Katie Nimon takes the wheel

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Katie Nimon has been working in her family business – Nimon Luxury Passenger Transport – since she was 14. Now she’s been recognised as a leading influencer for Hawke’s Bay tourism.

When this year’s Hawke’s Bay Tourism Awards were announced in September, Katie Nimon was honoured with a special individual accolade that seems very appropriate: Ambassador for Tourism in Hawke’s Bay.

It’s a reflection of more than just of her role as a key player in the local tourism industry; she’s been championing the Bay for years.

“When I was working in advertising in Auckland (about three years ago), my workmates used to joke about me being the ambassador for Hawke’s Bay,” she chuckles.

“Back then I used to talk about Hawke’s Bay so much – telling everyone to pay it a visit, how it was a great place to go on holiday, or just for a weekend – maybe they foresaw the award, I don’t know!”

In January this year, Katie was appointed general manager of the family business, Nimon Luxury Passenger Transport, where she works with her father and managing director Bill Nimon, mother Sue (administration manager) and uncle Garth Nimon, who looks after the company’s school runs.

Katie, 27, is the fifth generation of the Nimon family to work in the business and she’s been part of the company since she became a part- time staffer at the age of 14.

“I definitely started at the bottom. I was spending most of my time answering phones, filing paperwork and stamping envelopes. Basically, doing everything that no one else wanted to do.”

After leaving school, she studied advertising and marketing at Massey University, finishing with an Honours degree. But the family business has never been far from her mind.

“When I was 18, before I went off to university, I redesigned the logo to what it is now,” she says.

“Then, during my time at university, any free time I had – holidays and the odd weekend – would be spent working in the business, learning every single role that we have. I was doing the charter work, some marketing and PR, covering accounts when people were away, looking after operations.

“That was probably the best learning experience I could have. During that time, we were slowly starting to refine the brand and polish up what the business actually means, so I was effectively working on the brand identity that whole time.”

After completing her studies and spending time working in Auckland, Katie headed back to Hawke’s Bay in 2015 to take up the role as marketing manager at Nimons (as it is fondly known).

“The sunshine called and I followed,” she says.

“When I was younger I’d always wanted to work in advertising, and that’s what I studied and had the opportunity to do, and it was amazing; but the more time I spent away from Hawke’s Bay and away from the family business, the more I realised that was what I wanted to do.”

Then, in January this year, she became general manager, replacing long-serving GM Pete Patterson who had moved on.

“We looked at it and thought, yes, okay, I’m young, but on the other hand, who knows the business as well as I do?”

As general manager Katie retains the marketing role, which she says makes sense because it’s a business where marketing is at the core of what the company does.

“Everybody should be thinking with a marketing mindset, so it made sense that I continue doing what I was doing as marketing manager. In this industry the role is about marketing ourselves and the region as well as about relationship building.

“What’s really important is that you have good relationships with other operators and venues and members of the public. If other businesses don’t believe in what you do, then no amount of marketing is going to help because they are the advocates – they’re the ones who suggest to their customers that they should use your services.”

If taking up the GM role wasn’t enough, Katie is also back studying extramurally, working towards an MBA through Massey University.

While it’s keeping her very busy, she says she’s enjoying complementing what she’s learning through practical work in the business with what the MBA is teaching her.

Over the past three years, and following on from the earlier rebranding work, Katie’s work in the business has included introducing the Nimon Luxury Passenger Transport brand.

While not all aspects of the business are focused on ‘luxury’, she says the branding reflects the fact that a large portion of its operations is focused on the higher end of the market.

It’s a positioning Bill first identified when he realised several years ago that vehicles with high specifications were what the industry was demanding, and what could set Nimons apart.

“We had competitors in the region doing the ‘basic’ approach, and even though at the time there wasn’t a lot of high-end tourism, that’s changed and the arrival of destinations such as The Farm at Cape Kidnappers have brought a different type of business to Hawke’s Bay,” she says.

“Likewise, with the arrival of high-end cruise ships and growth in the number of touring groups and individual travellers looking for a top-quality experience, we’ve been ready for that change in the market, rather than waiting for it to happen and then responding to it.”

But Katie says the business – and the tourism industry in general – can’t afford to focus solely on high-end travellers.

“I think there’s a place for every kind of business and every kind of offering. We talk to people regularly who want our advice on how to get into the cruise market or tourism in general and we tell them the most important thing is offering something for everybody.

“We’re very aware that we’re not in Auckland, where you might be able to be top-end-only and still be successful. But if we only offered top-end services here, we wouldn’t be busy all the time.

“I was recently talking to a new operator who was interested in targeting the top end and I told him you don’t want to discount the backpackers because they still have money to spend, albeit not as much.

“It doesn’t mean that everybody shouldn’t offer quality and I think that’s completely different. If you are offering an affordable, accessible product, it still needs to be high quality, it just might not have all the bells and whistles that a top operator might have.”

She says the industry should always have in the back of its mind that today’s backpackers and freedom campers could potentially return to New Zealand as tomorrow’s luxury travellers.

