odoH Sneew ey - Hood Sweeney · before deciding your food model, she says. It’s a sentiment...

client storyFennell Forestry – Same, same but different: Fennell Forestry branches out.12

Golden boyAn experienced management team gives Golden Boy the golden touch.6

Food, wine and hospitalityFood Sector – Real opportunity or just a dream?26

ISSUE FIVE An advice, news and lifestyle magazine for clients

Hood Sweeney Serving South Australians

for more than 40 years

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Disclaimer This magazine is intended as general information only. It does not purport to be comprehensive advice. Readers should seek professional advice before acting in relation to these matters.

Accounting 4Get your head in the cloud to find the secret to business success.

Kounta 5Kounta cloud software gives hospitality businesses new fire power to boost performance.

Disclaimer This magazine is intended as general information only. It does not purport to be comprehensive advice. Readers should seek professional advice before acting in relation to these matters.

Agribusiness 16Savvy SA agribusinesses add value and change the tune for food and wine production.

Performance coaching 18How not to go the way of the Dodo with technological change.

Kings Creek 20Kings Creek Station tourist experiences: Conway Family dreaming becomes reality.

Golden Boy 6An experienced management team gives Golden Boy the golden touch.

Front Cover

Wendy Fennell Fennell Forestry

Financial Planning 10Waiting for value stocks is like waiting for the right wave in choppy seas: worth the wait, say expert investors.

Fennell Forestry 12Same, same but different: Fennell Forestry branches out.

Barramundi with naam jim dressing 25

Food, Wine and Hospitality 26Food Sector – Real opportunity or just a dream?

Hospitality 28Passion and business sense: key ingredients for success in the hospitality sector.

SA Wine Sector 30SA wine sector improving with age — and strong management.

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In this edition, we focus on the small and medium businesses (SMEs) that are the backbone of the South Australian economy.

They make up more than 90 per cent of the business sector in our state and have been heralded as the saviour of the struggling economy. SMEs are extensions of their owners’ passions, capacities, goals and ambitions. Hood Sweeney is proud to work with a large number of SMEs in South Australia.

It’s important that SMEs consider their strategic approach and business plan in order to grow and thrive. Consider the sage words of our Chairman, Rob DiMonte, if you're thinking what this might mean for you. Rob notes that those in the box seat for growth are those that have adopted a strategic approach and have developed markets for their products outside of South Australia. It’s important to have the capacity to invest and to have an investment mindset — even for small and medium enterprises. Businesses that have access to strategic advice will have the edge.

It’s this type of strategic approach to growth that has helped drive South East family business, Fennell Forestry, from strength-to-strength. By seeking new markets and continually working on the business as well as in the business, managing director Wendy Fennell says the company has just had its best year in 25 years.

Having the right advice at the right time has also helped Ian Conway to realise his family’s dream of creating an outback eco-tourism resort on their Kings Creek Station. The station’s

“glamping” facilities, together with new luxury units nestled into the rocks and equipped with air conditioning, showers, television, swimming pool, are a far cry from the camping ground Ian levelled with a piece of railway iron tied behind an old Toyota. His business systems, now run by daughter Megan with assistance from Hood Sweeney, have been updated from the old system which was based on a shopping bag of receipts.

In this edition, we also bring you insights from Hood Sweeney’s specialist advisors in the food, hospitality and wine sectors.

You’ve probably heard about the “dining boom” that has been predicted to replace the mining boom. Much has been made of South Australia’s potential as the food bowl of Asia, with food and beverage product manufacturing in South Australia accounting for more than 25 per cent of the total manufacturing workforce in the State.

While South Australia’s restaurant sector is celebrated and many people aspire to being a Master Chef, it’s critical to take a strategic approach, says Hood Sweeney’s Food, Wine and Hospitality sector specialist Priya Chadha. Success in the restaurant business is not just about passion — it’s about having good business sense and understanding your market before deciding your food model, she says.

It’s a sentiment echoed by Wine Sector lead Adam Wright who says while the sector is bouncing back from the challenges of recent years, changes in the tax regime make it more important than ever to seek advice about how to structure your business effectively.

WelcomeWelcome to the first edition of Life and Toil for 2017.

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Chris StewartManaging Director

Award-winning Adelaide restaurant Golden Boy seems to have found the formula for success, recently scooping silver in the National Restaurant and Catering Awards for Best Thai in Australia and two Forks in The Advertiser Food Awards. Co-owner Sondra Deering says the restaurant’s success reflects a strong vision, an understanding of how to be profitable in this market and a commitment to excellence. By introducing some edgy business improvements in the form of online booking, a two-sitting schedule, set group menu and deposits for group bookings, the restaurant has been able to deliver.

Not only do we bring you insights into the success of Golden Boy, we also share their wonderful recipe for barramundi with green mango salad.

There’s a lot more to read. We hope you take away something for your business. Come and chat to us if you would like more information.

Disclaimer This advice is general advice only and has been prepared without taking account of your objectives, financial situation or needs; and because of that you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

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A new wave of accountants is emerging and they have their heads in the cloud and their feet on the ground, says Hood Sweeney’s Dion Carbone.

The increasing popularity of connected accounting software, such as Xero, has seen proactive accountants moving towards advisory roles and away from the standard client compliance requirements.

The adoption of cloud solutions has allowed real time access to client information meaning an advisor can provide valuable and timely advice on business operations.

A business’ success is often about the ability to step away and look from outside its day-to-day operation, at the bigger picture.

Cloud-based technology provides valuable data about your organisation, your operating costs, as well as your business environment. However, as with anything the real power lies in your connected advisor joining the dots between the financial and non-financial information to improve and grow your business, he says.

“Many businesses don’t leverage the information they have or the potential information they could have available for crucial decision making.

“That’s where having totally integrated systems and an advisor to guide you can provide the edge in improving the performance of your business and gaining a competitive advantage in the marketplace,” Dion says.

