Thursday, November 22, 2018


We just spent $344 for the two of us for lunch and were charged an extra $3.78 surcharge for using a normal bank credit card - including that same surcharge charged on the tip!  This is a grubby little rip off for little dollar value.  Some financially challenged so called junior manager decided to penalise anyone who doesn't keep a bucket load of cash on them when dining - may I suggest no one!  Let me put that into perspective, this charge is the same as adding circa 50c to the cost of say a main course from $48 to $48.5 as we had this day.  It's a hidden charge designed to make the menu seem cheaper - except it doesn't.  My suggestion, join the real world and make people's experience seamless without reputation ruining nasty surprises.  Think the ramifications through instead of trying to grub a few cents over and above an expensive lunch.In our job we have eaten at hundreds of restaurants all over the world and rarely encounter such backward anti-customer charging.


Want to sell your business and be assured the people you entrust to that sale are both knowledgeable and professional?  Don’t we all.
A broker is merely an expensive intermediary between buyer and seller supporting non disclosure between the parties and by validating financial and legal information leading to negotiated contractual agreements.
Unfortunately there are many so called brokers who should be in some other sort of real estate because business broking requires a deft set of learned skills so as not to disadvantage either seller or buyer.  Beware the broker who devalues a business just so they can get a quick sale commission to support their own cashflow.  Indeed, there are international methods of calculating worth remembering that ‘worth’ is not a fire sale but a true and proven financial statement showing value.
Seek the broker who recognises they have a fiduciary duty and can prove education, knowledge and results because without all three they cannot provide valid advice.
Indeed, a business broker must by necessity provide financial [valuation] and legal [contractual] advice on all matters related to both selling and buying a business and, if that advice is flawed because of a lack of education [knowledge] or for whatever reason, both buyer and seller may be severely disadvantaged. 
Brokers charge and accept significant remuneration for a ‘professional service’ being far more than the cost of just lodging an advertisement on some website.  This differentiation is critical because it means a broker has a fiduciary duty to the seller or the person paying the fees to be honest and act in good faith in all dealings.
Buyer beware because there are many ‘brokers’ who pontificate at length about their ability to sell a business yet may not have a clue other than bluster. 
In simple terms a broker must be able to prove the following and if not keep looking for one who does:
1.       Education:  A broker is supposed to be an expert professional in business valuations etc and as such needs to have some sort of financial qualification to offer that advice; at the very least at diploma level but preferably at degree or even masters level.
2.       Experience:  Whilst experience is not as crucial as educated knowledge it is desirable for the broker to have transferred their educated knowledge into sales where both parties are happy;
3.       Industry knowledge:  As a well paid mediator/negotiator it is expected that the broker has extensive industry knowledge to be able to facilitate any sale without misrepresentations;
4.       Client base:  Has the broker a good enough reputation to be able to support clients wanting to sell and buy?;
5.       Working for you:  The obligation on the broker is to represent the seller as they are paying the commission.  It is not their role to act for both sides therefore no kickbacks;
6.       Not quick turnover fire sale:  It’s worth remembering that many brokers work their sales to maximise cash flow in the short term.  Therefore avoid those who devalue a proven valuation just to get a quick sale.  They win, you don’t – a $100k drop in sale price means you lose $100k whilst the broker may lose just $5k but get $20k in the pocket today;
7.       Valuation expertise:  This is the hub of the broker’s input and where they must prove expertise ‘in good faith’.    Ask the broker to explain common terms such as ‘risk based multipliers’ and ‘EBIT normalisation’ and ‘payback’ and ‘capitalised future earnings [Nett EBIT/ rate of return] * 100 +- adjustments’;
8.       Discretionary cash flow:  This is the total owners benefit from the business including lawful tax breaks, goods and services for private purposes etc;
9.       Mitigating factors:  These are the wow and risk factors influencing a sale such as consistent and verifiable profits and hours required to sustain profit and growth potential;

The most crucial figure is proven revenue [BAS *6] from which any professional broker can deduct linked expenses at ATO published rates and wages etal, add EBIT normalisation [this is why BAS expenses are not indicative] and apply a multiplier based on risk and/or calculate worth based on capitalised future earnings and/or by detailed analysis of P&L to get an estimate of worth.  Then it’s up to market acceptance factors.

This is their job and they get paid for doing it.  If they can’t, then find someone who can.

Wednesday, November 21, 2018


An open letter …

Mr Gary Hounsel CHAIR & Mr Nigel King CEO
Myer Holdings Ltd
PO Box 869J
Melbourne VIC 3001  Australia

