Report on FREE Business Health-Check for Six Northern Beaches Businesses

FREE Business Health-Check is made possible by Northern Beaches Council and the COVID-19 Community Response Grants for COVID Business Recovery Training

The FREE Business Health-Check is made possible by Northern Beaches Council and the COVID-19 Community Response Grants for COVID Business Recovery Training.

In 2020 Northern Beaches Council, Executive Manager Community, Arts and Culture, advised SEVENmile Ltd that our application for a Grant had been approved. The scope presented was for SEVENmile to conduct a  FREE Business Health-Check for six local businesses from diferent industries and to write a report and a recommended plan-of-action.

Expressions of Interest were sought from local business owners and SEVENmile Directors selected six that represent a good cross-section of industry segments.

The Directors of SEVENmile extend their thanks to Northern Beaches Council.

Background Research Report by SEVENmile Ltd Directors

Australian small businesses have been forever changed by COVID-19. Businesses closed, jobs were lost, and far too many communities were badly hurt by a pandemic that caused massive upheaval. But even as small businesses continue their struggle, our northern beaches community can learn from their fight. Their experiences over the past year should be lessons for the future that will help speed communities’ recovery and make their futures more sustainable.

Across various measures of business success, the smallest businesses of under 20 people struggled the most during COVID-19. Older, and female-led SMEs, saw worse revenue declines than younger and male peers. 

A Call-to-Action

First, it is very clear that digital tools are critical for small business resilience. Second, for digitally advanced small businesses, digital tools have provided the flexibility to pivot quickly, maintain more pre-COVID revenue, and hire more employees. And third, there remain too many obstacles to broad adoption of digital tools by small businesses, particularly due to uncertainty about how to leverage them to solve their business challenges and allocating time to understand the value of technology in their business. Our Call-to-Action is to ask how we address and solve this challenge.

For small businesses that embrace digital tools, the benefits are clear: greater revenue, stronger customer base, and a significantly improved outlook in an increasingly digital world market. To assist the digitally uncertain, policymakers and business leaders must create solutions, including investments that increase education, training, and small business access to a range of technologies that solve specific problems.

This is a perfect opportunity for all SME leaders to reset, pivot, and think big in order to evolve their businesses to match the digital expectations of a post-pandemic world. They should aspire to be skilled digital professionals - learning, experimenting with, and implementing digital tools as a part of their strategy. SME owners should identify gaps and opportunities within digital strategies, toolsets, and skills, based on their business’s unique needs, and invest time in learning about tools before investing significant capital in the hope of a good outcome.

Fixing this pervasive problem is indeed a significant challenge and the problem won't be solved in the short term. 

However, the solution is within the power of our Northern Beaches community; a community with a depth and breadth of talent that is unmatched in the Sydney basin.

Troubling Trend

That said, SEVENmile has observed a troubling trend: at least 50% of SMEs, likely higher, are struggling to overcome a “digital inertia” and have not only failed to become more digitally-inclined during the pandemic, but on average they have become somewhat less so. We believe that they are failing and closing during the pandemic more than technologically-driven, digital-savvy SMEs. Put bluntly: SMEs NOT embracing digital tools increase their risk of going out of business permanently. 

As the pandemic (hopefully) winds down, small business owners of all kinds will need to work within a post-COVID “new normal” fueled by digital tools - services, platforms, and marketplaces - that power efficiency, growth, and financial security for their businesses and families. While a small subset of SMBs can persist with analog business practices, most of them cannot over the long term, whether they realize it yet or not. Thus, a detailed understanding of how digital tools impacted and transformed small businesses during the economic disruption of the pandemic, could provide a general framework for future action. 

Making Time for Other Important Work

It's also clear that SME owners are spending more time than ever before working in their business and as a result have zero time to devote to working "on" their business. This impacts their ability to devote any time to buidling their knowledge of digital technologies and how they can realize the  benefits of transforming their business operations using digital technologies. 

The business owners we worked with can't remember the last time they attended any kind of networking event (virtual or in-person) that was focused on them as business owners. 

SEVENmile believes that Local Government can play a role to enable confidential events that focus on SME owners emotional well-being.

Adaptation, Resilience, and Innovation

The further downside of this lack of time is that SMEs will often hire external "experts" who do little more than take money and deliver poor outcomes that further alienates the SME owners and dilutes their enthusiasm for using digital technologies. SME owners are sitting ducks for exploitative social media experts who literally prey on SMEs who are generally ignorant of the design and workings of most digital technology and SME owners naively think if they pay an "expert" they will see benefits.

