Looking for shoes and finding a new direction

Appearing in the UpStart section of September issue of In The Black magazine


Children’s book a whole new challenge


Going from a senior role in corporate risk management to writing a children’s book has been a huge but very satisfying transition, says Naomi Vowels, an Australian CPA who has re-located to Singapore. The company established by Naomi and her sister Frances, Red Shoe Stories, is set for success, with an innovative approach and a lot of energy.

The company’s debut book is called Where Are My Shoes?, aimed at the 0-6 age group. It is about a favourite pair of shoes that have gone missing; the main character recalls what they did that day to try and remember where they left them. A key part of the book is that it can be customised so that it features the child, including their name and with suitable illustrations. It also allows for the choice of an ‘adventure buddy’, and even gives the child the chance to choose the shoes they wear in the story.

Naomi Vowels“Frances’ two children were the inspiration for the book,” said Naomi. “They love hearing stories about themselves and their possessions. Frances had her third child in April – just ten days after the birth of my first son.”

Naomi decided to make the change from the corporate sector to small business owner and author when she and her husband relocated to Singapore from Geneva in early 2017. She had held a number of private sector roles, and worked in the Australian diplomatic service, but her most recent position had been as Vice President at Lombard Odier, a private bank, working in strategy and risk.

“Frances and I enjoyed our former careers but they were never really our passion,” she says. “We always knew there was something more ‘us’ that we could be doing. It just took us a bit of time and courage to get there. We set up our business in Singapore because it is easy to register a business there, there is support given to start-up ventures by the government and the private sector, and our key suppliers are based there.

“My former colleagues were extremely supportive of my decision. In fact, many of them expressed some jealousy that I was taking the opportunity to step out of the corporate world and pursue something I feel passionate about.”

Support and advice

Naomi believes that the expertise she gained as a CPA has been invaluable – not only the technical skills but also the peers who provided support and advice.

The next step is to get the book into the marketplace. The sisters launched a Kickstarter campaign to help fund the website, which is the means for customers to buy the book.

“The campaign was financially successful but we also saw it as a way to connect with potential customers all over the world,” says Naomi. “On the website, customers are able to personalise their stories and see a flip-book preview of their book. We also plan to exhibit at several book fairs in Asia, Australia and Europe, and we will continue to build our audience on social media.”Shoes book #1

Naomi and Frances have also partnered with the charity Room to Read, which promotes childhood literacy and girls’ education. One book is donated to the program for every book sold.

“We plan to make the book available in languages other than English, and we have started writing our next book,” Naomi says. “We will continue writing books for as long as they are enjoyed by children and parents. It has been hard work but I don’t think I have ever been more satisfied or happy than I am right now, writing and running our business.”


Red Shoe Stories Website: redshoestories.com

Social media: @redshoestories


The sweet spot in the coffee business


Appearing on In The Black Digital site, September 2018, url https://www.intheblack.com/articles/2018/09/07/coffee-club-data-sweet-spot


The Coffee Club is using data analytics to understand customers better and stay ahead in Australia’s highly competitive café sector. Here’s how your business can use data to arrive at new solutions.

Behind a simple cup of café coffee lies a highly competitive industry, with a fickle customer base and complex marketing issues. In such an environment, the effective collection and analysis of data has become essential, as the franchise chain The Coffee Club has learned.

“In 2011-2013, The Coffee Club was riding a wave where the café industry was exploding,” says Jimmy Wu, analytics manager at The Coffee Club.

Jimmy Wu of Coffee Club“However, this growth hid a lot of problems. Data strategy at The Coffee Club was vague and ad hoc in nature, and many executives and internal stakeholders relied on summarised reports.”

The measurements were purely financial and not customer-focused.

“In 2014 there was a marked increase in competition from other chains and from independent cafés,” recalls Wu.

This put The Coffee Club brand at the crossroads between its heritage and the premium, value and convenience players in the market.