Cruise ship passengers, who might only spend a few hours in the region, should also be thought of in the same way.

“People on cruises might be here for six hours. It’s not long and often they don’t spend much money in the region, but we’re here to put our best foot forward and give them a great experience. Then they’ll come back, bring their families and stay for a week – that’s what we want and that’s our opportunity.

“That’s how we’ve got to treat any visitor – the potential for more. A backpacker may come here freedom camping but in 10 years’ time, when they’ve got money to burn, they might come back and stay in luxury accommodation.”

One of the challenges for Nimons, she says, is it represents two industries – transport and tourism – which often have conflicting requirements.

“The thing is not to put yourself in one box, because if we had put ourselves only in the transport industry box we wouldn’t have even considered the possibility of seeking Qualmark Gold certification. But because we’re also a tourism operator and we see the value of respecting and protecting the environment and making sure we are role models for our visitors, we went for it.

“We tried really hard to offset our carbon footprint and we achieved Qualmark Gold status. As a tourism operator that’s not uncommon but as a transport operator, it is. We’re one of only two coach companies in the country to achieve it.”

Nimons is a business where there’s a constant need to ensure the customer experience is unique, says Katie.

“It’s the personality of the driver and that feeling that customers have when they get onboard one of our vehicles. That’s what you’ve got to keep in mind every day. It’s more than just getting someone from one place to the next – because anyone can do that – it’s what you can do differently.

“The most important thing is thinking more about the experience than the product. The product is the bus and the experience is what you do with it. You can have the world’s nicest, most modern vehicle but if you’ve not got the entirety of the service at that same level, it’s not going to be a complete experience.”

Nimons.co.nz

Growing a market for hemp foods in HB

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Chefs and foodies have been quick to develop a taste for Otane-based Kanapu’s premium cold-pressed hemp seed oil. But that’s just the beginning. The company’s founders want to put Hawke’s Bay on the map as a global supplier of top-end hemp foods.

Having to ramp up your target production because product demand significantly exceeds initial forecasts is one of those business headaches it can be nice to have.

It’s the situation Isaac Beach and Simon White of Otane-based Kanapu Hemp Foods found themselves in this year.

Kanapu has been growing hemp on Otane’s Ludlow Estate, Simon’s family’s farm, and the cold-pressed hemp seed oil they’ve been producing has been in hot demand.

Targeting the premium end of the hemp food market – both locally and internationally – the company is also close to launching a packaged hemp flakes product.

“Following our marketing launch earlier this year, and as a consequence of the response from around the country, we’ve had to adjust some of our forecasting around demand for functional hemp foods in New Zealand,” says Isaac.

“It’s resulted in us increasing our target production for this year (the 2018–19 summer growing season) to around twice what we’d originally intended before the launch.”

The new production target is about 250 hectares of hemp, which the pair admit could be challenging to achieve. It will involve extending production beyond Ludlow Estate, using contract growers across Hawke’s Bay – potentially from Wairoa down to Dannevirke.

The hemp varieties being harvested by Kanapu have zero tetrahydrocannabinol (THC), so are completely non-psychoactive.

They contain about four percent gamma linolenic acid (GLA), a bioactive fatty acid known for its anti-inflammatory qualities, and two to three percent cannabidiol (CBD), which has been shown to be therapeutically useful in treating pain and epilepsy.

Isaac says the company is looking to commence growing trials this season with high CBD hemp varieties, containing 8.5–13 percent CBD.

Hemp production is regulated, meaning Kanapu needs to have its licenses amended in order to achieve its growth plans.

“We’re working with the Ministry of Health to first enable the increase in cultivation area within a short time frame. That process will impact on whether we can meet the target or not,” says Isaac.

“The Ministry have indicated we need to provide justification for the increase, and the justification is that people want to start consuming this product more readily.”

At around 700 hectares, Ludlow Estate is predominantly a mixed-cropping farm. Simon says he became excited about hemp’s potential following an initial meeting with Isaac.

“We’re always looking for new opportunities. And this was a very new opportunity that came to our attention. We researched it and Isaac and I put a three-year plan together. We had targets and key goals within that three-year plan. We achieved all those goals and targets and from there we launched on a commercial scale.”

Simon says a key aspect of the business is that Kanapu is working on a model under which the company controls all aspects of the product, from growing the hemp right through to sale of the product.

“We’re involved in the process the whole way through, which is a key part of making it a successful premium product. That way you’re guaranteeing quality of the product, which is really satisfying,” he says.

“The other thing that’s really hit home recently is the number of testimonials we’ve been receiving from people who’ve been using our product. They’re telling us they’ve been able to stop taking pills [for pain and arthritis] and are instead just using this sustainable product that’s actually helping them.”

Isaac says Kanapu was strongly focused on developing the hemp food industry as a positive economic driver within the Hawke’s Bay region and the Ngati Kahungunu rohe.

“In that regard, we are already establishing relationships with existing cropping farmers to assist in developing this industry because we realise if it’s going to become all that it can be in Hawke’s Bay, it’s going to require a joint effort from multiple farming interests – from the farming side of the value chain  right through to manufacturing, et cetera,” he says.