In Australia there is no formal certification of people and companies offering digital solutions and consulting. SMEs in particular are at high risk of spending money and receiving no benefit which erodes their confidence in digital technologies.

SEVENmile recommends that Northern Beaches Council consider ways in which digital consultants residing in the NBC Local Government Area can be vetted and endorsed as genuine digital experts that local SMEs can trust. SEVENmile would be delighted to assist NBC to develop and implement this concept.

Common Themes of SME Post-COVID Challenges

There are three significant business challenges that are common to the six businesses we assessed and it's very likely that a large majority of SMEs all over Australia have identical challenges. It's fair to say that I could have listed ten common challenges, but I have restricted my list to the underlying challenges for SME owners.

Firstly, SME owners generally have little or no time to work "on" their business. In other words they have no down-time when they can think strategically. COVID has greatly exacerbated this issue because SME owners are generally working much longer hours than ever to keep the business viable.

Secondly, SME owners are generally ignorant of the scope of digital technologies and how they can be applied in their business. This is compounded by a lack of budget and funds to hire suitably experienced consultants to plan and support a transformation from outdated technology to current state-of-the-art technology. The inability to transition to the latest digital capabilities will greatly inhibit growth.

Thirdly, it's surprising, but nevertheless a fact, that SME owners tend not to have a mentor they can access as a general advisor and coach. It's true that mentors often wish to be remunerated, not always through high fees, and it's possible to find mentors who will take that role on a pro-bono basis. Given the pressure that SME owners are under, SEVENmile feels this is an aspect of small business life that could be enabled by stakeholders like Local Government.

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Client 1: Global Surf Industries - Brookvale

Mark Kelly – Founder and CEO 

insert photo of Mark with SEVENmile Directors

Business Overview

GSI was founded in June 2002. After decades of cottage industry-style operations, the time for a better way of supplying surfboards to the international surfing market had well and truly arrived.

Today, GSI has a portfolio of 11 brands. We remain very deliberate and strategic in our brand and model selection. Each caters for a particular type of surfer with a specific level of surfing ability. Whether you are a first-day novice, a beginner, an intermediate, an advanced or elite-level surfer, GSI aims to have the brand and model that is right for you.

Business Problem/Challenge

Due to Covid 19, Mark recognised global and local sales had dropped due to both local and regional lock downs (and increased focused on social distancing) in cities across Australia and the world.  As an outcome to this surfboard sales deteriorated due to families and individuals consolidating their income and expenditure and therefore sales of new surfboards actually dropped over this “covid-period” 

To keep the business going in this difficult time, Mark had to look at different alternatives to generate revenue and manage B-Grade stock levels.

Business Solution

An initiative that was developed, was to look at B-Grade boards. Surfboards that had slight imperfections, that could not be sold at full price, or sold in the wide network of surfboard shops, due to inventory restraints at these surfboard shops. As Mark pointed out – it was difficult to sell new surfboard at full margin than selling B-grade boards at lower GP margin for the surfboard shops especially when the surfboard shops had limited real estate space to display their boards.

Even though Brand new sales of board had slowed, what was growing however was an undercurrent of family related activities that allowed parents who were working remote from home to spend more time with their active children. As a consequence, there was increased sales opportunities for both parents and children to take up learn to surf. Purchasing brand new boards may not have been ideal – however B-Grade boards that were lower in price and still performed like brand new boards was a good alternative.

This initiative was effectively a New Start Up business and its ongoing success would be based on targeting the right customer and developing sustainable market exposure.

Through our work with Mark and our research team we realised that both brand and product awareness were lacking. B-Grade carried a negative connotation in terms of branding differentiation, and it may be impacting sales. We also recognised that building awareness focused on the qualified target market was also imperative for the success of this new venture.

