10. Crypyocurrency – Risk and Volatility

It pays to remember that Bitcoin and crypto-currency is in it’s infancy. The value of a Bitcoin is highly volatile and is highly unpredictable over the short term, so it should not be regarded as a way of saving money. Only try it out with money you can afford to lose. Personally I believe it will evolve to the point where financial control is wrested away from the banks, governments and a clutch of super rich with the power to manipulate the market. Like all investments, anyone getting on the ride early could reap the benefits as it grows. However, we are breaking totally new ground here. It is also likely that cryptocurrency could out perform fiat currency and be a lousy investment but useful only for short time transactions as an “on the spot” measure of value, rather than an investment instrument. For all we know, it could have passed it’s investment peak now. For my money, there are better investments that conserve the value of your hard won savings.

Initially the concept of Bitcoin took off and other cloned versions vied for leadership. It was viewed as shady and branded as a way crime would launder money, in it’s early days. Banks refused to recognise it, effectively making it valueless in the real world. Today several banks are looking at participating in Bitcoin. These ups and downs in perception have reflected in the price of a Bitcoin.

Recently several European and Australian Banks have quietly begun to purchase Bitcoins. The Commonwsealth Bank of Australia is looking into Bitcoin at the moment.

I believe that it’s only a matter of time and crypto currency will take over from the banks, leaving them to be expensive safe deposit houses. The world needs a universal currency and nationalistic pride will never accept any one currency. The answer is a cryptocurrency like Bitcoin. Currently we lose millions in transfer fees to transact overseas. Why? We’re not loading gold onto ships any more; it’s purely digital data these days (the price of an international, micro seconds long, phone call)  but we are still paying the fees fixed in the pre-computing days when it was shipped in a flotilla with armed escort vessels. With Bitcoin it will cost no extra to transact at home or overseas. The banks require staff to do this, so they can never compete with Bitcoin.

The important consideration is, there is a maximum number of Bitcoins. There can only be 21 Million Bitcoins. Unlike currency, no-one can make any more. Over time as more and more businesses come to accept Bitcoin, the demand will increase and being capped at 21 million means the value of Bitcoin should rise proportional to the demand. If the same happened with the US Dollar, for example, the Federal Reserve could print more money which would drop the value of the dollar. No-one can do this with Bitcoin.

As in all digital matters, with time any system becomes open to vulnerabilities, so you need to keep your software up to date. I would not suggest you transact in Bitcoin on a system using Windows XP, Windows 7 or Ubuntu 13.04 Linux. These operating systems are no longer supported for security updates and would invite hackers to steal your wallet. If you prefer these old stalwart systems, transact using a smartphone with updates and store your stash in a cold store,  hardware wallet that is removed from your system, the moment the transaction is complete.

Making money on line – the truth – Part 1

The Internet is awash with tales of amazing wealth, created overnight with simple work from home systems. The advertisers seem to favour one of two methods – a picture of a billion dollar yacht or some car that looks like it should have come from a Batnman movie, with the tag, “Watch this video before it’s banned”. The other favourite is a picture of a young woman or man with a pile of notes or fast car and the tag, “Melbourne Mum earns $653 a day”. Of course the district the Mum lives in will change to a town near you and the income amount will vary.

The truth is, there are no free lunches and that applies to the Internet too. While there are those who made their millions on the Internet, they did so by creating something unique that most people wanted. Simply creating a website and expecting it to sell something and make you an income, is fanciful. It’s not that simple.

The fact is, even a top performing website will net you around $15 to $20 a month. To make an income, you’ll need to run 20 websites. They don’ t tell you that.

The websites themselves have to be specially designed to appeal to search engines, more than your simple WordPress site. They have to be specifically designed for SEO (or Search Engine Optimisation). The site has to be rich in popular search words that relate to the site’s topic. Then there has to be a lot of other sites linking to it, to convince the search engines it is an authority on that subject.

It doesn’t stop there; you will need to pay for Adwords as well. These are words that people use to search with when they are looking fpor something on the Internet. They are auctioned off and the successful bidder will get traffic (searchers) directed to their site when their word is used in a search.

Then you can pay outright to have your website display on the top of a search engine page. These are “Sponsorsed pages”.