CC:  Mr Solomon Lew - Premier Investments

As a bloke who grew up in Melbourne, was educated in Brighton, spent all my formative years in abject immaturity and wasted many many opportunities I should be the last person you listen to when it comes to your charge.  Indeed one of my burnt in memories was the Myer’s man delivering something for Mum the day JFK was shot.  The 22nd of November 1963 was an important wake up call for the world.  In a couple of days it will be 55 years ago and we still haven’t learnt that respect and trust is a God given right.
I offer that rather banal insight into history because it helps define your store.  When Sidney Myer founded his department store it was inexorably linked to the person and, if I remember, that link followed through to Ken Myer before his death in Alaska.  A ‘family’ store where people connected with the ‘name’ despite not knowing them. 
Mum used to drag me along to shop at ‘Myers’, have lunch at ‘The Birdcage’ and have the days purchases either carried to a taxi or delivered to home.  The day two mink coats turned up at home was a watershed moment in understanding marital relations between one’s parents.  Myer’s had a soul and a true understanding of people and Mum was made to feel special.
Before forging into hospitality I spent too many years downsizing companies around the globe.  A bugger of a job made all the worse because it was my role to deal with the aftermath of bad board decisions which in turn necessitated disadvantaging too many people all through no fault of their own.  My memories are a bit vague but I seem to remember an imported CEO by the name of Dennis Eck totally missing the point that Myer [note – no ‘s’] was not Coles or Target where impersonal vertical marketing seemed at home but a caring ‘family’ company.  I also seem to remember Don Argus saved the day but I can’t be certain.  The point being that personality and ethos were removed and the business suffered.
Now it seems, personality has once again been removed and business is suffering albeit with Myer still in toxic denial mode.  Look at it from an objective viewpoint – untrained staff, rows of cheapish merchandise, staff who are impersonal and confused, a store undifferentiated [and all at once]and disassociated with their customer base.  The vision has either gone or been muddled to such an extent that customers are confused. For example, remember when the bargain basement was just run-outs and odd items?  I do but it seems the ‘bargain’ mentality has infected the whole store.  More confusion.  Now, it seems that the boxing day sale is a critical tool to bolster sales because people wait for it!  Low margins are the result.  Misery.
Feel free to tear this up right now if you like because I am going to offer an opinion.  In a couple of weeks time we are heading off to Scandinavia again for a month where we will eat in something approaching 100 restaurants researching and collecting ideas for our little bistro.  A bistro which already has multiple global awards yet we still very cognisant of continuing to source global trends, service and differentiating ideas.   
And, I believe that is the key – differentiation.  Let’s take Galeries Lafayette or Le Train Bleu [within Gare de Lyon] as examples in Paris both of which we have shopped and dined in many times and both of which offer a special experience yet both are flawed in many respects.  The point is that both have held their vision and communicated that vision and, as a result, do well despite the flaws.  Now look at your charge!!
The day we saw a dog fashion show at Galeries Lafayette or watched a waiter ‘strut’ a dozen bottles of Moet on a tray above his head at Le Train Bleu burned an image in our heads.  A positive image which overshadowed any complaints.
In my opinion you have 3 types of customers.  The so called upper middle class who want the finer things and experiences, the lower middle class who want to be seen and to be treated as though their elevated position is a natural state of play and all of us seeking a bargain.  This is a natural differentiation in the real world.
I opened this letter with comments about ‘respect and trust’ and this is what I remember most about Mum’s dealing with Myers’.  Because of Myer’s ability to make people feel special my mum, and thousands of others, spent an awful lot of money therein [see comment above on Mink].  But now Myer [no ‘s’] has turned into a jumble sale where no one feels special including I daresay the staff.
The upshot is that people [like me in a previous job] are forced to cut even more staff and amenities to save a bottom line.  Spiralling into misery! 
What should Myer[s] be known for?
McEwans had it with their Vision, ‘McEwans means a million things’ and Bunnings has it with lots of stuff and cheapest prices.  Both places where Eck would have felt comfortable with vertical marketing - but, not for Myer[s].
At the bottom, the bargain basement is a place where people can go and rabbit around looking for that ‘something’ to be bought on impulse.  Why?  Because bargains are not pre-planned.  See stuff, buy stuff.  Everyone likes to fossick.  This is not cheap imported for the purpose crap but real run outs, overstocks etc as anything else diminishes the image and is best left to Target etal.  A bargain is an item reduced to sell, not a cheap product brought in to mimic a real reduction!
In the middle I believe a huge albeit simple change is necessary to cater for modern ways of purchase.  Firstly, people want to try on or view something before purchase and secondly they want it pronto. Therefore there must be a try-on size range and then at purchase the staff member who must be able to say, ‘It’s on its way’ because as soon as the money has been accepted the message goes through to a store where it’s immediately dispatched and with a non-conditional return policy.  Indeed, there is also technology allowing people to see themselves with various garments on screen [?].  When I did my MBA in the 80’s I seem to remember a French knitwear company who started to knit the purchased garment as soon as the order was received and delivered same to the customer at the speed of light.  They were a forerunner indeed!  I think much better to sell say 1,000 lines of quality than 10,000 lines of rubbish with stacks of multiple sizes jammed into racks no one can see over.  Myer[s] did not offer rubbish but Myer does!!
At the top, people want an experience and providing that experience could be the vision and saving grace of Myer[s]!   Why not rekindle Sidney as the founder overseeing a new ethos where people are made to feel special and welcome in his emporium where the best is available, champagne bars abound, the ‘Birdcage’ makes a re-entry, the Mural hall has invited glamour events, dogs have fashion parades, chandeliers light the way, lots of upmarket accessories are on display, furniture is leather, staff are trained and plentiful and trust and respect are ingrained.  My Mum would have lived there because she was made to feel special and that is the image of Myer’s I remember in its halcyon days.
Lastly, this image must be created at the City store and then followed on elsewhere.  Why?  Because nowhere else has the history or has the Mural hall.  Vision and image go hand in hand.  Indeed, the ‘top level’ may only be available at the city store, the home of Sidney. Spooky, isn’t it.
Just a small example, the ‘Hopetoun Tea Rooms’ in the Block Arcade is immensely popular because they capture something of the past whereas their competition can only look on in envy.  Image and vision!
I have been and still am at the pointy end and the coalface of business in highly competitive industries [hospitality etal] and in the past have been stupid enough to delve into so called corporate rightsizing which is about as depressing a job as you can get.  These days we run a little bistro and consult globally when I believe we can add value.
My ‘opinions’ are not mere puff but based on too many years experience.  I really felt for Myers when Mr Eck was CEO because of the diminution of a Melbourne icon to foreign standards.  Likewise when the Mexican triumvirate hit Telstra.  Why do we allow this to happen?
A department store is an icon of the past, present and future because it allows many faces within a constructed ‘life’ ethos.  An ethos which saw Myer’s rise and rise and a now a lack of ethos which foreshadows misery and failure.