“From a manufacturing point of view, we’re already positioning ourselves to support that development, and there are some key steps that need to take place between now and this summer’s harvest to enable us to really get a good foot in the door from a national perspective – and even with a view to going international – in terms of establishing Hawkes’ Bay’s potential within this industry.

“We’re almost unashamedly biased to supporting farming interests in Hawke’s Bay, from Wairoa to Dannevirke, and even further south into the Wairarapa region.

“From a business point of view, that’s where we need to focus our energy. If we are to be a region that has a significant competitive advantage in this sector, we need to partner like that. And we need to get all of the expert growers in this region onboard.”

As well as doing what it can to position Hawke’s Bay to take advantage of hemp’s business potential, Kanapu is also helping with efforts to strengthen the industry at a national level.

The company has been at the forefront of the formation of a coalition of businesses involved in the hemp industry.

That entity is called MIHI (Movers in Hemp Innovation) and is focused on identifying opportunities within the sector.

“We’ve identified there is a significant need for government and private sector resources to be dedicated to establishing a sound understanding of the market trends offshore so that we understand as a country where our unique point of difference can be best had,” says Isaac.

“There’s a lot of work that needs to be done to understand the growth of the industry on an international scale but also to understand where, within that global industry of foodstuffs, New Zealand has its unique point of difference. As a coalition partner we’re working towards that in conjunction with government.”

Isaac says the first meeting of MIHI founders was held at Ludlow Estate earlier this year and about 30 companies have now become involved in the grouping.

“Since then we’ve developed a memorandum of understanding and formalised a coalition as a government partner, representing industry in this area.”

www.Kanapu.co.nz

Pro Q&A with Tim Aitken

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Tim Aitken is the new chair of Horse of the Year (HoY). Tim has farmed in Central Hawke’s Bay for many years and is also a CHB district councillor. Tim has had a strong involvement in equestrian being a “Brony”, see below to what that stands for…

What are your key aspirations for the event?

Firstly I have to acknowledge and thank Cynthia Bowers for the six years she has chaired HoY (Hawkes Bay) Ltd board. She has steered HoY through some very tough times and has stepped down at a time with the show in great heart.

  • To deliver the best show in Australasia. We need to continue the partnership with the A&P Society and Hastings District Council in developing the facilities and grounds to their full potential.
  • Attract all the top competitors from around the Australasian region and I would love to see more main stream TV coverage.

Why did you get involved in HoY? And what has been your involvement over the years?

I have always looked at the show as a great event for the equestrian community and Hawke’s Bay, and when the opportunity came to be on the HoY board I took it.

I have been attending HoY for years as a support husband, dad or as my Lucy and Willa call it in our family a “Broney” (men who like ponies) the guy that picks up the poo, holds things, drives the truck, dishes out treats, general do it all person and of course being a volunteer, albeit in a small way compared to some of the hours stalwarts who have made the wheels of HoY turn.

What skills do you bring to the role of chair?

I bring strong Governance skills to the role as chair, I also bring an ability to communicate to all who are involved, from the parents who are supporting their children at HoY and sponsors, volunteers and discipline organisers who put endless voluntary hours into their sections.

Is there anything new planned for the upcoming show?

Eventing is going to see some changes, with the cross country going to be in the afternoon. Some jumps being copied from Burghley Horse Trials and hopefully more international riders competing this time. HoY is one of the few venues in Australasia where riders can expose themselves and their horses to the crowd’s we have around the course like they have at Burghley for example.

If you could make one improvement to the venue (HB A&P Showgrounds) what would it be?

An indoor arena large enough to hold 3000 plus people, that would have an interchangeable surface. We would have night time events going on all week for the public to come into after work, weather would not have such an impact. Competitors and horses would get the experience of being indoors which is how a lot of big competitions are now being held. This would not just be a positive for HoY and the equestrian community, but also all of Hawke’s Bay.

Likewise – with the event – what would you like to improve?

I would like to see an ongoing improvement in the competitor experience, and see competitors take a more active role in supporting the show by volunteering when they have down time. At the end of the day it is their show.

• A more international feel, with more international riders and stall holders attending.

• Better night time entertainment, we have not always got this right in the past and is high on the Boards list of areas that needs improving.

Another area that we hope to improve on is around the none-riding volunteers experience, how can we do it better for them so that they feel part of the family that is HoY and want to come back year after year.

What do you see as the benefits of HoY to HB? And to Hastings as the host city?

The economic benefit that comes from hosting HoY. Spotlight on Hawke’s Bay of all the wonderful things we have in the Bay from food, wine, tourism opportunities the list goes on.

How can Hastings and its people embrace HoY more?

To come to the show and see what it is all about. Volunteer for half a day, a day or more. Volunteers are the life blood for this show, without them we could not run it.

Will Hastings always be the home of HoY?

I would very much like it to stay in Hastings. It is very high on my agenda to look at what the board and the shareholders want HoY to look like in 2027. We cannot do it all in one year we need to create a strategy going forward to meet our aspirations for the show and to ensure that Hastings keeps HoY.