Hood Sweeney’s extensive experience as a Xero Gold Partner and Xero Authorised Integrator means the firm not only uses the Xero online accounting package effectively but can guide organisations to integrate systems across their entire business function.

“It is best practice to understand your cash flow before making financial decisions. Cloud-based packages can provide this data seamlessly and most importantly at the decision-making moment,” Dion says.

The benefit of this means that you and your advisor will have the most up-to-date information to make strategic business decisions and reprioritise resources immediately.

The cloud ecosystem with Xero at its core now has more than 500 apps

providing solutions for a range of functions including: inventory, debtor management, time tracking, point of sale, human resources, customer relationship management, eCommerce, reporting, payment gateways and industry specific software.

“There is some fantastic technology out there that can change the way we do business. Something as simple as an in-store beacon can tell you how many people enter your store and then you can use that information to determine your sales conversion rate,” Dion says.

It’s easy to spend up on the latest and greatest applications without being clear about what will really work to improve your bottom line which can end up costing you time and money in the process.

This is where the role of the connected advisor can be critical in assisting you to develop a solution that meets your business’s unique needs. More importantly once the solution is implemented, Hood Sweeney helps clients to understand and interpret the information to make better business decisions.

“That’s the difference between having a trusted advisor who understands your business and its unique capabilities, if you can’t use its information to impact decision making then you haven’t created any value,” Dion says.

“Our team can show you how to build your whole business around cloud integration to provide greater insight into your operations, greater efficiency and ultimately grow the bottom line.”

AccountingGet your head in the cloud to find

the secret to business success.

Dion CarboneManager, Accounting & Business Advisory

Representative of Hood Sweeney Accounting & Business Advisory

AFSL No. 485569

For more information or a consultation about integrated cloud-based applications contact Dion Carbone on 1300 764 200.

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Cloud computing systems are transforming the way small businesses, particularly hospitality businesses, operate.

Integrated cloud software enables smaller businesses to improve their customer service and business performance, and cuts the time required for administrative tasks.

Previously hamstrung by the need to buy obtrusive and expensive point of sale systems and industry specific hardware, smaller businesses are now spoilt for choice in cloud-based point of sale systems, says Hood Sweeney’s Cloud Accounting specialist David Block.

“One option stands out for the hospitality industry — Kounta is the point of sale system. Run entirely in the cloud with no software to install, you can get up and running on an iPad quickly and cost effectively,” he says.

This eliminates the need for conspicuous hardware that adds little value outside of simply processing orders.

“Kounta contains all the features you have come to expect from a point of sale system including price lists, promotions, staff sales tracking, inventory tracking, table management and much more but the real beauty of the system lies in it being cloud-based.

“Open API (application programming interface) developers can build and connect their apps directly to Kounta, giving you complete flexibility to extend your system and add new features over time including rostering, online ordering, reward programs, instore beacons, analytics tools and gift cards.

Accessible via handheld devices such as tablets and smart phones, cloud software frees business owners from their desks, enabling them to manage their business wherever they are.

The cloud-based system is life-changing for small business operators who need to be experts in multitasking. Menu updates can be done on the go from your phone or from the comfort of your home on your laptop.

The system can also be up-scaled to multiple sites as the business grows, without incurring significant costs.

“Once your first site is setup, to add on another register or open up a new site all you need is an iPad, a stand, a cash drawer and a printer and you are good to go,” David says.

Data shows small businesses have the jump on larger ones when it comes to using cloud computing to improve their customer service and back end operations.

Whereas larger franchise operations are hamstrung by legacy systems, small businesses can move to cloud-based systems more readily.

In a Telstra Business Awards survey of over 170 winners and finalists more than 70 per cent of respondents said they use cloud computing in their business.

The ability to use cloud-based software on any device at any time of day, gives small business owners unprecedented access to all the numbers they need in real time just like their larger competitors, without paying a premium. This means business owners are able to work closely with their business advisors to improve performance.

And by integrating the point of sale system with the Xero accounting software, business owners can spend more time on their business and less time on bookkeeping.

KountaKounta cloud software gives hospitality

businesses new fire power to boost performance.

If you would like to explore the ways Kounta could benefit you, contact David Block on 1300 764 200.


David BlockManager, Accounting & Business Advisory


AFSL No. 485569

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Golden BoyAn experienced management team gives

Golden Boy the golden touch.

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Golden Boy is an apt moniker for the golden child of the Adelaide restaurant scene given its string of awards since it was established three years ago.

The Thai restaurant, born from the Botanic Hotel in the city’s East End, has certainly a golden reputation, recently winning silver in the National Restaurant and Catering Awards for Best Thai in Australia and two forks in The Advertiser Food Awards.

On the other hand, the name belies the fact that much of the business’s success is based on having a “grown up” sense of identity and purpose, says co-owner Sondra Deering.

The concept of late night dining, buzzing vibrant space, spicy food and cocktails and its avant-garde administrative structures reflect a mature understanding of what works in this market niche.

It’s sometimes tempting, says Sondra, to be pushed and pulled in different directions, but there’s a fine balance between understanding the market and being reactive.

“We’ve had a café previously and we altered our offering based on what the customers wanted. We ended up with a restaurant that was nothing like what we intended it to be. So you look at it one day and think ‘I don’t like this at all’.

“With Golden Boy we had a really set idea about what we wanted to achieve and we didn’t budge on it.”Pr

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Chef

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Golden Boy brought some edgy concepts in dining to Adelaide including having the kitchen open until 10.30pm, online bookings, two-sittings, charging for groups of “no-shows”, and a tailored group dining menu.

And it works. The restaurant is usually full over the five nights a week it is open and the store room is empty at the end of each day, allowing the business to order produce daily.

Recognising that consistency would be critical to success, the business implemented a Tuk Tuk menu for groups of 6-plus people, where the waiter helps diners choose a selection of dishes at a set price.

