Indigenous Business Development :: JM John Armstrong


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JM John Armstrong is the Principal of Harbinger Consultants. He has spent many years working with Indigenous enterprises and entrepreneurs. In his work with Blak Business Smart Business, he developed the Business Readiness Assessment method as a culturally appropriate and responsive approach to business development with Indigenous entrepreneurs and communities. This presentation for the IQPC Conference themed "strengthening Indigenous communities" describes the Assessment process, as a capacity building method, and the achievements of Blak Business.

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Indigenous Business Development :: JM John Armstrong

  2. 2. We are here!!
  3. 3. <ul><li>The Blak Business Smart Business Hub (BBSB) was an initiative undertaken by the Brisbane City Council in partnership with the Queensland State Government and Federal Government in response to issues raised by the Brisbane Indigenous Communities through an extensive community consultation process which was conducted throughout 2003–2004. </li></ul><ul><li>Commencing in August 2005 the service ceased in August 2008 because of shifts in priorities and policy of the funding parties. </li></ul>
  4. 4. <ul><li>BBSB Mission: </li></ul><ul><li>To provide ongoing personalised, professional guidance for the sustainable development of Aboriginal and Torres Strait Islander businesses. </li></ul><ul><li>BBSB Vision: </li></ul><ul><li>For there to be national recognition of Aboriginal and Torres Strait Islander entrepreneurs who are establishing and managing successful enterprises and the major impact these businesses have on employment and the local and global economies. </li></ul>
  5. 5. <ul><li>BBSB Service: </li></ul><ul><li>By bringing together business information, support, resources and brokerage in a culturally appropriate way we assisted Aboriginal and Torres Strait Islander business development. We worked with individual and community based entrepreneurs in an ongoing mentoring continuum from initial business concept through to established enterprise growth. </li></ul>
  6. 6. The Blak Business Smart Business Hub operated across the following local government areas: <ul><li>Beaudesert Shire </li></ul><ul><li>Boonah Shire </li></ul><ul><li>Brisbane City </li></ul><ul><li>Caboolture Shire </li></ul><ul><li>Caloundra City </li></ul><ul><li>Esk Shire </li></ul><ul><li>Gatton Shire </li></ul><ul><li>Gold Coast City </li></ul><ul><li>Ipswich City </li></ul><ul><li>Kilcoy Shire </li></ul><ul><li>Laidley Shire </li></ul><ul><li>Logan City </li></ul><ul><li>Maroochy Shire </li></ul><ul><li>Noosa Shire </li></ul><ul><li>Pine Rivers Shire </li></ul><ul><li>Redcliffe City </li></ul><ul><li>Redland Shire </li></ul><ul><li>Toowoomba City </li></ul>
  7. 7. By proactively seeking, networking with and supporting Indigenous clients at any stage from business start-up to expansion the BBSB team of 4 staff achieved the following over a 3 year period:
  8. 8. <ul><li>600+ enquiries </li></ul><ul><li>157 individual clients actively serviced </li></ul><ul><li>8 Organisation clients actively serviced </li></ul><ul><li>48 new businesses operating </li></ul><ul><li>29 new businesses in pre-start-up phase </li></ul><ul><li>66 operating businesses receiving ongoing support </li></ul>
  9. 9. <ul><li>171 jobs generated </li></ul><ul><li>18 workshops held in-house </li></ul><ul><li>66 workshops held by other provider </li></ul><ul><li>432 clients participated in in-house workshops </li></ul><ul><li>196 clients participated in other provider workshops </li></ul><ul><li>257 clients provided with one-on-one skills development </li></ul>
  10. 10. <ul><li>83 completed business plans/feasibility studies </li></ul><ul><li>31 business plans resulting in business start-up </li></ul><ul><li>81 clients assisted with marketing/sales advice/strategies </li></ul><ul><li>72 funding applications = 52 approved </li></ul>
  12. 12. <ul><li>STEP 1 </li></ul><ul><li>BUSINESS READINESS ASSESSMENT </li></ul><ul><li>This is the first contact meeting and follows a referral from a third party or an approach from the potential client. </li></ul>
  13. 13. <ul><li>Establish a Cultural link (Where are you from? Who’s your Family?) – discuss the need for a Confirmation of Indigenous Descent which entails a letter from an Indigenous Community Organisation (necessary for securing any government support in the future – this sometimes can take a long time so best to get the process started at the beginning of the engagement with client) </li></ul><ul><li>EXIT POINT = if client has ethical or political objections to securing Confirmation of Indigenous Descent then they will not have access to government support. NB: can proceed if client has access to other funds for business development. </li></ul>
  14. 14. <ul><li>Client’s financial and tax situation – if bankrupt or in serious debt then we need to know – if client has outstanding tax returns (more than 2 years) then these need to be resolved before proceeding – this is a good point to encourage client to seek out an accountant and solicitor </li></ul><ul><li>EXIT POINT = if undischarged bankrupt then they will not have access to financial support. Tax - client fixes up tax situation and returns when all OK. </li></ul>