Recommendations

  1. Change B-Grade surfboards to Factory Second Outlet
  2. Conduct regular family BBQ events at the Factory Seconds Outlet including tours and special guests to talk about how surfing changed their life
  3. Increase the focus on ideal customer profile market – Parents of children.
  4. Add Facebook to his social media platforms as this target parent market connects and uses Facebook more effectively and ads can be tightly targeted.
  5. Employ or seek out a professional Social Media partner to develop marketing content and exposure tactics.
  6. Develop programs that market physical location – “Brookvale” – the home of Surfboard Manufacturing and sales and now the “biggest and only Factory Seconds Outlet in Australia”.

~~~~End~~~~

Client 2: edgedVR - Collaroy/Seaforth

Pictured below (left to right), Rob Forsyth, SEVENmile Board Chair, Carla Pereira and Rosanna Cotino, edgedVR Co-Founders and Mitchell Filby, SEVENmile Director

Business Overview:

edgeVR is a local Northern Beaches start-up that was founded in May 2020. edgedVR uses 360° immersive content for customer engagement. 

edgedVR use multimedia and 360° images to create virtual and immersive content that can be viewed either in a Virtual Reality (VR) headset or directly on your website. This is new and emerging technology that all businesses can be part of, by enabling customers to experience their products in a unique and immersive way. 

They work with schools to upskill students in this technology, with their VRCreate foundation and VRSkills-2-Industry courses.

Business Problem/Challenge:

edgedVR launched their business at the start of Covid-19 which many would suggest is not the right time to start and launch a business. However, where there is a challenge, some entrepreneurs see opportunity.  It was with this later lens that the co-founders saw a real opportunity in market around helping businesses educate, train, and manage both remote working and the capacity to innovate around new methods of educating both workers and our youth of tomorrow.

The specific challenge or problem that edgedVR identified and faced was market and product awareness in the education market. More importantly they were grappling to gain market reach, access, and the validation that VR was a strong proposition for the education system. One of the underlying problems that was identified was the education and awareness of teachers from local schools about the benefits of VR and the application of VR across the schools.

Findings and Solution Identification:

The data from our survey process in local high schools was validated by primary and secondary research and confirmed the following outcomes.

Teachers within the schools were generally unaware of the teaching and learning benefits of VR technology generally.

Teachers had limited understanding or insight as to what subjects provided the most benefit to students using VR technologies.

Head of teaching or teaching coordinators were concerned of potential costs of VR and believed training would be expensive.

With this understanding it was recognised that edgedVR had to improve its capabilities and focus on specific course subjects (e.g., Geography, Arts, Science, Design) that provided the best evidence that VR technology is a powerful teaching option to communicate and provide the most effective learning experience for students.

Recommendations:

Develop a pilot program where edgedVR could collaborate with a (targeted) higher education school to test, validate, and take learnings from teachers in terms of the application content that best suits that subject.

As part of this pilot program, edgedVR could assist and develop course content that provides the teaches a simple guide and process to help students develop their own use cases of VR 360 content.

  1. By targeting and focusing on the “cross-over” between teachers and their subjects, edgedVR will have more testimonial traction to expand and scale further commercial opportunities to other schools.
  2. edgedVR needs to provide options in terms of pricing available to schools that recognizes budget constraints.
  3. Pricing per subject and or pricing per subject application
  4. Subscription pricing that included the costs of VR headets spread across the subscription period
  5. Training-the-Trainer programs to certify specific teachers to develop VR learning content.

~~~~End~~~~

Client 3: MyFirstGym - Frenchs Forest

Jason Chan - franchise owner, MyFirstGym Frenchs Forest

Pictured below (left to right), Rob Forsyth, SEVENmile Board Chair, Jason Chan, MyFirstGym and Mitchell Filby, SEVENmile Director

MyFirstGym states that “we’re all about helping aussie kids grow up fit and healthy! With a mission to Inspire Movement, we’re focused on mobilizing our little members by offering programs that develop the skills kids need, while also encouraging kids to move their bodies in and out of our clubs. At the core of everything we do lies the principle of Physical Literacy, the integration of physical, mental and social capabilities to live active, healthy and fulfilling lives. We’re giving kids the confidence, ability and motivation to move and be physically active."

Business Problem / Challenge

This successful franchise of MyFirstGym (also known as MFG) was established in Frenchs Forest two years ago. It’s target market is local children in the age group of babies to 16. For babies and toddlers the courses enable parents to bond over exercise and introduce balance and coordination. Singing and dance are also introduced. In classes aimed at older children, coordination, speed and strength, and improved cardiovascular fitness levels, are the focus.  The challenge is that with this focus - or at least the public perception of this focus - on the younger age group, older children in the low teens have been largely absent from MFG. This leads to an under utilisation of the premises and diminished flow of attendees through the age groups.  This problem was found to be common across other MFG’s. 

Business Solution

After some limited market research, it is believed that the problem is mainly around the marketing focus. The community perception is that MyFirstGym is a ‘baby's gym’ and as such holds very limited appeal for this young teenager marker. In fact, given the emerging social awareness of this teenage group, peer pressure acts as a deterrent. In particular with boys, there is also a changing need for free weight style equipment rather than the access to group classes (such as dance). There has been limited communication with local sporting clubs in the targeted age group and the view was expressed that “If my mates don’t go there, why would I?”