“When we first opened people complained about it but we didn’t budge and it has been the best thing for us because customers have a great experience, and it becomes the thing people can rely on time and time again,” Sondra says.

The business also quickly opted to work five nights flat out rather than over a 7-night trading period, which helps to build a solid team.

“We could open more but I don’t think we would get the same result. We have consistent staff; even in the kitchen we recognise the orders of regulars and know how they like it.

“We would rather everybody gets two days a week of complete rest and five nights we just hit it really hard. That way our staff are happy, and we are happy.”

While industry forums point to a lack of serving staff to support the 85,000 new restaurants and bars predicted to open nationally by 2020, Golden Boy emphasises a personal customer experience.

The online booking system enables the team to keep track of customers’ past experiences and to warmly welcome them back when they book.

“To go to sleep and wake up and know the restaurant is booked without having to make any phone calls – it’s incredible. Otherwise you are on the phone all day and trying to shuffle people around.”

The 60-seat business also benefits from hosting two sittings, particularly in a location where drop-ins are few.

Photography Credit: Smudge Eats

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“It’s not only late night dining that is relatively new to Adelaide, it’s the two sitting thing. People sometimes wonder whether they will have enough time but if they turn up to their booking on time they will have plenty.

The booking system requires groups to leave credit card details to cover last minute cancellations, which is driving cultural change in the hospitality industry, Sondra says.

“It means people are committed to their reservation rather than just thinking: ‘I’ll book but may or may not come’,” she says.

Having an experienced management team, supported by a personalised accounting team at Hood Sweeney, has helped Golden Boy to establish a strong identity.

It doesn’t hurt that Sondra and her partner James have a number of thriving, symbiotic Adelaide businesses. They’ve also built strong relationships with some of the finest produce purveyors in the city.

While the team is hot on constantly improving and gathers customer feedback from a wide array of sources, it understands better how to use the information than it might have in the past.

Sondra also works in the kitchen a couple of nights a week to keep her finger on the pulse.

“You draw on previous experience – with everything, you become more sure of yourself and know what works and doesn’t work,” Sondra says.

“You have to be really focused and really sure of yourself and have the right team otherwise you can’t do it.”

“ Having an experienced management team, supported by a personalised accounting team at Hood Sweeney, has helped Golden Boy to establish a strong identity.”

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With the world awash with capital and capacity, there are few real value stocks to be found in local or international markets — until we get some growth and inflation, a Hood Sweeney investment seminar has heard.

Masters of investing panel included Geoff Wilson and Matthew Haupt of Wilson Asset Management, David Prescott of Lanyon Asset Management and Hood Sweeney’s Tony Michaels. The panel said while governments had hoped to stimulate aggregate demand by printing money and keeping low or negative interest rates, this had not eventuated.

Instead, asset prices have been pushed artificially high with most share prices significantly exceeding earnings.

Investors planning to snap up bargain stocks in the wake of Donald Trump’s shock victory in November were disappointed as markets dipped then rallied, they said.

“As an investor, the ideal scenario is that you want a market to crash. That’s the exciting part as an investor. It might be painful if you are in it but really that’s when the opportunities present themselves,” Mr Wilson said.

Most pundits expected the market to fall after a Trump win but sentiment had shifted as his acceptance speech had been more moderate than his campaign and many predicted a boost to government spending on defence and infrastructure.

This highlights the importance of not following the herd because mob sentiment is often wrong, the panel said.

Many remain nervous about ongoing international political instability and resentment from the middle class which has been suffering from falling living standards in the US and Europe since the Global Financial Crisis in 2007.

Despite the frisson of excitement over the US election, monetary policy, not politics remains the key driver for asset prices for the foreseeable future, the panel said.

“I think as the months pass we will return to a focus on the extraordinary monetary policy environment, said the new chair of Hood Sweeney’s investment committee, David Prescott.

“We are focused on finding mispricings in the market – that’s easier when there’s a lot of panic and a lot of fear. It’s a lot more challenging in this environment but it doesn’t change our focus.”

In this market, characterised by high asset prices and global capital desperately seeking a return, it is difficult to find value stocks.

While the longstanding bull market continues unabated, many people were being encouraged to take greater-than-normal risks with their capital in quest of a return, Mr Michaels said.

“With investors searching for yield, people are being forced up the risk curve… Most people are thinking, how can I get an excess return and it’s not quite there yet and we really need to focus on the risk,” he said.

Companies have done what they could to create value by stripping costs out of their business but most have completed the task and now need revenue growth to drive profit. This lean cost base will stand them in good stead to make profits when demand increases.

A major market correction is still on the cards, the panel said, although it is possible that top line growth will begin to emerge with a general pick-up in demand.

Hood Sweeney clients heard that while it is difficult to pick the top of the market and tempting to stay in while it continues to rise, the risks greatly exceed the potential rewards.

Financial Planning Waiting for value stocks is like waiting for the right wave

in choppy seas: worth the wait, say expert investors.

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For more information contact Hood Sweeney’s Financial Planning team on 1300 764 200.

Tony MichaelsDirector, Financial Planning

Authorised Representative 259128 Hood Sweeney Securities Pty Ltd

AFSL No. 220897

The panel said although returns on cash are at historic lows, it is better to retain a significant proportion of cash than take excessive risks.

Investors should prepare for the worst but hope for the best in their investment strategy.

“We’ll sit in cash unless we can find a cheap stock and identify a catalyst that we believe will lead to a re-rating. What we are trying to do is buy undervalued growth companies and find a catalyst. When we sit in cash we do take short term trading opportunities and if you look at our performance over time, we’ve well and truly outperformed the market over the last 18 years,” Mr Wilson said.

“As an investor my rule number one, two, three, four and five is: Don’t lose money.”

The panel outlined four key rules for value investors:

› Ensure you are confident in the company’s management before investing

› Identify earnings growth – earnings per share growth

› Examine a stock’s valuation carefully – it must represent good value

› Identify a catalyst – something that will change a company’s valuation eg positive earnings report or management change or structural change in the industry – anything that will change that value quickly.