What’s the current economic impact of the event?

14,767 people attended the 2018 show, of which 11,178 were domestic visitors and 224 international visitors. 80 percent were from outside Hawke’s Bay which has a contribution to tourism in Hawke’s Bay of $4,495,000 excl GST

What’s the biggest thrill you get out of being involved in HoY?

Just being a part of it all, meeting people, from all walks of life all over New Zealand and the world who have made it their mission to come HoY. Walking around and feeling the buzz, visiting each discipline area and watching everything unfold and marvel at how it has all come together. I have met some super people. This year I had a reciprocal visit to Liz Inman who is in charge of the Land Rover Burghley Horse Trials and had a fabulous tour around the Burghley grounds.

What keeps you awake at night in the lead up to and during the event?

The weather, always the weather and the budget!

What do you do in your spare time?

When the weather is good I try and go fishing with my son Jim, enjoy supporting Lucy and Willa with their horses and I have just taken up flying again after a 15-year hiatus.

The value of building your own home

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Hawke’s Bay is growing. We can see that by the numerous new infrastructural construction that is going on around us. So, it’s no surprise our region is growing residentially as we need to house a growing population.

It is generally accepted that new housing stock is now a vital part of keeping up with a growing New Zealand. So, the chances are that building your own home will become a more prevalent option.

However, when building the issues you face are completely different from purchasing an existing property. Land value plus the cost to build does not always equal ‘Market Value’. Most people do not have the cash available to have a house built from scratch, they need to sell existing homes and time frames to build and sell often don’t align. It therefore becomes necessary to borrow funds.

So how can a Registered Valuer help?

The bank will just about always require a valuation of the property “As-if-Complete” from a Registered Valuer. “As-if-Complete” simply means what the property will be worth once complete including planned landscaping. A valuation report includes:

A valuation report includes the following information:

  • The Market Value (MV) “As If Complete”
  • Analyses “Cost to Create”
  • Determines whether the project is over capitalising
  • Provides full report to your Financier to rely upon to lend Mortgage Security so you can pay your builder
  • Confirms your home is being built as per the plans and specifications.

What the Registered Valuer needs for a progress report:

Full set of plans

  • Stamped & Approved by the Local Territorial Authority
  • Build Contract
  • A copy of your building contract stating build cost and any exclusions

Specifications of

  • All building materials
  • Fittings to be installed

Details of other site improvements, such as:

  • Landscaping, fencing, gardens
  • Driveway, paths, paving, swimming pools
  • Associated out buildings (e.g. shedding)
  • Services to the site

What are Progress Payments and Progress Payment Certificates?

The bank will not normally lend you all the money at once but in stages during the building project.

Therefore, as the build advances, progress payments will be needed to pay for the work completed by the builder. Therefore, your

lender/bank may require a ‘Progress Payment Certificate’ which also needs to be undertaken by a Registered Valuer verifying that the appropriate site works have been completed, and what is still required to finish the project.

On your instructions the Valuer will re-inspect the property to assess the percentage of works complete and a ‘Progress Payment Report’ is issued for the lender/bank to release the funds. Any progress payment recommendation is based on the full funds to be drawn down less a calculated amount ‘Cost to Complete’ less a ‘Saleability Allowance’. The number and frequency of ‘Progress Certificates’ required will depend on your personal financial circumstances, and your bank’s requirements however the following can be a used as an estimate:

  • Slab down, framing up and roof on
  • Fully enclosed and secure all exterior cladding on and all exterior windows and doors in.
  • All interior walls lined, and ceiling lined as well as all electrical and plumbing in place.
  • All interior and exterior decoration complete and all fittings to bathroom, kitchen as well as all electrical fittings in place.
  • Fully complete dwelling with Code of Compliance Certificate issued, all landscaping and other improvements included in the valuation done.

Items included in the ‘Progress Payment Report’ include all items that are physically fitted in place. We cannot include items that are on site but not fitted, such as: stock piles of building materials, joinery, fittings and appliances on site but not fitted.

However, the following four key items are necessary as they are designed to protect your financier’s interests should they ever be put in a position where they need to step in and complete the project. It is also just as important for you to have a good understanding of the process and requirements involved so that you can make prudent decisions during the build process.

1. Stamped and Approved Plans by Council – these are necessary to confirm our valuation findings.

2. Build contract with contract price – to confirm against our estimated market normal costs.

3. Saleability Allowance – what is this? At every progress payment a ‘Saleability Allowance’ is deducted due to the incomplete nature of the property. The allowance decreases as the project progresses.

4. Code of Compliance Certificate – Our final ‘Progress Payment Report’ will hold some funds until the Code of Compliance Certificate is issued by the Territorial Authority.

Building your own home can be a hugely rewarding experience with significant benefits. You get to stamp your mark and your personality on the project. Not to mention the fact that you also get a pristine place to live, fully insulated and with low maintenance required.