Recommendations

  1. Create a sub-brand and a dedicated area for the older (12 - 15) age groups, ideally with a seperate entrance. 
  2. A sub-brand like MFG-Teens will help attract teenagers.
  3. Repaint the MFG-Teens area to look appropriate for teenagers. 
  4. Begin a gradual purchase of free weight equipment using the teenagers as kind of consultants as to what free-weights they want to use.
  5. Begin discussions with local sporting clubs to find ways to reach club members who are teenagers.
  6. Create marketing campaigns with local sporting clubs and targeted special offers for ‘team membership’. 

~~~~End~~~~

Client 4: Winbourne Estate Fine Foods - Brookvale

Pictured below (left to right), Rob Forsyth, SEVENmile Board Chair, Hwei Oh, SEVENmile Director, Nigel Abbott, SEVENmile Director, Natalya Hansson, owner Winbourne Fine Foods and Mitchell Filby, SEVENmile Director

Winbourne Foods, bringing restaurant-quality food to your home...... Sometimes there simply aren’t enough hours in the day, yet you need a meticulously prepared, delicious meal. With generous servings, handcrafted artisan skill, and preservative-free ingredients, our seductively delectable ready meals offer the perfect culinary escape for the time-poor foodie. Each exquisite option is full-flavoured, restaurant quality and, thanks to Darfresh packaging technology, lasts for 21 days in the fridge – so you can enjoy our restaurant dining in your own home, any time you please. There’s enough variety for the whole family to enjoy too, from Coq Au Vin and Braised Lamb Shanks to Bangers & Mash or Meatballs. 

Business Problem / Challenge

Winbourne owner, Natalya Hansson, has focused on establishing retail outlets to sell her gourmet food. Sales via these partners account for over 70% of her revenue with the balance being direct sales via word-of-mouth marketing. The problem is that retail sales take close to 30% of the sale price which leaves Natalya with gross margin of our 30% and that is insufficient to enable her to continually reinvest in the business.

Natalya is in a Catch22 situation. She needs the retail sales but gives away too much margin and consequently doesn't have the funds to invest in growing the direct sales channel.

Research

Natalya agreed to supply 30 of her gourmet meals to enable us to do some customer feedback research. The meals were distributed to people in the SEVENmile community who agreed to provide feedback on quality, price and overall satisfaction. The market test confirmed that Winbourne Fine Foods make very high quality meals. All the feedback was that the meals were delicious. There wasn't a single negative comment.

There were also positive comments about the packaging and that Winbourne only sells food that is fresh and not frozen, although this creates a challenge for Natalya because her food has a limited shelf-life.

We also did some general market research into food delivery services and it's clear that it is a highly competitive market, so how to find a way to achieve cut-through is essential.

The Winbourne website is what Google calls, "Not Secure", meaning the website does not have an SSL Certificate installed. This results in Google  allocating a Domain Authority rank of 1, which means Winbourne will never rank on page 1 search results.

Recommendations

  1. The Winbourne Fine Foods branding is old and tired. It fails to convey the essence of the product being gourmet food, cooked by professional chefs. Given the lack of budget for this work, we recommended that Natalya explore offering 2 local high schools to ask year 12 multimedia students to provide new branding ideas with a prize of around 30 Winbourne meals. In this way it's not a high cost to Winbourne.
  2. Use an online shopping solution like Shopify that is integrated with the website to enable online purchases by customers, whetehr they are retailers or direct consumers. This is not technically difficult or expensive.
  3. Ensure that an SSL Certificate is installed on the website ASAP so Winbourne can start to be assessed by Google when people search for food delivery.
  4. Create a subscription pricing model for her retail and direct customers to encourage a regular and predictable ordering regime that allows Natalya to begin to set aside funds for marketing. 
  5. With a very limited budget of even $100 per month Natalya can do some market testing on Facebook and Instagram. SEVENmile can provide some basic guidance so Natalya can get started.
  6. There is currently no simple and fast way for Winbourne customers to leave reviews that will form part of Google search results. We recommend that Natalya uses Google reviews and that her website and food packaging encourage customers to leave reviews.
  7. Natalya does not currently use any video content on her website, yet this is now the most powerful content to enable customers to decide to place orders. SEVENmile has recommended that Natalya begin to create video content and that she can do this with a smartphone and a simple wireless microphone that will provide adequate quality. Two of the five SEVENmile Directors have indepth experience with this format of content and can help Natalya. 

~~~~End~~~~

Client 5: Seaforth Physio - Seaforth

Pictured below (left to right), Rob Forsyth, SEVENmile Board Chair, Hwei Oh, SEVENmile Director, Nigel Abbott, SEVENmile Director, Robbie Scarll, owner Seaforth Physio and Mitchell Filby, SEVENmile Director

For the last three decades, Seaforth Physiotherapy and Sports Injury Centre has been caring for the local community by providing expertise in the treatment and management of acute and chronic injuries, specialising in a hands-on approach. 