Please note that this does not constitute advice on individual investment strategies or suggested investments.


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Fennell ForestrySame, same but different: Fennell Forestry branches out.

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As a young school leaver, Wendy Fennell spent her gap year in the family forestry business in the South East and loved it so much, she never left.

Yet the forestry industry’s image belies its high level of innovation and technology and struggles to attract workers, particularly from the city.

Attracting a high quality workforce is the south east forestry sector’s biggest challenge after losing many workers during the mining boom, Wendy says.

Fresh from a presentation to former Holden workers looking to find a new job, she is passionate about the opportunities the region provides and the need to promote it better.

“We are trying to come up with different strategies to attract people to the region. We employ the person and train the skills so it is about trying to find that person who is interested in doing the shift work and operating the types of equipment.

“It is a great quality of life here – low cost of living and we have most services but the fact that a lot of medical and other services are still in the city does, I guess, put people off a little bit,” Wendy says.

“Our industry hasn’t got a great image as far as what the job really involves but I really love it. To be able to work outside every day and work with million dollar pieces of equipment and the latest technology — it’s a great career option but it is not seen that way.”

Considered by many to be a “traditional industry”, in fact modern day forestry is highly innovative, striving to find efficiencies through technological change and to use more of the product to extract greater value.

It’s this aspect that particularly drives Wendy’s brother Barry, co-owner and now executive director of business development and innovation.

Like Wendy, he too, joined the family business as it was expanding and has helped to drive it to become one of the region’s most successful businesses, employing around 70 people and expanding into new business lines.

Established by their parents and uncle as G&R Logging in 1991, the business has evolved from hauling softwoods under contract into transporting blue gums for the plantation owner for export.

Wendy and Barry took over the business through a succession plan designed with Hood Sweeney, and the company was re-branded as Fennell Forestry in 2013, servicing two major clients with 24-hour operations.

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“We had a different risk appetite to our parents and we didn’t want them to work hard and lose everything. We wanted them to enjoy everything while they were well and fit.

“Hood Sweeney suggested the succession plan … losing our uncle who finished work, got sick and didn’t get a chance to enjoy it was a driver for us but also we were very fortunate that Mum and Dad were keen to step aside.

“They were very good at letting us move into the running of the business even before the succession plan was in place so the banks were comfortable with the change. I think the key to our success was the fact that they stepped aside really well,” Wendy says.

The firm has continued to evolve and now has the Australian import licence for lightweight flat pack trailers from Canada, which Barry sourced and had built locally in 2014, to underpin a shift from blue gum log transport to chip transport.

“There wasn’t anything available in a stock standard way of doing things so Barry investigated something better. We are

always looking for ways to do things better… and our forest owners are always pushing for more innovation,” she says.

This commitment to continually finding new and better ways of doing things is a deep-seated tradition within the business. This extends to continually improving its internal management structures and building relationships with staff and the community.

The company sponsors a range of community events including the annual Fennell Forestry Truck Pull to raise money for children’s charities and it works hard to ensure employees are supported.

“The responsibility of employing that many people does weigh heavily, not only from a safety point of view but also ensuring that they have a job.

“We want to make people proud of working here and we understand that people work to enjoy a great lifestyle so there has to be that balance…People can come and work hard but they’ve got the ability to enjoy it.

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For more information about Hood Sweeney’s Accounting and Business Advisory services contact Hood Sweeney on 1300 764 200.

“We are not just employing that person; we are employing the whole family. If we can give back and support the community it makes a greater lifestyle for everyone,” she says.

Somewhat unusually for a small business Wendy and Barry have prioritised jointly attending a business growth program at the University of South Australia in a bid to ensure that the management structures could support the business’s growth.

Whereas the pair had previously pitched in wherever necessary to jointly manage the Company, they’ve now separated the roles. Wendy has become the managing director of operations and Barry has assumed the role of executive director, business development and innovation —playing to their strengths, says Wendy.

“The thing with a family business is that you blend in and roll along and all of a sudden you are a big business and you need to shift.”

The team also has regular planning days with Hood Sweeney to map out the strategic path, capitalising on the firm’s long standing relationship with the Company and its understanding of its issues.

“It is important to be working on our business but is taking time out and being disciplined with it.”

And the business is reaping the rewards, posting its most successful year in 25 years, says Wendy.

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An iconic poem in which farmer Hanrahan regularly proclaims “we’ll all be rooned” at various points in the season has pretty much summed up the sentiment of agriculture for generations.

Buffeted by international prices and Mother Nature, the sector has the reputation of feast or famine.

Yet while the weather might remain a critical variable, increasingly sophisticated production and marketing techniques are ironing out some of the volatility.

And in the wake of the mining boom, South Australia’s fortunes have been linked to a resurgent agribusiness sector, with many citing our clean, green crops, wine and meat production as the way of the future.

In 2015-16, food, wine and forestry industries were South Australia’s largest export industry worth $21 billion per annum. Food exports grew significantly in 2013-14, representing 35 per cent of total merchandise exports.

Field crops earned $2 billion, livestock and dairy over $1.4 billion and seafood and horticulture were worth $245 million and $225 million respectively. Overseas wine exports were worth $1.2 billion.1

Economists have pointed to South Australia’s competitive advantage in bulk foods, particularly with growing Asian markets which are expected to account for 71 per cent of growth in global food demand up to 2050.

1 Primary Industry and Regions South Australia (PIRSA) Agriculture, Food and Wine in South Australia, 2015-16

Yet agribusiness, like other sectors, is being transformed by a global megatrend of consumer influence and success is linked to tailoring products to suit different market segments.

Savvy producers have worked hard to value-add and to market premium products, reducing their vulnerability to international prices.