  15. 15. <ul><li>Business Assessment - BBSB talks with the client about their personal goals, why they want to start a business, how committed they are and what resources they have </li></ul><ul><li>EXIT POINT = if client decides they are not ready for whatever reason – facilitate access to job network or link with other clients at this stage. </li></ul>
  16. 16. <ul><li>Client Agreement Form - BBSB staff discusses with the client the services available to ensure that both client and BBSB are clear about who is responsible for what and that all client information stays confidential. </li></ul>
  17. 17. <ul><li>Develop a business idea - This is about clarifying and identifying the client’s business concepts or about assisting the client to identify the most suitable business to match their strengths. </li></ul><ul><li>EXIT POINT = if client’s idea is unviable - facilitate access to job network or link with other clients at this stage. </li></ul>
  18. 18. <ul><li>Research Plan - BBSB provided the client with resources to start planning their business. </li></ul><ul><li>Action Plan – work with the client to allocate tasks and timelines and document these </li></ul><ul><li>EXIT POINT = some clients may only require Research Plan and Action Plan to manage their own business development and/or expansion. Other clients may benefit from linkage to ICV . </li></ul>
  19. 19. <ul><li>The following matters should have been discussed with the client by the completion of Step 1 </li></ul><ul><li>NB: DTRDI ‘7 Steps to Business Success’ have templates and checklists to facilitate this. </li></ul>
  20. 20. <ul><li>Consider Your Suitability: Start a business where you already have industry or management experience. Those starting a completely new venture have a higher risk of failure (50-80% of new businesses fail in their first 3 years). If starting a new venture ensure you are continually learning new skills and researching the industry. </li></ul>
  21. 21. <ul><li>Consider Your Idea: assess the merit of your business idea and whether people will be willing to buy BEFORE commencing start up. </li></ul>
  22. 22. <ul><li>Consider Your Market: Develop a way of consistently reaching your customers, because you need customers to survive and you will probably have to do a lot of marketing until you establish a name for yourself. </li></ul>
  23. 23. <ul><li>Consider Your Competition: Check out what the competition is doing. You need to establish a competitive advantage to survive. </li></ul>
  24. 24. <ul><li>Consider The Environment: Keep in touch with what is happening in your industry, the general trends and the overall economic situation so you can take into account factors that might affect your success. </li></ul>
  25. 25. <ul><li>Consider Your Finances: Keep accurate and up to date financial records and manage your cash flow. This means you can address problems immediately rather than leaving it too late. </li></ul>
  26. 26. <ul><li>Consider Your Start Up: Make sure you have enough money to cover your start up. Do not budget optimistically as banks will not lend money with high risk attached. </li></ul>
  27. 27. <ul><li>SKILLS AUDIT </li></ul><ul><li>Training Plan identified - BBSB assists the client to identify what skills they have when it comes to owning and operating their own business. </li></ul>
  28. 28. <ul><li>Education options - BBSB assists the client to identify the most appropriate way to further develop their business skills. </li></ul><ul><li>EXIT POINT = if significant skill gaps are identified the client may need to enrol in further study or seek work in the industry or give up the idea completely. </li></ul>
  29. 29. <ul><li>Workshops - The client is encouraged to attend sessions that include networking, business readiness and business sustainability. Online training modules may be applicable as a self paced solution. </li></ul>
  30. 30. <ul><li>STEP 3 </li></ul><ul><li>PRACTICAL MATTERS </li></ul><ul><li>These matters can be dealt with now but stress should be placed on the necessity of engaging a good accountant and solicitor. </li></ul>
  31. 31. <ul><li>ABN and Business Name Registration - assist the client to register their business name and secure an Australian Business Number (ABN) as well as GST Registration if appropriate (annual turnover above $75K). </li></ul>
  32. 32. <ul><li>Credit Check - facilitate a credit history check which is necessary if the client intends to seek business capital through loans or grants for establishing their business. </li></ul>
  33. 33. <ul><li>Ensure client has Confirmation of Aboriginal or Torres Strait Islander Descent Form - This is also necessary if the client intends to seek business capital through Indigenous specific loans or grants for establishing their business. Client cannot approach IBA without this. </li></ul>
  34. 34. <ul><li>Ensure client has appropriate partnership agreements in place if not a sole trader. </li></ul>