Construction sector in good health but …

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The construction industry in New Zealand has been experiencing a period of sustained growth and the highest activity levels ever. This is evident on our back door steps too as we see many new developments underway or planned here in Hawkes Bay. The question is whether the businesses in the industry have adequate margins, staffing and cash flow to sustain this level of growth.

Earlier this year, BDO surveyed NZ Construction Industry Businesses in the housing and commercial sectors. The survey resulted in a lot of positive news and emphasised that most construction companies are in good health but also identified many of the issues and challenges faced by the industry.

Cash Flow Challenges

The availability of cash resources is a defining factor of those businesses in a strong financial position. Of survey participants, 27% either use an overdraft or find juggling cash flow a struggle, which creates greater risk in the industry. It doesn’t help that 41% of respondents have clients that pay late, despite contractual obligations to pay on time. This means there is a need for businesses to have a strong buffer of cash reserves to allow for any timing issues in the receipt of payment from clients or any unforeseen events that invariably occur in this high risk industry.

Inadequate Margins

Survey results showed that margins are inadequate for the level of risk in the industry resulting in many companies making little to no profit after accounting for overheads. It seems that risks are not being properly taken into consideration before pricing a job which could be due to the high level of competition for contracts. There is a trend that suggests New Zealand is still largely driven by price rather than quality.

When talking about competing for projects, the survey asked by what margin businesses were missing out on winning contracts by. For housing it was around 8% and commercial building 5-6%. Those obtaining better margins appear to be generally larger companies undertaking larger, higher risk projects, whereas smaller companies don’t

have the same resources or cash reserves to tender for these projects. It is this perpetual cycle which is seeing the risk in the construction industry leaning heavily on the sub-contractors as they endeavour to get paid on time and maintain their own reputations in the industry.

A theme emerging from the survey is importance of looking after subcontractors. In the past, sub contractors have been the victims when large construction companies have collapsed, leaving them exposed financially and availability on other projects is constrained. Surviving construction companies will need to instil the confidence in their subs contractors that they will get paid so that projects can be finished on time

Retentions

The Construction Contracts Amendment Act 2015 now requires those that deduct retentions to hold them in trust. The responsibility for the enforcement of this is placed on those that have retentions deducted from their progress claims by allowing them to request inspection of trust records.

From the survey, it was found that 74% of those that have retentions deducted have not enquired as to whether their retentions are held in trust. For those that have checked, 36% found non-compliance which means they run the risk of not getting paid their retention at the end of the job.

For those that hold retentions, 28% of responses were not willing to answer the question, possibly because they could not confirm they were holding the funds in trust in cash. These results suggest that the regime is not working as it was intended. Businesses should really be asking to inspect the treatment of retentions. This is an easy way to gain confidence or raise concern as to whether you will be paid for all progress claims at the end of a contract.

In order to see the NZ construction industry continue to succeed, the above issues need to be addressed. Without higher margins, proper evaluation of risk and careful cash flow management companies without a strong balance sheet may need to look at their own processes to ensure they can keep up with growth.

 

First Impressions Count

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Organisations generally invest significant amounts of time on the recruitment process to fill vacancies, plus checking the credentials of the preferred candidate and getting them signed up. After investing all that time and money it’s important to get your new employee off to a good start.

It may be timely to review your induction process, or if you don’t really have a process, to consider developing some structure around it. The first impression you make on your new employee in the initial days and weeks will very likely have a lasting impact. Assuming they arrive at the new job excited and enthusiastic, the last thing you want to do is diminish the new energy you just brought to the business.

These days most businesses give priority to a sound health and safety induction, which is absolutely critical. This needs to be done by someone who believes in safety and can communicate your culture and expectations relating to safety. It needs to be documented so you have evidence of completion but try to ensure that it doesn’t come across merely as a compliance exercise to ‘tick the boxes’.

Taking time to think beyond the essentials like health and safety means you can create a well organised and consistent experience for your new hires. They will feel like they have joined a professional, well run organisation and that you care about your employees by taking time to settle them into the new job thoroughly.

It is beneficial to include organisation history, values and culture in your induction programme. This helps the new employee to connect with the organisation and to begin to understand ‘how we do things around here’ and why that is. It can also engender pride in the business (we are the biggest, the first, fastest growing, started from small beginnings, proud to be family owned etc.)

In a small organisation you may only need a one page checklist to remind you of the key information to cover off (key people the new appointee should meet, building security and facilities, payroll paperwork, computer log-in, any equipment or uniform to be issued, house rules, hours and break times and so on).

In larger organisations you will probably have a policy manual for the employee to read through and sign-off. This may be on-line, as so many things are these days. This is great for allowing the employee to go through the information at their own pace and to refer back to material later, and can be presented in a very engaging way with useful links to follow and video content and so forth.

There is often a lot of information to present to new employees so you need to consider ‘information overload’ and what can realistically be absorbed on day one or two. Consider the pace of the induction process and what you can reasonably spread over the first week rather than the first day.

While the paperwork and/or the online process is valuable you also need to be careful not to overlook the human factor. This includes introducing new hires to key people so they know who’s who in person, rather than a list of names and positions in the manual. Each of those introductions also makes the person feel welcome and is opportunity to express how pleased the organisation is to have them on board.