Just as countries starting out in manufacturing tend to begin with labour intensive production techniques and relatively simple products. These eventually evolve to capital intensive production and more complex products, so is agribusiness evolving.

Take for example Hood Sweeney client, Pangkarra, which has supplemented wheat farm income with premium products such as wholegrain pasta and pre-packaged pulses.

Brand is becoming increasingly important in products such as meat where product differentiation has historically been limited. Anecdotally, the paddock to plate story is increasingly appealing to consumers who value biosecurity.

The biggest employers in SA agriculture are sheep, beef cattle, grain farming, wine making, fruit and nut tree production, meat and meat products manufacturing. A 2015 Bank SA report noted that the value of finished foods has increased significantly, driven mainly by meat processing for export.2

South Australia produced the majority (54%) of Australia’s red wine grapes in 2015 with 454,000 tonnes and new vine plantings increased in 2015 for the first time in a decade.3

2 Bank SA, Trend: Premium Food for Thought, Opportunities for South Australia in the Asian Dining Boom.

3 Australian Bureau of Statistics, 1329.0.55.002 – Vineyards Australia 2014-15 and Wine industry statistics – viticulture http://winetitles.com.au/statistics/viticulture.asp

AgribusinessSavvy SA agribusinesses add value and

change the tune for food and wine production.

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Scott Young Director, Accounting & Business Advisory


AFSL No. 485569

Jim Pinkney Associate, Accounting & Business Advisory


AFSL No. 485569

The state, with its broad acre cropping, meat production and wine sector, is expected to benefit from demand for clean food produce, especially from the growing global middle class. Pre-packaged food and restaurant dining is expected to increase as incomes rise and time is scarce.4

Although well-positioned, the sector will need to overcome a range of challenges though, such as the need for capital (including connectivity) and an ageing workforce, with farm workers more than six times as likely to be over 65 than those in the general workforce.5

Now’s the time for strategic thinking, for extracting as much value as possible through the innovative use of production techniques and technology; for engaging with consumers to deliver what they want, and for marketing products effectively using sector specific channels.

And that’s what many of Hood Sweeney’s clients are doing.



“ Savvy producers have worked hard to value-add and to market premium products, reducing their vulnerability to international prices.”


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The internet has a habit of “cutting out the middle man”, which is great for consumers but not so great for the obsolete link in the supply chain.

Hood Sweeney consulting and Performance Coaching Director, Simon Starr, says in this environment businesses need to be clear about their particular edge over competitors to ensure they stay relevant in the market.

Recent history is littered with examples of “disintermediation” or the process of removing intermediaries in a supply chain. Companies are tending to use the internet to deal directly with customers rather than going through a distributor, wholesaler, broker, or an agent.

Take these examples, says Simon:

› Did you use a Lonely Planet guide to travel the world? Today most travellers don’t leave home without Tripadvisor.com

› Did you use a travel agent to book flights and accommodation? Today many people do it themselves via AirBNB, wotif.com, webjet.com or expedia.com.

Equally, Gumtree and Ebay have superseded newspaper classified advertisements, digital channels such as itunes, Spotify or Netflix have largely replaced CDs and DVDs.

In the meantime traditional charities are losing revenue to direct fundraising through Facebook, Donorschoose.org or gofundme.com.

Yet disintermediation doesn’t need to be the death knell for your business, he says. Thinking like a software company can help to put your business back in the box seat.

The first step towards thinking like a software company is to identify your intellectual property, says Simon – your distinctive know-how, a process, a way of doing things.

Start by asking these four questions:

1 What can I do brilliantly that I know my competitors can’t?

2 How easy is it for my target customers to discover this (do I actively promote it)?

3 This thing/skill/ability I am brilliant at now… will it still be valued by my target market in the future?

4 How can I use technology to codify my ‘knowhow’ in this situation?

Performance coachingHow not to go the way of the Dodo with technological change.

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Take Lego for example. It began as plastic bricks but evolved into movies, apps and games.

Similarly, personal trainer Michelle Bridges leveraged her expertise and moved from personal training face to face to training thousands at once via her 12-week body improvement programme on Facebook. Competitor Kayla Itsines scaled up her business by developing a subscription-based fitness app for a bikini body which she also promotes via social media.

Technology platforms have amazing abilities to scale your business, says Simon.

“They are not only tools to improve existing processes; they are also instruments of collaboration.

“Take cloud-based accounting software Xero and its ecosystem of applications which can enable businesses to coordinate with suppliers, staff, inventory, point of sale, ecommerce, debtors in real time. You can also use its customer relationship management (CRM) plugins to connect directly to your current, target and aspirational markets.”

Hood Sweeney’s performance coaching team can help you to identify the ways you can fine tune your competitive edge and explore the role that “scaling and digitising” can play in your business performance.

Simon StarrDirector, Consulting & Performance Coaching


For more information and an obligation-free first consult, contact Simon Starr on 1300 764 200.

“It’s worth engaging a performance coach to help you identify the ways you can fine tune your competitive edge.”

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Kings CreekKings Creek Station tourist experiences:

Conway Family dreaming becomes reality.

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Kings Creek Station with its luxury units built into the rocks overlooking the majestic country near Kings Canyon in the Northern Territory is living the dream; owner Ian Conway’s dream for an extraordinary combination of creature comfort and remote outback experiences.

“Well it’s my dream,” chuckles Ian. “But as Lyn [my wife] always says, ‘it’s my nightmare!.... I’m a bit of an ideas man… She tells me whether she thinks it will work.”

With Lyn’s stamp of approval, the new jewel in the crown of Kings Creek Station enables visitors to drink in the eagle’s view of the valley. It’s a concept finally realised for the Conway family who have built up the station out of the red dirt over the past 35 years.

Like many good ideas, it seems perfectly logical to find a blend of working station with camping and glamping facilities 36km from Kings Canyon.