Using multiple data sources

Wu has introduced a comprehensive data analytics strategy aimed at building a complete picture of existing customers and profiling new ones. Point-of-sale data was collected on the time of day of purchases, the day of the week, other items purchased in the same transaction, and traffic count versus average spend.

Wu notes that the primary transaction data was already available, but it had not been used in the right way.

Unstructured data such as customer feedback, perceptions and behavioural patterns was also incorporated. Another data source was 150,000 active VIP customers, which provided data on their buying patterns through repeat visits.

There was also cross-referencing with other datasets. It was found, for example, that a drizzle of rain on Saturdays would increase traffic in stores, but heavy rain on Sundays would deter customers from shopping centre sites.

Comprehensive profiles on each store were developed, combined with Australian Bureau of Statistics and GIS (geospatial) data, to model the best sites for possible new stores and examine growth options within the franchise chain.

Using data to arrive at new solutions

“We are always on the lookout for better data analytics solutions as this space changes rapidly,” Wu says.

“I am a big fan of Tableau Software because it allows users to discover structured data quickly. There are also other packages that we use for different purposes, such as Power BI, SPSS, Qlik, R, and Python.

“The challenge that most organisations using advanced analytics techniques face is that you reach a point where your traditional data warehouse will not accommodate the sheer size and calculation power needed. To address this, we are moving into cloud infrastructure. This will allow us to not only take advantage of addressing our current 5Vs – volume, velocity, variety, veracity, value – but also explore innovative areas such as machine learning capabilities, and data lake [data repository] and discovery sandpit areas.”

Data-related possibilities for the future include facial recognition technologies and having AI robots answering reservation phone calls, or even having a personalised digital menu based on customer preferences with product recommendation systems built in. Another idea is to leverage AI to enable store-level operational improvements.

“In this business, understanding your customers is crucial,” says Wu. “And it’s an ongoing journey. The moment you think you’re successful is the moment where your competitors start to outperform you.”

Takeaway coffee

  • Use data to profile existing and potential customers
  • Look to see what information is already held but not used
  • Cross-reference with other datasets
  • Stay abreast of new analysis tools
  • Ensure warehouse capacity


Blockchain shifts solutions thinking

Appearing in In The Black Digital site, url https://www.intheblack.com/articles/2018/08/22/how-governments-using-blockchain-technology


Blockchain tech offers public sector answers


There has been a fundamental shift in thinking about blockchain technology in the past year, and blockchain-related innovations are already providing solutions to longstanding problems.

Public sector agencies in particular are exploring its potential, according to Katrina Donaghy, co-founder and co-CEO of Civic Ledger, which focuses on civic applications of the technology.

Katrina Donaghy of Civic Ledger“In Australia, we are still in a development stage, with government, industry, banks, academia and business exploring blockchain technology through proof of concepts,” she says.

The federal government is sending positive messages about blockchain technology. Standards Australia is the Secretariat for the International Standards Organization’s international technical committee for blockchain standards, and is looking at standards, definitions, rules, and other elements of the technology. This will provide a clear decision framework on issues such as governance, jurisdiction and interoperability of the technology.

“This role by Standards Australia will, I believe, be very significant in the long term,” Donaghy says.

“Another critical step is that the Australian Government’s Digital Transformation Agency is taking a lead with exploring blockchain uses in government. In our experience, their digital marketplace is very useful for Australian start-ups looking to secure government as their first customer.”

Donaghy also notes that the Australian Digital Commerce Association is working with government on behalf of the blockchain and cryptocurrency industries, assisting with the design of policy, guidelines and legislative changes to encourage innovation in the area.

Solving problems

In developing and adapting blockchain technology, Donaghy makes comparisons with the early days of the internet, when no one really knew what to do with it. It was sometimes seen as a solution looking for a problem.

Within a remarkably short period, however, the internet became a central part of both business and social life. She believes blockchain technology will follow a similar path.

“Like the internet, we did solve the problems of scale, improving its use and imagining new applications,” she says.

“There are thousands of very smart people around the world working on building the blockchain infrastructure, most of which is done through open data protocols.”