Most organisations will assign another team member as a ‘buddy’ for the first few weeks. This provides someone the new hire can ask what may feel like dumb questions in the early stages, rather than having to bother their manager. Hopefully they can also provide some social support in the first few

days to make sure their new colleagues meets team mates, knows where to park, where to buy lunch, and has some company for lunch if wanted at the start. Again, it’s important to choose the right person for the buddy role, making sure they are approachable, knowledgeable about company processes, have the time to devote to the task and will be a positive influence.

The little things count. Make sure someone is assigned to get the workplace essentials ready for when the new employee arrives so they feel welcome and that you are well organised – workstation, computer, phone, stationery, uniform, PPE, equipment, and so on. It also means they can be productive quickly, rather than waiting for email access and IT log-ins to be set up.

We all know that being thrown in the deep end is not a good way to start a new job. Having invested in finding the right person, it makes sense to put some effort into settling them into the job well to make the appointment a success for both parties.

Franchising – what’s in the fine print?

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Despite being prevalent throughout New Zealand, there is no legislation that governs or regulates franchises, with the result that there is no requirement for the terms of a franchise to be fair and reasonable.

What is a Franchise?

Every franchise should be a replica of the Franchisor’s business, therefore giving customers of the franchise a consistent experience.

The Franchisee gains the benefit of the franchise’s reputation, goodwill and intellectual property instead of having to develop this from scratch.  A franchise business will often cost more to purchase than an equivalent independent business – the theory is that a Franchisee pays a higher up-front fee and pays on-going costs, in exchange for lower economic risk.

In general, a franchise involves:

  • A Franchisor
    • granting a Franchisee the rights to use its intellectual property and systems;
    • providing training, know-how, ongoing marketing, business or technical assistance.
  • A Franchisee
    • establishing and operating a business selling the Franchisor’s products or services;
    • being required to follow the Franchisor’s systems, procedures and instructions;
    • paying fees (royalties) to the Franchisor;

Franchise Agreement

The Franchise Agreement regulates the business operation and the franchise relationship.  The relationship is contractual and encompasses multiple areas of law such as taxation and intellectual property.

Franchise Agreements are invariably long and complex documents that favour the Franchisor and, to protect the integrity of the franchise, Franchisees will not be able to negotiate changes to it.   Some say that all Franchise Agreements are unfair, unreasonable and one-sided when considering the balance of rights and obligations – an easily missed word or clause can have a significant ongoing impact through the term of the franchise.

It therefore follows that extra care and attention must be given prior to entering into a franchise.

It is important to separate out the “sales pitch” from the nitty gritty of the Franchise Agreement.  The “sales pitch” will focus on the benefits etc. however the benefits are only one aspect of the arrangement – what is most important is understanding what it really means to be part of the franchise which can only be uncovered by considering the Franchise Agreement in detail.

During due diligence a prospective Franchisee should obtain focussed advice on the terms and implications of the Franchise Agreement.  If you are not fully informed as to the details or you do not appreciate the significance of a provision then you may be disappointed, disheartened and ultimately suffer losses as a consequence.

Fees, Levies or Royalty Payments

As part of the franchise arrangement, the Franchisee would typically be required to pay a number of fees:

  • An initial (lump sum) franchise fee to compensate the Franchisor for development costs and as a licence fee;
  • On-going service or royalty payments for the on-going:
    • use of the system and trade name;
    • support and assistance of the Franchisor.
  • An advertising or marketing levy (an advantage of the system is that a Franchisee obtains the benefit of the franchise’s advertising albeit that the Franchisor chooses how to advertise or market the franchise).

Other terms to consider

  1. The length of the initial term;
  2. If and how the franchise can be renewed and the fees associated with a renewal;
  3. The territory in which the franchise will operate and any rights to exclusivity in that territory;
  4. How the franchise can be terminated and obligations on termination; and
  5. Restraint of trade.

Franchise Association of New Zealand

While there is no government regulatory body for franchises, the Franchise Association of New Zealand (FANZ) is involved throughout the country and sets standards for best practice among its members.

Franchisors that are members of FANZ are required to follow its Code of Practice, which should reassure potential Franchisees that the Franchisor is serious and has undertaken to practise in a fair and reasonable manner.

By way of an example, FANZ requires its members to:

  • publish a disclosure document to maximise the information available to prospective Franchisees, so that they can make a sound business decision whether or not to proceed
  • insist that each Franchisee has independent legal and accounting advice
  • use agreements that contain a minimum of a 7-day cooling off period.

 

5G – the need for speed

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There has been quite a bit of discussion and some excitement around 5G coming and what that might mean for us here in New Zealand.

Firstly, what is 5G. Simply 5G is the fifth- generation mobile network. In 1987 1st generation was deployed in New Zealand and this was all about voice, 2nd generation in the 90s was digital enabling text, 3rd and 4th generations were all about data. 5G is all about the data as well but has some unique characteristics that really do take it to the next level.