Their services include Physiotherapy, Exercise Classes, Sports and Athlete Screening, Exercise Physiology, Home Visits and Remedial Massage. 

They have 10 staff and operate from their 6/567 Sydney Road, Seaforth premises.

Business Problem/Challenge

When Seaforth Physio began there were only three Physios in the surrounding area, this has now grown to around 20 and become a very competitive environment.

Although their customer return rate and word of mouth is strong (around 50%), Seaforth Physio needs to increase the number of initial fresh enquiries via the website and social media instead of relying on word of mouth. 

Research

The first thing addressed was some online research using a competitive matrix to better understand the Brand proposition for the top ten competing businesses via Google's rankings, this was done by evaluating their online presence via their logo, colour palette, overall design and copy.

We then scored the top five:

The above matrix highlights a score for each of the core elements for a brands proposition, naturally, consumers will connect on an emotional level first and then functional and social, it became clearly evident that working on the emotional and social elements would be Seaforth Physio's biggest opportunity.

Seaforth Physio has no marketing budget and therefore, conducts no advertising and their social media activity is very ad hoc.

The business does not evoke an emotional feeling through their overall brand identity and therefore there is no real unique point of difference to set them apart from their competitors.

So the real issue is the brand itself and that's what needs to be addressed first before any funds are spent on advertising

Recommendations

  1. Revisit the Brand ID using a brand-build methodology to develop documentation that articulates: brand proposition, positioning statement and tagline
  2. New logo, colour palette and website UX that includes new copy based on the above 
  3. Allocate a marketing budget to enable test campaigns to find what works best
  4. Search Engine Optimisation (SEO) work is essential and is primarily about generating content across all media channels
  5. Search Engine Marketing (SEM), aka Advertising, as part of the experiments to find how best to target local audiences
  6. Content development and content schedule that can be used across social channels and boosted to reach a local audience
  7. Ideally apply some modest budget to create an SEO/SEM Dashboard that summarises the test campaigns so Robbie can easily see what progress has been achieved

~~~~End~~~~

Client 6: FoodSt - Warriewood

Pictured below (left to right), Rob Forsyth, SEVENmile Board Chair, Lorraine Gnanadickam, FoodSt and Mitchell Filby, SEVENmile Director

FoodSt Overview

FoodSt was founded by Lorraine connects homecook chefs and customers, and delivers frozen home cooked meals. FoodSt is very diffferent to other home delivery food services because it has 30 home-based chefs that enables people who love cooking to work from home, making their favourtite recipes for FoodSt to store, market, and deliver. FoodSt has a warehouse in Warriewood that servces as the freezer warehouse and office, empoying 8 staff.

Ideal customers are typically new parents, working couples, and older people.

These meals can be kept for around up 10 weeks depending on the food.

Business Problem/Challenge

Trouble reaching ideal customers 

Difficult to get mindshare with the target audience

Less than 50% of customers are placing repeat orders

Advertisements haven't worked

Finding more home chefs for continual variety in the menu

Solutions

Customer feedback is essential to be able to make informed decisions.

Use data from quantitative surveys to discover the most effective advertising techniques in order to identify trends in customer behavior and preferences

Monitor ideal customer behaviour, research their daily life and activity via online channels like Facebook and Instagram.

A percentage of revenue has to be allocated to a formal marketing program so Food St can better serve customers and achieve the desired level of growth. 

Recommendations

  1. Offer five customers a month a free meal for 2-people if you can speak to them to ask questions as to what they like and don’t like about their experience with Food St. Our recommendation is that SME owners that make time to talk with customers end up with a more customer-centric product or service.
  2. Conduct at least 50 surveys a month that are designed based on quantitative questions so the results can be readily analysed. SEVENmile recommends using Typeform.com for these surveys. The basic version is free and it provides sufficient functionality for this task.
  3. SEVENmile recommends that Lorraine connects with 2 or 3 high schools that are close to her base in Warriewood and hire students to conduct social media research about customer trends in online food ordering and delivery. This will provide a great community connection between her business and local school communities.
  4. The 

Northern Beaches Mums group on Facebook accepts ads and we recommend that Lorraine does a couple of test ads to guage if it can be a worthwhile marketing channel.

~~~~End~~~~

The FREE Business Health-Check is made possible by Northern Beaches Council and the COVID-19 Community Response Grants for COVID Business Recovery Training.

For questions or feedback please contact the author of this report, Greg Twemlow, via email to greg@sevenmile.org.au

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