It’s the perfect mix of experiential tourism, catering for campers, “glampers” in safari-style tents and onsite units, providing a range of ways to experience the bush. Tourists can even be choppered into a remote, fully serviced camp site, to ride quad bikes along a magnificent valley with waterholes and big beautiful rock formations.

Nestled into the rocks the new luxury units are equipped with air conditioning, showers, television and a swimming pool. An ancient cave — once accommodation for travelling Indigenous people and decorated with petroglyphs and artefacts — has been transformed into a common area with a deck overlooking spectacular night time views of the

“dreamtime escarpment”.

Yet, Ian admits it was not always so idyllic.

Ian and Lyn arrived with the dream of a tourism operation and station in 1981 with two children aged four and two and not much else.

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“We always had a vision of tourism somewhere and Kings Canyon has been an area I’ve always been interested in because it is beautiful country. I’m of Indigenous descent. My white grandfather lived in a cave out near Kings Canyon in the early part of last century and he worked out of there and my grandmother was an Aboriginal woman from Alice Springs,” Ian explains.

“We didn’t have any mod cons – we had no electricity, no water. We had to do it pretty tough.”

They lived under a tarpaulin strung between two trees and eventually built a tin shed and turned that into a kitchen and bathroom. The family slept under the verandah.

“It was really hard yakka but the thing was: we were young, we had a dream and we were able to forego a lot of stuff,” Ian says.

The project was a team effort – even the kids helped from the beginning, clearing an area for the Flying Doctor airstrip.

“Lyn was the teacher, the doctor, the assistant, the fencer, generator starter, cook – she did everything.”

Lyn went back into Alice Springs to generate income to supplement the station for a while. The tourism project got off the ground when an American tourism operator approached Ian for a shipment of camels which he happened to be catching as a hobby.

“It was the first lump sum we made and it was a starter for us.”

This provided the capital to buy an old Toyota LandCruiser at auction as the station’s main piece of equipment – the cost defrayed by selling off the doors and the roof.

“I drove home in this little open deck Toyota and that became our workhorse. I’ve still got it. It’s nearly 40 years old and it is still going.

“It hasn’t got a straight panel on it because I’ve been using it in later years not only catching wild camels but catching wild bulls and brumbies and all that sort of stuff — that’s all been part of our revenue.“

“We started to put a camp ground in but we didn’t have any machinery so I had to drag the whole area with a piece of railway iron behind my Toyota and I established the camp site on the side of the road going to Kings Canyon.

The camel trade also funded the lease of some demountable buildings as camp ground facilities, including a shop which Ian stocked by regular trips to Alice Springs – a 10-hour round trip in those days.

In time-honoured bush tradition, the Conways made the most of what they had, rationing power, re-purposing rubbish to productive use, confounding the Australian Taxation Office (ATO) which struggled to believe that such an enterprise could involve so little turnover.

“They sent this Russian bloke who turned up in little tight shorts which didn’t go down too well. We gave him a cup of tea in our tin shed we were living in and he said: Where do you live?

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“I said ‘we live here’ but you could see him thinking ‘he’s pulling the wool over my eyes’.

Ian took him to his office —a little grass hut covered in shade cloth with a trestle table and a couple of logs as seats. Papers were spread out on the sand, weighed down with big rocks.

“He said: ‘Where are all the old papers?’ I said: ‘they are under those rocks there. He asked about recent papers and I showed him a shopping bag full of papers. He said: ‘Is there any semblance of order to this? I said: Yeah the old ones are on the bottom’.”

It took quite a bit of convincing that the Conways were fair dinkum about their financial position, Ian says.

“He’d come in and say: ‘what about the welder – I don’t see any paperwork for that.’ But I had picked it up at a rubbish dump

– it wasn’t going; I picked it up and fixed it… that’s how the conversation went.”

It was about that time that Hood Sweeney’s Matthew Fox swept into the picture at the suggestion of one of Ian’s friends, and helped to transform the operation into a modern business.

They got rid of the shopping bag full of paperwork and even replaced the shed with a proper house at Matthew’s insistence.

“I cannot speak more highly of Hood Sweeney – they are a fabulous, fabulous group of people… If I have any issues with the business, I’ll call Hood Sweeney and they’ll organise everything for me… They are more than accountants now – they are friends.”

Under the watchful eye of Hood Sweeney’s accounting team and daughter Megan who runs the books, the business has become an equal blend of agriculture and tourism, promoting experiential outback tourism.

The business created a foundation providing education for Aboriginal people, putting a number of Aboriginal kids through high school.

These days, the station is connected with satellite telephone services and the internet which has transformed its operations.

There’s even a plan in place to build a more stable team of live-in workers, and strategies to boost the marketing via internet and social media.

It’s still a 7-day a week commitment for Ian though; there’s always a road to be graded, a bore or a pipe to be fixed, always improvements to the buildings, painting or 256km of fencing to maintain.

Yet for Ian and the family, it is a dream come true and one they are keen to share. “Tourists really appreciate that we are locals. They are really searching for bushman and the bush,” Ian says.

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Ingredients

Barramundi1 whole barramundi

1 knob butter

Pako breadcrumbs, to coat the barramundi

Salad1 green mango, shredded

2-3 shallots, finely sliced

Handful coriander

1 spring onion, finely chopped

Peanuts, roasted

Handful mint

Handful Vietnamese mint

Naam jim dressing4 pieces garlic

4 fresh scud green chilli

4 pieces coriander root, cleaned

2 tablespoons fish sauce

2 teaspoons palm sugar syrup (white sugar)

1.5 tablespoons lime juice

Method

BarramundiDe-bone and butterfly the barramundi but if you’re not up for that, simply score the skin of the whole fish 3 times on each side.

Rub the fish with butter then coat with breadcrumbs. Have the oil ready in the deep fryer, saucepan or wok.

Naam jim dressingIn a mortar and pestle crush the garlic, chilli and coriander root into a paste. In a bowl mix the paste with the fish sauce, sugar and lime juice. Taste and adjust as needed - looking for a balance of sweet, salty and sour.

