given the spate of natural disasters in 2011. But worryingly, research by Regus shows just 36 per cent of businesses have a disaster recovery plan for their IT systems.

“After a terrible year for disasters in 2011, we are seeing that many firms are taking a renewed look at disaster recovery and business continuity,” Willems says.

Dave Stevens, founder of Brennan IT, is another cloud computing fan. He says a key trend this year for small businesses with revenue of between $500,000 and $2 million will be leveraging consumer-based cloud applications for business purposes.

“We will see cheap cloud services such as Skydrive, Microsoft’s Exchange Mail and [document sharing system] Sharepoint become more commoditised for small businesses,” he says.

According to Stevens, what this means for small businesses, is that they will be able to build relatively sophisticated IT systems, for virtually no – or very little – cost.

“For $100 a month, you will be able to get mail boxes for five employees, as well as full document collaboration. And lots of companies now offer specials like 10 free gigabytes of storage,” he says.

Stevens says systems that were originally designed for consumers are not as valuable to slightly larger organisations that want to be able to monitor who has accessed particular data and which might also want to restrict access to certain information.

“At the larger end of the small business market, this year businesses will be looking at infrastructure-as-a service models, especially those that want more advanced security, auditing and full collaboration functionality. In 2012, there really is no reason to own your own server when you can outsource this and get dedicated software for around $500 a month,” he says.

As to technologies that are likely to become totally outdated in 2012, Stevens is sceptical this will be the year the landline and the copper network becomes redundant. “But it’s got to be on the cards soon.”

Read more: http://www.smh.com.au/small-business/smallbiz-tech/tech-trends-the-year-of-the-cloud-20120307-1ujmv.html#ixzz1oTbMmd48