The real excitement around 5G is the increase in speed and capacity as well as low latency. Downloading a HD movie in about 10 seconds compared to around 10 minutes using 4G. Initial trials in New Zealand have indicated speeds of 9 Gbps outdoor to 19 Gbps indoor and latency of around 10ms to potentially 1ms against current latency of around 50ms.

Those impressive numbers mean applications that currently require low latency and which are data heavy will now be able to be carried out remotely enabling a new generation of remote applications.

This is where the benefits of 5G will be realised, its ability to enable remote working where it couldn’t be done before due to the nature of the business. This could translate into the ability to access data in the field through Augmented Reality (AR) which at the moment may be too data hungry or low latency dependant. More on this later.

Globally 5G is being developed and deployed in many countries, as I write this Verizon in the US (Indianapolis) has deployed a 5G network (although not on international 5G standards) this week and have released it to the consumer market through consumer wireless broadband plans.

South Korea is poised to be the first country to deploy 5G completely. South Korea’s three main operators are banding together to deploy 5G services by March 2019, making it the first country if they meet that date.

The Europeans have set up a 5G Action Plan aimed at aligning roadmaps for a coordinated deployment across member unions.

New Zealand is set to deploy by 2020 through Spark. There are some challenges to meeting this timeframe, notably no spectrum has been allocated for 5G and while Spark as a temporary licence they would want that to be permanent to commercially deploy in New Zealand.

In order to have New Zealand completely 5G there will need to be, as in other countries, cooperation between operators in order to gain coverage. One of the advantages of 5G is the ability to build out from the cell site with micro sites (like commercial Wi-Fi sites). This could mean faster deployment in urban areas. Then they would push out to regions similar to what happen when 4G was deployed.

The benefits of 5G that we know of today is its ability to support far more connected devices and this is done quite smartly from a network operators’ perspective. With the world connecting more devices than before the 5G network provides many benefits to enabling and supporting those devices.

From the new network we will see proliferation of smart devices, from street lighting to smart power meters and new smart home services, real time fright tracking and logistics to supporting near instantaneous communications across all industry. It will provide end user businesses the environment to develop beyond the office to provide better customer experiences. We could see the real prospect of remote surgery being commonplace, as an example.

I mentioned before AR. 5G should enable field workers to, in real time access complex detailed content that enable tasks to be completed with the assistance of AR technology, 5g enables much larger amounts of data to be carried and lower latency meaning AR can be a practical tool rather than a novelty.

From a consumer perspective, it’s likely we will move away from mobile or home wireless plans that cap data. That will mean 4k rich content on any device (note no 5G capable mobiles have been manufactured yet) and opening the opportunity for 8K content down the line.

From previous experience the true benefits of the network are generally not known at the initial stage of deployment. When 4G was launched, wireless broadband and unlimited mobile plans were not considered but both have since become significant products driven by the adoption of media entertainment like Netflix and Spotify.

It’s natural that entrepreneurs and businesses will develop new applications that leverage the new network and its exciting to be a participant in that process. From a local perspective I would certainly like to see the new network provide some economic benefits for the Hawke’s Bay and given the entrepreneurial of businesses in the Hawke’s Bay I’m sure we will be keen to see deployment here as soon as possible.

Entrepreneurs Alive and Thriving at EIT

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The Hawke’s Bay economy is changing and EIT is adapting to meet the era of the entrepreneur.

“Over the past decade there has been a massive global shift to entrepreneurial ecosystems,” said Jonathan Sibley, EIT’s Director of Research and Associate Professor, School of Business.

“It’s been estimated that 50 percent of all jobs created in OECD countries over the last decade have been created by innovative young firms. There is an increasing need for workers to be able to create their own jobs.”

This mindset is driving EIT to adapt and extend beyond teaching business courses for students looking for full-time career employment. Now it’s also working to foster and nurture the development of students’ abilities to create new businesses and new jobs. “It is important that we develop students’ ability to adapt to an uncertain and unpredictable future,” says Jonathan.

Entrepreneurship@EIT is the School of Business’ response to this new world of work.

It has three elements, working with students and budding entrepreneurs at differing stages of their development. YES@ EIT targets secondary school students; Entrepreneurs@EIT is for students at EIT; and Entrepreneurs Gym, which is currently in development, extends entrepreneurship

development capabilities across business in Hawke’s Bay.

Managing the first two elements is Ben Deller, a Masters in Applied Management post-graduate student. He was one of the original founders of the business that has since grown to become NOW. In true entrepreneurial style, the Airnet NZ business started in Ben’s brother’s laundry.

Ben started studying at EIT in 2015 and through his involvement with the School of Business faculty, he came in on the ground floor of the programme’s development. His role in the short term is to get Entrepreneurship@EIT off the ground and to create a framework to ensure it is authentic and sustainable.

“It’s amazing the ideas and existing businesses that students have. There’s incredible potential for some of them to be doing something really special. Our goal is to help them do that something special much earlier in their business career by supporting them through the programme,” said Ben.

YES@EIT, launched in 2017, aims to stimulate entrepreneurial interest by supporting the secondary schools’ Young Enterprise Scheme already running in the region through Hawke’s Bay Chamber of Commerce.