SaladMix ingredients together in a bowl.

TO SERVEFry your fish until golden - 10-12 minutes, depending on the size of the fish. Once ready, let is drain on paper towel.

Place your whole fish on a plate, mix salad with the naam jim dressing and place on top of the fish. Serve with rice.

Thai food is all about balance of sweet, salty and sour. When green mango is out of season you can use green apple, but you will have to up the sour element in the dressing (lime) and reduce the sweet (sugar).

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Barramundi with naam jim dressing

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Food, Wine and Hospitality Food Sector – Real opportunity or just a dream?

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You probably know the stats.

Agriculture, food, wine and forestry are South Australia’s largest export industries. Food and beverage product manufacturing in South Australia accounts for more than 25% of the total manufacturing workforce in the State. Australia can meet less than 1% of Asia’s food demand after meeting its own food requirements and China and Hong Kong are the largest export destinations today.

So everything looks rosy?

Well maybe not.

It is true that we have some natural competitive advantages including land, biosecurity, technology, education, innovation and proximity to export markets. However, there are some significant disadvantages including the high cost of labour, an ageing farm workforce and regulatory burdens, to name a few.

Also, the best performing farms and businesses are the larger ones, yet the South Australian economy is dominated by small to medium enterprises. Why do the larger enterprises generally do better?

It essentially comes down to being strategic. To have some clear aspirations and goals, know which markets to target, being very clear on how to create a differentiated value proposition and then to invest in the right things that delivers value to the customer. It is important to have the capacity to invest and perhaps even more important to have an investment mindset. Investment is often thought of as infrastructure investment that brings efficiency and lowers costs of production. Or sometimes the essentials to produce the product. However, the critical investment is in knowledge, people, brand, innovation, product development and supply chains that targets the chosen markets in the way we want to compete. These investments are often not considered. Smaller enterprises generally tend not to invest in these areas but rather the more tangible asset based production requirements. This is where strategic advice is critical.

There is a “two speed economy” forming in South Australia. The successful enterprises that have invested in strategically growing their businesses and those that have not. Noticeably in South Australia, enterprises that market their products outside of South Australia are generally doing better than those only selling their products within South Australia. This has wide reaching implications for the economy, the enterprises in question and for the State’s ability to capitalise on the global opportunities. Small to medium enterprises with aspirations beyond the State boundaries are going to be more successful and contribute more to the State.

So can South Australia capitalise on the Food Sector opportunity or will it just be a dream?

Yes it can.

It will require the large body of small to medium enterprises to invest in their capabilities to succeed. Brand Australia alone cannot drive success. South Australia’s reputation for quality food is important, however small to medium enterprises must position themselves for success on the global stage. To innovate in ways they have not in the past. To collaborate with others to create scale and competitive advantage. To raise their sights and commit to the growth markets of Asia.

Small to medium enterprises with aspirations beyond the State boundaries are going to be more successful and contribute more to the State.

Rob DiMonteChairman

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HospitalityPassion and business sense: key ingredients

for success in the hospitality sector.

‘Build it and they will come’ was an idea that worked in the 1980s movie Field of Dreams when an Iowa corn farmer (Kevin Costner) was mysteriously called to build a baseball field on his farm.

Yet it is not a strategy for the Adelaide hospitality sector in 2017, says Hood Sweeney’s Food and Wine sector lead Priya Chadha.

“You definitely need to have passion for the industry because there are such long hours, a lot of late nights away from your family.

But it’s not just about passion — it’s about having good business sense and understanding your market before deciding your food model.

Getting the right advice about how to set up your business effectively, how to monitor its progress and how best to turn a profit is critical to success — even if you are a great chef or bartender, she says.

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For advice about how to execute your bright business idea contact Priya Chadha on 1300 764 200.


Even very well-known restaurants can risk sliding into the red if they care more for the vision than the bottom line and, once in debt, it’s difficult to get past playing ‘catch up’.

Having a fabulous fine food restaurant with top notch service might be your dream but you also need to keep your target market in mind and understand what will keep regulars coming through your door.

“People are not going out to dinner as much in the current climate. People are doing more coffees and dessert bars and things like that,” Priya says.

For pubs and clubs, particularly in the city, it’s important to continually re-invigorate your business.

“The pubs and clubs sector is very much affected by pop ups, pubs in particular. If they don’t have pokie machines, they are getting slammed by all the pop ups who don’t have the same type of costs.

“In the suburbs if pubs have pokies and local clientele, they’ll always do well but in the city, you need to be new and shiny because that’s what people like.”

In helping clients in the formative stages of their hospitality business, Hood Sweeney can make a significant difference in their profitability.

With extensive experience in the food and wine sector, Hood Sweeney has recently developed an industry focus, addressing the particular issues those working in the sector face including financing setups, POS systems, liquor licensing, and business structure.

It really does pay to get advice early about the right business structure for your situation, says Priya — particularly if you are planning to enter business with associates.

Those who have been in the hospitality business for a while and looking to diversify, are increasingly looking to build a consortium of around 4-5 parties to spread the costs around, she says.

“Setting up the structure from the beginning is a key part of the advice. We talk about the different structures people might use – whether it is a partnership, a company or a trust – depending on their personal circumstances … one size doesn’t fit all. You have to look at assets behind the scenes, whether they are involved in other businesses.”

“One of the things we are really telling our clients at the moment is that if you are setting up with a company or partnership, make sure you have a shareholder or partnership agreement in place because if things do go sour you want a good exit clause — you want to have a good valuation of the business to be able to buy out. “

And while it has never been easier to manage the business information and coordinate different parts of the business with new technology such as cloud-based applications, Xero and point of sale (POS) systems, many need advice about how to use them to improve their bottom line.

“Getting loans for businesses is a lot harder than it was 5-10 years ago. These days you can get a loan but you really do need a personal guarantee and you have to have assets behind you,” Priya says.