  35. 35. <ul><li>Introduce client to relevant stakeholders and networks (SEQICC, Blak Pages etc). </li></ul>
  36. 36. <ul><li>Client should be able to utilise appropriate business terminology and have access to computer. </li></ul><ul><li>EXIT POINT = client may partner with experienced business person </li></ul>
  37. 37. <ul><li>STEP 4 </li></ul><ul><li>PLANNING </li></ul><ul><li>Preparing applications for business support - BBSB worked with the client to complete and lodge business support applications for a Feasibility Study, Business Plan and Marketing Plan. (IBA, DEEWR, DTRDI). </li></ul>
  38. 38. <ul><li>Marketing support was offered by BBSB. </li></ul><ul><li>Access to mainstream financial institutions can be brokered. </li></ul><ul><li>Access to Venture Capital can be brokered. </li></ul><ul><li>Linkage to other business support agencies and corporates can be brokered. </li></ul>
  39. 39. <ul><li>STEP 5 </li></ul><ul><li>IMPLEMENTATION </li></ul><ul><li>Mentoring - BBSB linked the client to a relevant Mentor who can assist with sustaining the client’s business when it is operational. </li></ul>
  40. 40. <ul><li>Capital Assistance - BBSB supported the client in applying for grants or loans for the establishment or progression of their business. </li></ul><ul><li>Marketing collateral developed </li></ul><ul><li>Access to microfinance can be arranged </li></ul>
  41. 41. <ul><li>Business starts up and everyone celebrates! </li></ul>
  42. 42. <ul><li>Open for Business: Developing Indigenous enterprises in Australia is the report of the House of Representatives Standing Committee on Aboriginal and Torres Strait Islander Affairs’ inquiry into developing Indigenous enterprises. Earlier in 2008 the Committee undertook a short but intense inquiry into Indigenous enterprises which considered the support that is available for Indigenous businesses and explored ways that Indigenous people could be encouraged to embark upon or expand a business. </li></ul>
  43. 43. <ul><li>The life expectancy gap of 17 years between Indigenous and non Indigenous Australians was a critical driver for this report. The Committee was concerned that in this day and age that there was still such a large gap in life expectancy. </li></ul><ul><li>The Committee held the opinion that if the rate of Indigenous participation in small business was increased, there was likely to be a flow on effect of employment and increased economic participation which could help to close the gap between Indigenous and non Indigenous people. </li></ul>
  44. 44. <ul><li>In 2006, six per cent of employed Indigenous people indicated they worked in their own business, which compares with 17 per cent of employed non Indigenous people. 1 Overall the small business sector employs nearly 50 per cent of all the people working in the private sector, so a focus on increasing Indigenous participation in small business was seen by the Committee as being a positive way forward. </li></ul><ul><li>The 15 Recommendations will inform and guide the sector into the future. </li></ul>
  45. 45. <ul><li>Recommendation 1 </li></ul><ul><li>The Committee recommends that the Australian Government conduct a biennial national review of Indigenous businesses in Australia, collating data on industry sector, business size and structure, location and economic contribution. </li></ul>
  46. 46. <ul><li>Recommendation 2 </li></ul><ul><li>The Committee recommends that the Australian Government recognise the vital contribution of Indigenous business development to the economic and social sustainability of Indigenous communities and, accordingly, develop the methodology to adequately value this economic and social contribution when assessing the investment returns for providing assistance to Indigenous businesses. </li></ul>
  47. 47. <ul><li>Recommendation 3 </li></ul><ul><li>The Committee recommends that the Australian Government develop templates for Indigenous Land Use Agreements to specify that corporate and industry partners fund Indigenous partner corporations to access advice, including financial, taxation and in particular expert legal advice of a quality comparable to that available to the other negotiating partner. This is to ensure that the terms of agreement meet the social and commercial objectives of the Indigenous communities involved. </li></ul>
  48. 48. <ul><li>Recommendation 4 </li></ul><ul><li>The Committee recommends that the Australian Government develop a process for monitoring the content and implementation of Indigenous Land Use Agreements, and develop a complaints process for Indigenous partners. </li></ul>
  49. 49. <ul><li>Recommendation 5 </li></ul><ul><li>The Committee recommends that the Australian Government establish an Interdepartmental Committee (IDC) to ensure a streamlined and coordinated approach to the delivery of all forms of business assistance to Indigenous enterprises. The IDC should comprise all departments and agencies delivering services to Indigenous businesses and enterprises including but not limited to Indigenous Business Australia, the Department of Education, Employment and Workplace Relations, the Department of Innovation, Industry, Science and Research, the Department of Families, Housing, Community Service and Indigenous Affairs. </li></ul>
