Archive for the ‘Small & medium enterprises (SMEs)’ Category

Sydney’s new entrepreneurial hub

May 30, 2012

The City of Sydney opened a creative and cultural hub for entrepreneurs at 66 Oxford Street in February 2012.

Sixteen tenants including tech start-up AroundYou moved in and the co-working space has been such a success that Moore is converting two other buildings on William Street to create more space for start-ups.

“People started collaborating almost as soon as they moved in, it was quite remarkable to walk around the building and hear their stories,” said Mayor Clover Moore, adding she was taking expressions of interest for the William Street property.

She said start-ups needed affordable space, advice, encouragement and support, but the biggest challenge was finance. A lack of venture capital is forcing Australian talent to go offshore.

To that end Moore said she had asked her staff to “look at ways the city could act as a broker or blind date some of these venture capitalists with start-ups”.

City of Sydney is following the lead of other co-working spaces such as Fishburners, which opened in April last year in a building in Ultimo and filled up with 60 entrepreneurs within six weeks.

“There’s a real groundswell of start-up activity in the tech sector at the moment and that’s attributed partly to just how cheap it is to start a tech business these days,” said Fishburners director David Vandenberg.

Cockatoo’s view is that there’s nothing new here – it is a business incubator pure and simple. Indeed Sydney entrepreneur Peter Fritz AO established a similar facility two decades ago in a former warehouse in Chippendale, an inner Sydney suburb. He wrote a book about it, called the Honey Pot or similar. His best known book is The Possible Dream. Peter is a true collaborator and visionary, and chairs an OECD group promoting SME development.

However we applaud Sydney City Council for its vision. The CBD is a natural place for such incubators, and we trust it works. The critical factor could well be finding a venture capitalist, or some outfit with patient capital, to join the collaborative effort.

This article draws on material supplied by the Sydney Morning Herald

‘Pioneers exploring in an empty space” says Gettler

January 12, 2010

Leon Gettler (Cockatoo member) is a leading columnist with the Age. Herewith an extract of a recent article.

Policymakers say Australia’s affluence is in a consignment of iron ore headed for China. They believe such good fortune must come at the expense of manufacturing. Someone should remind them that reducing a country’s economic base is dangerous – in the 1990s, England embraced financial services while its manufacturing sector declined. Look at it now.

In its latest quarterly Statement on Monetary Policy, the Reserve Bank sees the resource sector as the future of Australia’s prosperity and warns that manufacturing will shrink. Similarly, Treasury secretary Henry has forecast an Australia in 40 years with a much smaller manufacturing sector.

A report by UTS professor Roy Green (http://bit.ly/3AkeRk) – part of a study by the London School of Economics – found that Australian manufacturing managers were at best mediocre, significantly lagging behind the US, Japan, Germany, Canada and Sweden. Chinese and Indian factory managers were a lot better. Australian managers were particularly bad at managing people and innovation.

Professor Green says Australian manufacturers need to work smarter, focusing on niches and developing clusters. Some manufacturers – e.g. implant company Cochlear and cutting tool maker Anca, which exports 95% of its products – are good examples of companies that have built niches and strong global markets. Australia, however, has few manufacturing clusters, most are just clumps. Research by Swinburne University sociologist professor Michael Gilding compared biotech clusters in the US with the Parkville precinct. Our biotechs are – same applies to other precincts, such as the IT sector in Clayton and Ryde. It’s very Australian – pioneers exploring opportunities in an empty space.

It contrasts sharply with Italy’s manufacturing sector – small city of Modena specialises in high-performance cars, home of Ferrari, Lamborghini, Maserati. Montebelluna, close to the Italian Alps, produces 65% of the world’s ski boots and home to Rollerblade skates. Sassuolo is the home of 150 tile manufacturers, producing 60% of all tiles traded internationally.

The only globally successful cluster in Australia is the wine industry, with intense competition among almost 2000 companies, combined with collaboration through industry associations.

Canberra-based industry consultant Rod Brown says business and governments need to identify high-value niches and then build collaborative frameworks, bringing in financiers as well. Aerospace is a prime example. “A proactive industry policy for aerospace would have a cluster program connecting the key players in Sydney, Melbourne, Adelaide and Brisbane, and tying in the outriders” Brown says. “An aerospace cluster would connect the dots with the CSIRO, relevant CRCs, training providers, VC providers, banks – and see who wants to collaborate and those who simply want to go it alone.”