If you are thinking of deriving an income from a website on the Internet, you can but be prepared to work at it. It’s a job, just like everything else.

Over the next few instalments, we’ll look at some of the ways to make an on-line income.

Using the Internet for business

So we have looked at the different web sites and how they suit different types of business.

The important thing to consider is firstly, will a web site help your own business?

If so how and what type of web site will work best?

Too often I see small businesses readily seeking a web designer for a site that will do nothing for the business other than satisfy someone’s ego.

Some important points for managing your online business:

Businesses are lucky if they know how 5% of their customers actually feel about their contact with the business. A website can be useful for customer feedback but to make this work you need to offer some reward. Forget the lottery entry type rewards (“for a chance to win …”). Offer a discount voucher or a code they can quote next time they deal with you. It will also give you an indication of how many people see your web site.

Beware of free websites. They are usually making money (or generating traffic) for someone else’s site and you’ll often end up on the same page as your opposition. You will usually end up with a page or two on someone else’s website and people will seldom go to your site directly if you are on someone else’s site; the url (web address) is usually too long to remember. A web hosting account will set you back between $100 and $200 a year, so it’s a very small cost for the benefits and it will come with a free domain name.  Don’t get bogged down with patriotism. The best and most reliable web hosts are in the USA. Customers don’t place any importance on having a site or a site. The extra expense is not warranted. In fact most customers will come via a search of the Internet so your domain name is not as important as your business name.

Remember on-line store and blog sites require continuous updates, whether this is new articles or updating stock levels.

If you are running an on-line store, never let the stock run out. A customer who finds out their favourite item is out of stock, will not come back.

The Internet is vast. Don’t get bent up if someone is cheaper than you. People have limited knowledge of the Internet and probably don’t know of your opposition or they could have a bad reputation.

Every so often, do a Google search for problems with your product or business service and check if you are getting a bad rap. Often a business is being criticised on forums and they know nothing about it.

Telco companies like Telstra and Yellow pages will offer free websites with their contracts. Don’t bother, you will end up with a slot on their site. Get your own domain name and make your business look professional. Also use a web mail provider like Gmail, GMX, Yahoo7 or Hotmail, rather than a Telco for email. If you change your telco, your business won’t suffer by losing it’s email account. Email accounts are free anyway. Your web host will provide free email accounts with your domain name too.

Your site statistics can be a valuable asset for on-line business. In the next instalment we’ll look at site stats, what they are, what they say and how to interpret the results.

Online shopping – definitions and some fine tuning

Previously, I mentioned eCommerce software and POS Systems.A few readers commented they were not familiar with these terms.

If it sounds like Geek-speak here’s some explanations

  • eCommerce software is an on-line shop. Goods are arrayed in either a matrix or a scrolling window and information about the item is displayed as a caption beneath, including price etc. The more sophisticated packages allow for extras like discounts, loyalty points, multiple purchase discounting and wholesale pricing
  • POS software basically turns a computer into a cash register with Z readings, categories etc plus inventory management and a range of other businet functions.
  • These systems are usually a major financial outlay for start-up businesses because we tend to think they require a degree to set up (not so). Usually a business will be slugged with a fee for the package and an ongoing fee for maintenance. They don’t require much maintenance once set up, usually only adding new product and removing out of stock items. They are available free as open source software packages, either as stand alone (totally independent), cloud (based on software on the Internet and you add or remove data) or Freemium (you get a simplified package free and you pay to be supported/updated/added to).

Using an escrow service

We hear horror stories of online rip-offs, especially when it comes to paying for goods that don’t arrive.

Using an escrow service like PayPal will help show customers you are genuine. The service acts as a middle-man, releasing the funds when the goods have arrived and offering a refund service for defective products.

The truth is, without an escrow service there can be rip-offs on either side. You will also need an EFTPOS facility, so people can pay directly by credit card.Later you will need a secured site (SSL) and a VPS if you are handling credit card data.

To set up an online store, I suggest you begin with a simple website first and attach the online store later. Finally a POS system if you want to take payments directly.

As I mentioned earlier, set up a landing page immediately you get a web host. This allows you to ‘age’ the site. You can put up a few pages as a teaser for what is coming. The search engines will be alerted and begin ranking your site. They use a variety of criteria to rank your website and age is an important one, so get a page or two up on day one and mention what your business will be doing on the Internet.