  50. 50. <ul><li>Recommendation 6 </li></ul><ul><li>The Committee recommends that the Australian Government provide additional funding for the Commonwealth Science and Industrial Research Organisation to expand its research and partnering work in the areas of natural resource management and carbon emissions reduction leading to potential commercialisation opportunities for Indigenous communities. </li></ul>
  51. 51. <ul><li>Recommendation 7 </li></ul><ul><li>The Committee recommends that the Australian Government work cooperatively with state and territory governments to expand an Indigenous business networking model that appropriately takes account of the uniqueness and diversity of Indigenous business in each state and territory. </li></ul>
  52. 52. <ul><li>Recommendation 8 </li></ul><ul><li>The Committee recommends that the Australian Government establish a ‘one stop shop’ for Indigenous entrepreneurs and businesses. This facility should provide assigned case manager contacts, similar to Austrade, who navigate a business through different stages of establishment and growth. The ‘one stop shop’ facility should include services to support Indigenous businesses such as: </li></ul>
  53. 53. <ul><li>advice on the range of government, industry and community grant and funding programs available; </li></ul><ul><li>mentoring and business ready skills recognising the particular cultural challenges facing Indigenous enterprises; and </li></ul><ul><li>advice on establishing appropriate governance structures. </li></ul>
  54. 54. <ul><li>Recommendation 9 </li></ul><ul><li>The Committee recommends that the Australian Government establish a series of target levels of government procurement from Indigenous businesses, and require all Australian Government agencies and authorities to nominate a target level. The Committee also recommends that all Australian Government agencies and authorities be required to report in their annual report the procurement level from Indigenous businesses. Future consideration should be given to introducing an escalating series of mandated procurement levels over the next decade. </li></ul>
  55. 55. <ul><li>Recommendation 10 </li></ul><ul><li>The Committee recommends that the Australian Government provide a program of funding, including micro-funding, with an emphasis on remote area enterprises, to enable entrepreneurs to establish cooperative enterprises, especially in the arts sector. The Committee recommends that Indigenous Business Australia in association with a corporate partner in the financial sector deliver this program. </li></ul>
  56. 56. <ul><li>Recommendation 11 </li></ul><ul><li>The Committee recommends that the Australian Government as part of the current review of Australia’s taxation system include consideration of how to encourage Indigenous start up business through the taxation system. </li></ul>
  57. 57. <ul><li>Recommendation 12 </li></ul><ul><li>The Committee recommends that the Australian Government fund biennial Indigenous business awards, similar to those held in New South Wales and previously in Western Australia. </li></ul>
  58. 58. <ul><li>Recommendation 13 </li></ul><ul><li>The Committee recommends that the Australian Government pilot an Indigenous Supplier Development Council in Australia for a period of Five years. There should be a review after three years that assesses longer term viability, participation levels and contribution to growing Indigenous businesses. Seed funding for the pilot should include adequate resources to network and market the benefits of the pilot Council to Indigenous suppliers and corporate buyers. </li></ul>
  59. 59. <ul><li>Recommendation 14 </li></ul><ul><li>The Committee recommends that the Australian Government demonstrate its commitment to the pilot Indigenous SDC in the following ways: </li></ul><ul><li>commit to a core of Australian Government agencies and authorities, which have significant procurement budgets, becoming foundation members of the Indigenous SDC and directing a targeted proportion of their procurement budget to the Indigenous SDC; </li></ul><ul><li>pending a successful pilot of the SDC, establish target dates for all Australian Government agencies and authorities to become members of the Indigenous SDC; and </li></ul><ul><li>work cooperatively through the Council of Australian Governments to maximise the use of the Indigenous SDC across all levels of government. </li></ul>
  60. 60. <ul><li>Recommendation 15 </li></ul><ul><li>The Committee recommends that the Australian Government, in addition to establishing a pilot Indigenous Supplier Development Council, through the Department of Innovation, Industry, Science and Research trial an Indigenous business ready mentoring and accreditation program to increase the range and capacity of Indigenous businesses able to supply to the pilot Council. </li></ul>
  61. 61. <ul><li>JM John Armstrong Harbinger Consulting PO Box 334 ASPLEY Queensland 4034 AUSTRALIA </li></ul><ul><li>0418 224 953 [email_address] </li></ul>