Donaghy argues that blockchain has a special role to play in public administration as governments look for ways to modernise their services along digital lines.

Blockchain provides a neutral place for a transaction to occur, creating what Donaghy calls “a shared truth” of data.

This is crucial when governments take the role of the authenticator of data and, through rules, determine the allocation of resources and benefits.

She says a change of thinking will be required. Blockchain is not owned or governed by a central authority, and the data is decentralised and distributed across thousands of computers.

Government agencies are inherently centralised, so change management in relation to issues of control and the future of work will have to take place as the technology is being explored.

Peer-to-peer platforms

Donaghy points to a project that her company delivered for the Australian Government. The key issue was how to improve information in the Australian water industry to increase participation and confidence in water trading.

Civic Ledger developed Water Ledger, based on the public blockchain, Ethereum. The blockchain-enabled platform provides a means to verify all water trades and update state registries in real time to prove that a water trade has happened, as well as showing the location of the trade.

A crucial part of the system is the “tokenisation” of a physical asset: megalitres of water.

“It showed how blockchain technology could address very complex problems involving many participants and a large number of rules – in fact, over 15,000 rules,” says Donaghy.

“Water Ledger has become a key success story and is a case study of a peer-to-peer exchange platform that increases the transparency of activities across borders and jurisdictions.”

Civic Ledger has developed similar solutions for other agencies, including IP Australia and the City of Melbourne.

The company recently won the FinTech Australia award for Australia’s Emerging Fintech Organisation of the Year for 2018, which Donaghy sees as an important step forward.

“To be recognised by our peers and industry is a tremendous honour but we also see it as a signal to government, industry and business that blockchain technology is a real opportunity to redesign economies and societies that are inclusive and democratic,” she says.

“The award sends a message to other start-ups who are building blockchain applications or infrastructure that this is an area where there are opportunities to succeed.”


Key points about blockchain

  • There are opportunities for blockchain start-ups in government procurement.
  • Blockchain is very suitable for commerce which has many participants and complex rules.
  • The real-time nature of blockchain enables transparency and accountability.
  • The decentralised nature of blockchain will require changes in thinking, particularly within centralised organisations.


Side hustle: why there’s no better time to be a part-time entrepreneur


Appearing in In The Black Digital magazine, July 2018

url: https://www.intheblack.com/articles/2018/07/04/side-hustle-no-better-time-to-be-entrepreneur

Mini-businesses made possible by tech, demography 



Many people have an entrepreneurial streak but are not ready to switch from full-time employment to starting their own business. They might need the security of a regular pay cheque or think their idea is too risky for a total commitment. A “side hustle” can be a good compromise.

“There are two great Australian dreams”, says Trent Innes, managing director of accounting software firm Xero. “One is to own your own home and the other is to be your own boss. In terms of social trends and new technology, I can’t think of a better time to be an entrepreneur.”

Trent Innes of XeroInnes points to a recent report by Xero, The Ageless Entrepreneur, which shows nearly a quarter of Australians already have a side business on top of their regular income and a further 38 per cent hope to start one.

While many want an additional income stream to deal with increasing living costs, the most common reason for wanting to start a business is to try something new.

“Technological change has been a key driver, from setting up a business to doing the administration to using digital marketing tools,” Innes says. “With online-based businesses [being] the second most popular form of earning income on the side, claiming 29 per cent of the market, this is a clear trend.”

How to set up a side hustle

In his new book Side Hustle*, start-up consultant Chris Guillebeau sets out a plan to get a part-time venture up and running in 27 days, with minimum financial investment.

Guillebeau believes the best way to start is to list all the things you like to do, not just the obvious ones. A second might list the skills you already have, not just those related to your day job or education. Combining the two lists can generate ideas and possibilities.

“A lot of side hustles come about from people solving problems or otherwise making some kind of improvement that has value for potential clients or customers,” Guillebeau says. “So, don’t just think about your passions – also think about what frustrates you and what could be done better, cheaper, or more efficiently.”