I have created several online store websites myself. It’s not hard once you have done it once but for the hours you will spend, that would be more productive in your business, I strongly recommend hiring a web designer.

Personally I would not recommend any new business to start off with a web store. If you want to move stock and generate an online presence, use eBay, Gumtree, Trade me or some other buy-sell-swap site in your area – it will cost a lot less.

This will give you a chance to test the market first.

On-line Shopping Website

To create a website to handle transactions requires special POS or (Point of Sale) software to process the funds and an online store (estore) to display the goods and provide a shopping cart. There are free e-commerce software packages available that will take you step by step through the design and setup process.

This is where you enter the web designer minefield. Programmers who code for POS software tend to think they are dealing with mega stores with huge budgets and should be paid accordingly. However. in keeping with our support of open source software, here’s a few POS packages that are free:

Keyhut Cash Register If you want a totally free POS system that is very easy to use, accepts bar code scanners, various printers and does nearly everything and very easy to set up and use, then try Cash Register By Dale Harris. Specifically designed with small business in mind by a very down to earth coder with a sense of humour, this system is a good starter and can be expanded as your business grows. Dale Harris, the coder, runs a related website which is also a good laugh and worth a look.

uniCenta boasts a system that could rival any paid small business POS. It has inventory management, reporting, CRM, and even employee management features (many paid products don’t even come with all of those.) uniCenta is also formatted for any type of hardware – even mobile. There are many favourable reviews and positive feedback from user on uniCenta particularly relating to the ease of use of the system.

ProffittCenter EPOS is another completely free POS system like KeyHut, this system is definitely intended for small retailers. It’s a more pared down version of POS than some of the other options on this list. It’s mainly a cash register; taking money, running discounts etc. It does run reports and have some inventory management capabilities that relate directly to automatic ordering of products. As well, it has an extremely easy-to-use user interface. Dave Proffitt, the man behind this operation, does provide customer support whenever you need it. And, like Dale Harris, Dave told me he provides a really high level of service – he’s available via email, phone, chat and is willing to rework code. ProffittCenter also boasts an active user forum for support. Unfortunately it only runs on Windows.

TruePOS this is a pared down version of a paid POS system designed out of India. As a “fremium” version it only allows for one cash register.
like TruePOS, this is a freemium version of a paid system but from one of the biggest POS designers. It allows only for one cash registe and a maximum of 10 products. Although it is cloud based, it can continue to operate off line.

Zero POS is a python cloud-based mobile POS system that comes with features like inventory management, and the ability to take mobile payments and gift cards among others. There are premium features you can upgrade to – like advanced analytics and an eCommerce store. This system is aims for use with mobile devices.

Types of business websites – Forum

Forum – this is where the reader can relate directly with the business. A forum requires constant attention by people who are qualified to answer the reader’s questions.

It’s a page where a reader can post a comment or question and it is visable to all other readers on that page. Usually a forum is divided into various sections, then topics within each section and threads (questions or comment topics).

It’s important to have conditions that readers agree to before they can access the forum. This allows them a user name and a password, they have to log in with, to access the forum. Some forums allow anyone to view the pages but only logged in members can comment.

Generally forums do not contain video or sound clips, to keep the user’s loading time and bandwidth usage to an absolute minimum. Users can however post links to other websites with video etc. as part of their comment.


  1. A computer store runs a forum for customer support. Their tech staff reply to customer queries. This keeps customers in touch with the business and reduces callouts and staff demands. It also identifies new work opportunities.
  2. An art club has started a forum off and an art shop has signed on as a user, where it offers product advice and tips, to gain more exposure and credibility than it’s opposition.

Setting up a business web site

So we have a web host and a domain name?
Don’t get bent out of shape over a domain name. It’s not really such a big deal. Most people will come to your site through a search engine which works more on what’s in the site (content) rather than what it’s called (domain name).

Your goal for your website is to get as many visitors (traffic) as possible. That means you want search engines to rank it as highly as possible. Search engines rank sites on relevance and age, so we need to get something relevant up on the Internet as soon as possible.

A common business mistake is waiting for the web designers to finish the perfect site before they put it on line (upload it). As most web designers will verify, you usually design a site to the person’s instructions then they want to change it several times before it’s what they really want it on line. That can delay publishing several weeks or even months.