Focusing on the marketing side — particularly social media —from the beginning is also imperative, particularly in this day and age of consumer power and the instant review.

“It’s about developing a brand and finding the right food costings and food model,” Priya says.

“The main thing is that if you are interested in this industry, get advice up front because it is a hard industry – you have to be passionate about it and get the right advice and structure but if you don’t do the business well, it’s just going to fail…

“If you get the advice, you are getting exposed to things like Government grants for start-ups that you may not know about but your accountant will know.”

“You’ve got the passion – but it’s about executing your idea,” Priya says.

Priya ChadhaAssociate Director

Accounting & Business Advisory


AFSL No. 485569

“ Setting up the structure from the beginning is a key part of the advice.”

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Quality, not quantity, is the mantra propelling South Australian wine businesses up the food chain and it is the way of the future, says Hood Sweeney’s director of accounting and business advisory, Adam Wright.

As a specialist advisor to the wine sector, Adam says while the sector has had some casualties with lower grape prices over the past 10 years, the overall result has been positive for the sector.

Large wineries have been divesting vineyards over the past 10-15 years and grape prices have been driven lower due to the oversupply of grapes, so producers have had to be clever in managing costs and in finding ways to build consumer loyalty.

In the past becoming a winemaker or vigneron was a cherished tree-change dream for many professionals seeking to take advantage of tax concessions, but the sector has become more competitive.

Impending changes to the Federal Government’s Wine Equalisation Tax (WET) rebate to take effect in 2018 are likely to produce further industry consolidation, says Adam.

This is despite the government watering down the original plan to reduce the $500,000, to $350,000 from July 1, 2017 and $290,000 from July 1 2018. Instead, the rebate will be cut to $350,000 from 1 July 2018 where it will remain.

The government had also planned to introduce a requirement for recipients to own a winery which could have dramatically increased the value of wineries. This has since been revised to the following measures.

From 1 July 2018, the rebate will only apply to packaged, branded wine. To be eligible, a wine producer must own at least 85 per cent of the grapes used to make the wine throughout the winemaking process—from crusher through to final packaged product.

The wine producer must sell wine packaged in a container not exceeding five litres (or 51 litres for cider and perry) and it must be branded with a registered trademark for domestic retail sale. Common law trademarks would be allowed where the producer is not legally able to register their trademark.

SA Wine Sector SA wine sector improving with age — and strong management.

Adam WrightDirector, Accounting & Business Advisory


AFSL No. 485569

For more information about how the WET rebate changes may affect your business or how to improve your business performance, contact Adam Wright on 1300 764 200.

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The new eligibility criteria will apply to all wine from the 2018 vintage, irrespective of when the rebate is claimed.

“The reduction in the rebate just comes straight off the bottom line which will have a big impact particularly on some of the smaller players,” Adam says.

In this environment, producers might need to re-evaluate their business model.

With grape prices finally improving and demand growing through Asia, there will still be opportunities for well-run wine businesses to thrive, particularly those that use integrated cloud technology to improve sales and efficiency.

“They all need to run a very lean business and watch everything. Cloud and the technology systems available now mean they are able to use real time data to guide the business,” Adam says.

There may also be opportunities for some regional businesses to obtain a $100,000 recurrent grant designed to foster cellar door experiential tourism — although it pays to read the fine print as many of such grants are taxable.

“At the end of the day, successful operations manage their business very well and they don’t carry too much stock and they focus on which stock lines to keep or to move. The wine industry is extremely capital intensive when you consider that a bottle of red potentially is released two years after the grapes were picked. The grape grower has been paid and so you have to hold it in barrels for two years before you get a dollar,” he says.

In this environment it is essential to work closely with a business advisor to use the available data to improve business processes and decision-making.

“Now with real time data we are able to go out to a winery more regularly to discuss last month or last quarter’s results. We are also able to advise on the information flow through the whole business.

“If a deal comes across your desk such as someone wanting 10,000 cases — at least you know exactly how much it is going to cost you and what profit you are going to make. Then you can make the call on the opportunity cost of not having that stock to sell later or whether you are best to realise the stock into cash and get it back into cash flow.”

Clever smaller “boutique” players are thriving, particularly those offering a food and wine experience such as a “meet the maker dinner” or a chance to vicariously live the country lifestyle – even if only for an afternoon at the cellar door.

Smaller players are also increasingly using social media to connect directly with their customers and to tailor their offerings.

“There’s definitely been a shift in focus by the growers to restrict quantity and grow for quality,” says Adam.

“There is a lot more focus now on cellar door, not only just to produce a quality product but in marketing an experience to the consumer.

“It is only one thing to produce an excellent product in the bottle but it’s probably about the same amount of effort again to get it out into the market and get it sold.”

There will be opportunities for smaller players in the sector but it will certainly pay to have good advice, to start planning early for the reduction in the WET rebate and to use the right management systems to ensure you are constantly improving, he says.


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Meet the

Hood Sweeney Contributors

Rob DiMonteChairman

Dion CarboneManager, Accounting & Business [email protected] of Hood Sweeney Accounting & Business Advisory AFSL 485569

Chris StewartManaging [email protected]

Our featured clients

Golden Boy Fennell ForestryKings Creek

Simon StarrDirector, Consulting & Performance [email protected]

Tony MichaelsDirector, Financial [email protected] Representative No. 259128

Hood Sweeney Securities Pty Ltd AFSL 220897

Priya ChadhaAssociate Director, Accounting & Business [email protected] of Hood Sweeney Accounting & Business Advisory AFSL 485569

Adam WrightDirector, Accounting & Business [email protected] of Hood Sweeney Accounting & Business Advisory AFSL 485569

David BlockManager, Accounting & Business [email protected] of Hood Sweeney Accounting & Business Advisory AFSL 485569

odoH Sneew ey - Hood Sweeney · before deciding your food model, she says. It’s a sentiment...

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