EIT staff provide teaching sessions through its Trades Academy to those schools that don’t offer a business curriculum and an increasing number of the business faculty act as mentors for teams.

Importantly, EIT has provided seeding capital by way of competitive small-scale grants, recognising that not all school teams have family connections or discretionary income to assist teams establishing their YES business. In 2018, 28 teams were granted a total of $8400.

In 2019, EIT aims to launch the YES@ EIT programme at its Tairāwhiti campus in Gisborne.

The second element, Entrepreneurs@EIT was launched on the Hawke’s Bay campus in September this year. Its objective is to assist students to launch new business ventures or to grow existing businesses while they study. On offer are skills development, mentoring, networking, business support and an ‘entrepreneurs’ clinic’ to assist aspiring entrepreneurs to develop their skills.

An Entrepreneurs’ Clinic aims to develop self- awareness about a student’s entrepreneurial skills, capabilities, and importantly, what gaps they may have, says Ben, whose job it will then be to help develop a programme specifically to match their needs.

Ben is also responsible for helping the budding business owner with an industry- aligned mentor from the wider business community to support their business progress.

In addition, there are exclusive offers from businesses, such as membership of the Hawke’s Bay Chamber of Commerce at a 50 percent discount.

The third strand, the Entrepreneurs’ Gym is in its early stages. EIT has been exploring the concept of development capability with various other economic powerhouses in the region including territorial authorities, Business Hawke’s Bay, the Hawke’s Bay Angel Network and the Icehouse.

Services would span training, mentoring, access to finance and related business services. EIT will initially focus on relevant micro-credentials. While still in development, these micro-credentials would likely focus on capital raising, negotiation and communications, and business planning. It is hoped that the Gym will be off the ground in 2019.

Making cents of the market

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It is the process of anticipating what could lie ahead, and the creation of methods and processes to help minimise the potential negative effects of future influence… but can you ever truly 100% futureproof a portfolio?

The truth is you can’t completely 100% future-proof any portfolio, because investment involves risk no matter how low, and the future is uncertain. But where we lack a crystal ball in life, we can still set a healthy projection for the future by identifying our personal objectives and re-evaluating our investment mix throughout our lives to make it as resilient to negative influence, as possible.

Over time, we’ll go through several investment lifecycles. Our goals and assets in our thirties will likely vary greatly to when we’re near or post retirement age and there are plenty of factors we need to consider at regular intervals over the years to ensure our investments evolve to reflect our lifestyle, risk profile and assets. We should also re-evaluate as markets fluctuate and threats or opportunities present themselves.

The identification and monitoring of our goals will ideally take into consideration a broad range of potential experiences in relation to what’s happening globally. In doing so we should consider how our future outcomes could be impacted by things like technology, political instability, boom and bust business cycles or environmental factors. We’re not talking fear or panic driven decision making, but mere logical consideration to how these factors may affect our goals. This helps us to work out how we should strategise so it aligns with our expectations.

When analysing our goals, it isn’t all cold numbers and projections. More and more we’re seeing the conscious investor looking into more ethical opportunities. Socially responsible investing acknowledges there’s an emotive side and behavioural biases when it comes to the choices we make in life, and it’s important to consider how this should affect the decisions you make with investing too.

Paying attention to our concerns or stance on certain subjects can help focus us on our journey, as well as the outcome, opening us up to take a more tailored, holistic approach. Our needs might be complex, but that doesn’t mean our investment strategy can’t harmonize with them.

MARKET THREATS AND OPPORTUNITES

When we discuss influences such as threats and opportunities in the market, we are trying to recognise that which we can’t yet see in full and anticipate what that could look like for ourselves. We mentioned political instability and BREXIT offers an example: it was a multifaceted disruption to the market that surprised many with its result. It reinforces the importance of recognising triggers early.

According to Statistics New Zealand “Over a fifth of New Zealand’s investment in the UK at the end of June 2016 was portfolio investment” including KiwiSaver investments. The UK is also mentioned as being 14% of New Zealand’s total investment overseas, which is no small fish by any means.

A political event like this pulls on our emotions and biases. Sterling driven assets are becoming less attractive to some and the current state of political turmoil has pushed spooked investors toward more defensive investments. That’s not to say there’s a rule book for this kind of political instability or how we invest. It depends on our individual aversion to risk, our biases, our asset allocation and our goals.

Using comfortable retirement as our hypothetical goal – a riskier investment might appeal to you if you were still receiving a steady income. But as the years pass by and you get closer to retirement you might feel less comfortable with the risk.

Utilising objectivity, our circumstances and projection as tools, we should be able to determine if it is in our interest to keep a hypothetical investment in the UK or whether to change it out for something more suited to our goals.

The takeaway is – though we might not be able to completely ‘futureproof’ our investments, we can get them close. Just keep in mind that as our circumstances, goals and stance change – our investments will likely need to change with us. Well researched and thought out diversification, with effective asset allocations aligned to your personal goals is the most effective tool we have when trying to protect your investments.