Instead, create simple page (called a landing page) that says what you do and what’s coming. It doesn’t have to be a work of art, just be there on the Internet, to show relevance and to start the clock ticking so it ages.

Now you can decide what form your site will take and what sort of content you want to put in it.

So let’s start with looking at the different types of websites and what they do.

What can a website really do for my business?

This depends on the type of website and the type of business. The right type of site can boost a business’ bottom line but it’s important to choose the right type of site for your business. You need to determine the function of your website – what it’s supposed to do for you.

Don’t get caught up in the sales hype either. The facts are that most first time business sales are transacted initially off line. The customer will use the Internet to research your product or service first, then contact you directly to complete the sale. Subsequent sales are more likely to use your website, if you are equipped to accept sales on line.

This should dictate your web marketing strategy.

  • If you are after new business structure your site to give lots of product information and testimonies.
  • Make it easy for them to contact you with prominent email buttons that direct them to forms designed for easy filling out with queries. Make phone numbers, mailing addresses and locations easily visible.
  • Give first names for people to contact, so it’s personal.
  • Offer coupons or discount bonuses for sales originating from website inquiries. Every web sale costs you less than a store sale – less staff, advertising, less competition because they don’t drive past your competition to get to you.

Make your site so easy for first time users, that they will use it again. Web based sales are more profitable than over-counter sales. They require less staff and can allow you to conduct business 24-7 even when your doors are closed. If you live in Australia and have clients in the USA, you can actually do business while you sleep!

Get away from the “Cheap -Cheap – Cheap” ethos. People deal on line because it’s already supposed to be cheaper. No-one wants a “cheap” product, they want quality at the lowest price. Promote the quality of your product and the quality of your service and customer service with examples and testimonies.

Next session we’ll look at the setting up process to get the best out of a web site, before we move on to the different types of sites and what they do for a business.

So what can we expect from this new government?

The recent election in Australia will mean a few changes, especially in business and some will not be good:

Firstly, Australia is basically a two party nation – Labour versus The “Coalition” (the Liberal and National parties combined). Labour is supposed to lean slightly towards the worker, the Liberals are supposed to lean towards the business sector and the Nationals are regarded as pro-farming and rural. There are other parties but they don’t attract enough votes to gain power.

To appreciate what happened you need to realise that Australians have an innate sense of fairness and many voters voted against Labour because of all the power wrestling that went on. Regardless of the party policies, we find it more offensive and “un-Australian” to have a bunch of shifty back-stabbers in power. This election result was a reaction from the general public to all the back stabbing that went on in the previous government and was not a clear mandate that we all agree with Tony Abbot’s new government’s policies. In other words it’s not necessarily a vote of confidence for Tony Abbot – just a vote of no confidence for the Labour party. Unfortunately Tony Abbot’s party members are choosing to ignore this and are crowing that it was an overwhelming endorsement of their policies.

Australia’s new National Broadband
In the I.T. sector, I don’t believe anyone wants a slower Internet system like Tony Abbot is promising. Anyone who really understands telecommunications in Australia would certainly regard the Fibre To The Node (FTTN) alternative Internet system as a disaster about to happen. The previous government were going to take the high speed fibre optic Internet cable directly to your home. This new government will take the new high speed fibre optic Internet cable to a node – a box in your street about the size of a fridge, where it will be connected up through an adapter, to the existing copper telephone cable to your home. Although it saves a large cost, it is much slower and this is the argument the public have been fed but there’s a lot more that is not being told to the public.

Over the last decade the governments (both sides) sold off the government telecommunications corporation, Telstra and privatised it. Like all corporations, it became unprofitable to keep the infrastructure in peak condition because it ate into their profits. To further cut costs, Telstra shed their technicians and employed subcontractors on a cost per job basis. The repairman were contracted on a rate per repair and not on a regular wage. This meant that they only did the bare essentials to get the line working and no preventative maintenance. If they came to repair a fault in your phone and saw that your connection was one of 4 or 5 that were corroded (a common fault cause), in the past they would have spent 5 minutes cleaning the corrosion off the others as well as yours. Because Telstra contractors now get paid per time per job, they will only clean your connection now – not the others. It is more profitable if they leave the others to fail, creating new jobs later.