Source: The Age

USA gets Small Business STR (BEST PRACTICE)

November 22, 2009

David (Preacher) Dodd reports that Senator Mary Landrieu has introduced legislation to increase small business exports. The US administration is appointing a special trade assistant for small business to

  • promote the trade interests of small business concerns.
  • identify areas of demand in overseas markets.
  • identify and address foreign trade barriers that impede exports by small business concerns.

 Small business represents 97% of all exporters in the United States and account for 29 percent of the volume.  The constraints identified by the US Administration are:

  • lack of sales volume or resources to overcome the costs of trade barriers and overhead expenses in international transactions.
  • Small business advocacy groups often lack political influence in foreign countries, which hinders efforts to solve problems outside the legal process.
  • Small business advocates are not as visible or vocal on issues relating to international trade.

 David suggests that the proposed Cockatoo “Sunrise” project (aimed at bringing US and other nations into aid-investment-trade consortia) fits exactly with Obama’s mantra of “community” and “being a better partner in the global community.”

Commercial Ready OUT – Commonwealth Commercialisation Institute IN

June 18, 2009

Commercial Ready grants are no more – the goss is that Minister Carr always had a leaning to tax concessions, hence there is now an expanded R&D tax credit from 1 July 2010 – ostensibly to improve support for smaller firms in tax loss as well as rewarding larger firms for their R&D efforts – a 45% refundable credit for firms with turnover less than $20 million – equivalent to a tax concession of 150%. 

 The document that stood out was “Powering Ideas – An Innovation Agenda for the 21st Century“. Produced by the Department for Innovation, Industry, Science and Research, the report clearly and eloquently looks at the history of innovation in our country and identifies Australia’s failure over the last decade to keep up an appropriate level of investment in innovation compared to our peers. The 2009 Budget is stage one in the long path towards rectifying the country’s under-investment in innovation over the last decade.

Commercialisation is an art – requires input and commitment from seasoned business executives with experience in taking promising ideas, products and services and creating profitable enterprises from them. Over the last two years in my role as a VC, I’ve looked at 340+ entities (we have backed two!).

The common theme is the genuine lack of commercial expertise in these entities to make them globally successful. Investment has to be made in this area and the Commonwealth Coomercialisation Institute (CCI) is the right body to achieve it (see HOT GOSS)

Commercial Ready didn’t rise like a phoenix from the ashes in this Budget. The amendment to the R&D Tax concession is welcomed. But many early innovators will not be around to take advantage of these additional tax credits. Many have been struggling with the cash drain of the R&D burden since CR was cut in May 2008. Many are on life support. With CR, cash payments were made in advance of the expenditure. Now the cash does not arrive until after the tax year.

Contributed by Nick McNaughton (Anthill)

The Case for ‘American Innovation Zones’

November 12, 2008

 

America needs a national strategy that nurtures competitive and innovative regions, says a White Paper from the Association of University Research Parks (AURP).

 

It makes the case for a national strategy for federally-designated American Innovation Zones.

 

They would receive special incentives, and other support, based on their capacity to nurture cutting-edge research, promote technology commercialization and stimulate entrepreneurial activity – targeted R&D tax credits, preferences for programs like the Small Business Innovation Research effort, encouragement for federal research facilities in these zones. (Thanks to NDOE).

Go to The Power of Place: A National Strategy for Building America’s Communities of Innovation.

Innovative Regions agenda – Australia

September 22, 2008

 

The Rudd Government’s national $20 million Innovative Regions Centre, with its HQ at Deakin University’s Geelong campus (Vic), was opened in August 2008.

Industry Minister Kim Carr said it will help address the challenges faced by Australia’s regional SMEs in today’s increasingly global marketplace. “The Innovative Regions Centre will operate as a source of advice and services to help regionally based SMEs become more innovative, efficient and competitive.”

The facility is a part of the $251 million Enterprise Connect network. This centre aims to provide services and support for about 1,500 companies annually by way of expert, practical advice and support. The centre is to support businesses in targeted regions around the country.