Consequently, the copper network is desperately in need of upgrading all over the place. It’s rotten. Copper wires in those post thingies on your nature strip are exposed to condensation and they corrode, creating faults.  I recently had a phone connected in Melton South, here in Victoria. There were 10 pairs of wire in the cable from the street. The technician tested all of them and not one pair passed the voltage and current specifications required for a functional phone connection. He went out to the footpath and tested them at the node and although there was less resistance, they still would not pass the connection standards. I won’t bore you with all the details but by the time I received a working phone line, the technician had repaired 10 faults to get one line or pair of wires working. He admitted that he saw many others that were as corroded as mine but Telstra would not give him permission to fix them because he was already beyond the time allocation for this repair.  When my next door neighbour had phone problems, the same thing happened all over again a month later but to a different pair of wires on the same cable. Again Telstra would not authorise the repairs for the other pairs on that same cable. He also confirmed the assessment of my technician, “the copper network is rotten”.

When the government said they were taking fibre optic cable to the home, it made the copper network redundant. Telstra realised that the copper network was going to be replaced by the government NBN system so why should they repair it?

As a result the copper network that Tony Abbot claims he will connect up to, it nowhere near as good as he thinks. The cost savings this government claims they will make, will never happen. The copper network that they will connect up to, requires major repairs and a vast section of it is already corroded beyond repair. This has not been factored into their projected costs for their FTTN fibre to the node system.

As the system stands today, we will get a slower Internet for almost the same price as the original cost of Fibre To The Home. The savings will be swallowed up in repairs to an already rotten copper system.

You want to be in Business? -7.

7. Business Structure – The Franchise

This is a variation on the partnership structure and was a boom model in the 1980s. A franchise is a partnership between a business and a business person. An experienced business Head Office with a good track record of success offers a partnership with a new business owner. Usually it appears like the new owner has their own business but through a franchise agreement, the Head Office imposes trading conditions on the new owner. This is usually a trade off for access to the Head Office’s advertising, business expertise and their well known brand name.

Generally franchises have a better success rate than new businesses. This is probably due to the fact that the Head Office has experience and does it’s research before offering a new franchise. Also it gives the businesses access to a much bigger advertising budget and a popular brand of product. In some types of business, it can also restrict competition by establishing a territory where the business can trade. A typical example would be Jim’s Mowing, who offers franchises that are limited to a territory, to prevent poaching work from neighbouring Jim’s Mowing Franchises. However Jim’s Mowing cannot stop other mowing businesses, that are not Jim’s Mowing franchises from poaching work in the territory. Some popular franchises include Mc Donalds, Pizza Hutt, Seven Eleven, Midas and many other well known brand names.

The Head Office trains the business operator to produce a product and service to their brand name’s standards. They specify the equipment and materials the operator can use, the territory boundaries for the operator, trading hours and many other business practises. Effectively they are your boss and you get to manage your business to their rules.

Franchises were in their Heyday in the 1980’s but their time has passed. Today’s business needs to adapt to the changing marketplace quickly, not when a Head Office has a board meeting and a review before agreeing to a business change. A business needs to source product and services from the best the marketplace has to offer, not the only source that a Head Office has. A franchisee in the Melbourne’s CBD had to use the recommended repairer from Head Office to service and repair his fridges in his shop. The repairer would not come on the day and was booked up until late the next day, by which time the entire freezer’s stock was lost. His service bill was $540.00 dearer than the bill from the shop next door who rang around to find a refrigeration mechanic who could call within an hour. The total loss for the franchisee was over $1,972.00 on a job that cost his neighbour $322.00.

What operators don’t realise is the Head Office is a partner. If the Head Office goes broke, so do all the franchises. Recently Retrovision went broke. Their stores were all closed instantly, whether they made a good profit or not. Effectively it was the same result as if a partner had died but there was no partnership insurance (because it was a franchise, Retrovision Head Office was effectively a partner).

Franchisors are great help at the start up of your business but can become a drag on a business with time. Weigh up carefully just how much the franchisor’s input is really worth to your business and keep in mind that they don’t take a flat fee for those services. They usually take a percentage of the turnover. As your business grows, so does your workload and their cut but not necessarily their input. What are they doing for your business, that you can’t do yourself?