Senator Carr announced Professor Roy Green (Cockatoo member) as Chair of the Centre’s Advisory Board. “Professor Green, the Dean of the Macquarie Graduate School of Management in NSW, brings great expertise and experience …in providing advice on the implementation of the Innovative Regions Centre and the ongoing strategic direction of the centre,” he said.

Visit www.enterpriseconnect.gov.au or ring 131 791.

Tories Release Small Business Platform

June 24, 2008

 

Recent Labor Party losses in local elections have emboldened the UK Conservative Party, which has released several policy proposals.

 

One examines how Great Britain can reform and streamline current public support programs for small business.

 

According to the study, Britain is now home to 3,000 different business support programs run by 2,000 public bodies at an annual cost of £2.5. billion. The report recommends:

§ major streamlining of these efforts, and a commitment to rigorous evaluation of programs.

§  the creation of a single web-based Business Information Service.

§  new approaches to expanding small business finance resources.

§  a program modeled on the US’s Small Business Investment Research.

§  expansion of youth entrepreneurship education programs.

 

Go to Small Business and Government: The Richard Report

US expert predicted Mitsubishi’s exit in Australia

March 8, 2008

Professor Oded Shenkar was the Ford Foundation Professor of Global Business Strategy at Ohio State University in 2001. From our archives, we have idenitifed some very prescient comments he made at a series of talks in Australia as part of the Smartlink project .

Shenkar has a longstanding expertise re engagement with China, globalisation, multinationals, SME development, innovation and auto industry adjustment. Comments included:

  • Globalisation is on everyone’s mind – and the Conference Board (the key think tank in the US) has identified globalisation and alliances as the two critical issues.
  • Australia feels threatened by takeovers and, while MNEs might provide jobs, they may not be a ‘thinking’ workforce.
  • In Australia, there will not be four auto manufacturers within five years (i.e. currently Ford, GM, Mitsubishi, Toyota). The future of Mitsubishi will hinge on how well Chrysler does in the US – where it is losing $US500m per quarter at present – people in SA should be praying for Chrysler)
  •  Virtually all nations want foreign investment, and there is tremendous competition. But 85% of FDI is via mergers and acquisitions, and global M&A is now greater than domestic M&A. MNEs are trying to consolidate and not replicate – countries looking to maximise the contributions of MNEs should concentrate on knowledge-based activities – not capital for its own sake – go for back-office activities, education and training, design and tooling etc. that can build value chains. The need is to leverage off MNEs’ requirements.
  • One-third of global trade is internal transfer between the affiliates of the one company – and 60% of MNEs do not pay a cent in corporate tax.
  • SMEs are flourishing despite the growth of globalisation – they drive innovation. MNEs need them to capture innovation – this is why Cisco has bought 70 companies in the last two years. The share of US exports represented by SMEs has grown from 20 to 30% in recent years.
  • How should SMEs respond? – take opportunities as they arise, piggy-back off MNEs, push on exports because ‘if you don’t venture out, someone else will come and eat your lunch’ (i.e. off-shore competitors will encroach in  your domestic market).
  • Re US investor perceptions of Australia – while at pains to emphasise this was his first trip, Prof. Shenkar indicated that from his perspective, Australia is not on the screen – the leisure image works against Australia, and Hawaii suffers the same problem. Australia is seen as downunder and far away – Americans do not realise that Sydney is closer than Hong Kong in flying time. Australia really doesn’t have identifiable brands or specialisation like Sweden – furniture, Germany – cars. Interestingly, Subaru uses Paul Hogan and kangaroos in its 4WD ads in the US, and a fair proportion of Americans probably think the vehicles are made in Australia (and not Thailand etc.)
  • Alliances could help Australia overcome its lack of scale – bilateral alliances are one possibility whereby different aspects of a supply chain could be coordinated – but it requires a different perception of things and a creative government on both sides – need to see it as a value chain.
  • Sometimes we need to be physically close – it is important, and part of human nature. Governments need to recognise this. 

Lego – exemplar for Denmark

December 16, 2007

Last year Danish toymaker Lego announced plans to outsource most of its manufacturing to Eastern Europe and Mexico – only 300 blue-collar jobs remain at Lego’s HQ in the town of Billund. 

Union leaders at Lego said “It was the best way to keep as many workers’ places in Denmark as possible…we want to make sure that they make money and we make money.”  

In Denmark, 76% of respondents in a recent poll said globalization was a good thing. And why shouldn’t they? Living standards in Denmark are among the highest in the world. Per capita income trails that of the U.S. but is distributed far more equally. Unemployment is just 3.1%. The country exports more goods and services than it imports.

And while only two Danish corporations (shipper A.P. Moller-Maersk and the Danske Bank) are big enough to make the FORTUNE Global 500 list, Denmark has more than its share of smallish, nimble, outward-looking firms well positioned in growth areas ranging from alternative energy to health care to high-end furniture. 

According to the latest rankings from the World Economic Forum (WEF), Denmark is the world’s third most competitive economy. It also has the second highest tax burden in the capitalist world, a generous welfare state, a heavily unionized workforce and at least five paid weeks off every year. It’s all part of a trade-off, the Danes say. Corporate taxes are low, and capital gains are taxed at a much lower rate than ordinary income. There are few restrictions on trade.  

Employment Minister Claus Hjort Fredriksen says ‘the model we have found here – free education, free health care, a good financial situation if you lose your job, together with a flexible labor market and the size of Danish companies – somehow has struck something that is the answer to the challenges of globalization.” 

Denmark is now a darling of European social democrats and the country has been overrun lately with visiting journalists, academics and politicians looking for insights. Another thing is its size and homogeneity – 5.4 million people, of whom all but 478,000 are of Danish ancestry – are crucial to how the economy works.  

It’s basically a clan – and informality, disputation and disrespect for authority are core Danish traits. There are a few clear goals and lots of leeway to achieve them. 

Source: IEDC 

Pattie’s Pies – outstanding example of regional investment

October 25, 2007

A fascinating example of regional investment, family-owned Pattie’s Pies, continues to unfold. It was a small company based in Bairnsdale, eastern Victoria.  Anyway, about 10 years ago, Pattie’s Pies bought out the Four ‘n’ Twenty pie business, that had in turn been snapped up by the US multinational Simplot. 

Simplot is a $US2.6 billion business begun by Idaho potato farmer J.R. ‘Jack’ Simplot. In 1995, Simplot amazed Australia with a $76 million punt on Pacific Dunlop’s bakery business, incorporating the iconic Fourn ‘n’ Twenty pies and other well-known brands – Herbert Adams, Wedgwood, Great Australian Pies and Nanna’s apple pies. ‘The Australian’ newspaper says the self-styled Mr. Spud (as his vanity number plate in Boise, Idaho, attests) was willing to pay almost double the next highest bidder. 

Meanwhile, back at the camp, Patties had been building sales and market share, and a reputation, throughout the 1990s. It was, and still is, owned/operated by a local family, and the CEO is one of five sons in the business.

Around 2000, it received a grant of $270k from the Victorian Government to assist its expansion. A $600k grant from the federal Dairy Regional Assistance Program followed in 2001 – this was linked to employment outcomes. 

The key reasons behind the decision to expand in Bairnsdale (which is a good three hours from Melbourne)  were its pre-existing (albeit modest) manufacturing base and family/lifestyle factors.  

Bairnsdale is actually an interesting case study. It is the main town (population of 12,000 or so) within East Gippsland, which was described as an ‘economic cul de sac’ by Bill Kelty, head of the Commonwealth’s Regional Development Taskforce in the 1990s. He memorably summed up its weak transport and commercial linkages to NSW and beyond, its distance from Melbourne and its sparse population. However the area has benefitted over the last decade by the Seachange effect – the growth of Paynesville and Metung as retirement villages has strengthened Bairnsdale’s role as the regional service centre. 

Getting back to Pattie’s Pies, it is remarkable development at a number of levels.

§          It has built a strong position in a slow-growing market, and ships its product all across Australia and to the USA.

§          It was a confidence-booster for the wider Gippsland region, which is still a low growth region due to earlier hits to its energy and forestry industries.

§         The government grant enabled spillover effects to be realised.  

A bouquet to government agencies for its role in this company’s evolution.   

www.patties.com.au