The process he suggests involves developing a set of possibilities: choosing the best one after some investigation and research; assembling the mechanical elements, including pricing and workflow; choosing marketing tools to reach potential customers; and then refining the model, focusing on what works and discarding what does not.

Deciding what form your side hustle should take

Guillebeau discusses side ventures ranging from teaching how to play guitar to making specialised cakes. Some side ventures have been built around innovative apps. The sharing economy – exemplified by Airbnb – has added a whole spectrum of other possibilities and in some cases an existing marketing and pricing infrastructure.

“Some people use the side hustle primarily as a creative outlet, something that utilises a different skill or part of their brain than they use for their regular job,” Guillebeau says.

“For others, having a side hustle can provide security through a time of life transition.”

Whether a side hustle derives from a hobby or to meet an unfilled market niche, it must be treated as a business, with a means to track progress. Given its smaller scale, it is sensible to focus on only a few key performance indicators (KPIs). Keeping the structure simple is also important, especially if the time available to devote to the business is limited.

However, even a straightforward sole trader structure requires proper accounting procedures.

“If you don’t have a way to get paid,” Guillebeau says, “you don’t have a business.”

How accountants can help new businesses

Side hustles offer a new niche for accountants to act as advisers, as long as they recognise their unique characteristics. For example, they can offer advice on available technology, possible networks and customers, and how much time, energy and capital the venture might require. Innes notes that he has seen successful ventures started by everyone from teenagers to retirees. Age is no barrier.

“Some start as a side project and ultimately become a fully-fledged business,” he says. “Ensuring the right foundations and advice is crucial to success. Technology allows small businesses to operate with global reach, if that is what they want.”

Most of all, a side hustle can be fun. If it fails, very little has been lost.

“Always remember that it is different from other start-up ventures or corporate businesses,” Guillebeau emphasises. “You don’t have to listen to experts or follow conventional wisdom. You don’t have to ‘scale’. There is no single ‘right way’. There is only the right way for you.”Side Hustle book


6 tips for creating a side venture

  • Start with a list of what you like to do and cross-reference with a list of your skills
    • Select one idea from several possibilities
    • Determine how much time, energy and capital you want to commit
    • Examine relevant technological tools
    • Set up an appropriate accounting system
    • Develop a limited number of KPIs to track progress


*Chris Guillebeau, Side Hustle: Build a Side Business And Make Extra Money Without Quitting Your Day Job, Macmillan, $30, 258 pages, ISBN 9781509859054


SMEs on the rise

Appearing in In The Black magazine, March 2018

url: https://www.intheblack.com/articles/2018/03/15/small-business-owners-asia-pacific-optimistic-survey

Small business owners in the Asia-Pacific feeling optimistic: survey


Small businesses in the Asia-Pacific region are successfully leaping into the digital era and are optimistic about the future, according to CPA Australia’s 2017 small business survey.

Across the region, small businesses with a focus on technology, innovation and exporting are significantly more likely to be growing and creating jobs than those that are not.

The Asia-Pacific Small Business Survey, the eighth conducted by CPA Australia, was of 2952 businesses with fewer than 20 employees from Australia, New Zealand, Mainland China, Hong Kong, Indonesia, Malaysia, Singapore and Vietnam. While Hong Kong is a Special Administrative Region of the People’s Republic of China, for the purpose of the survey data for Hong Kong is shown separately from Mainland China.

Growing sense of optimism among small business owners

The survey found a growing sense of optimism in the small business sector. Overall, 2017 was slightly more positive than 2016, with a moderate increase in the number of businesses reporting that they grew.

Indonesia and Vietnam showed the strongest rates of growth, and Australia, New Zealand and Singapore the weakest.

Small business confidence in their expected performance in 2018 is highest in Indonesia, Vietnam and Mainland China and lowest in Australia, Singapore and Hong Kong.

Confidence in their local economy is highest in Vietnam and Indonesia and lowest in New Zealand and Australia.

Respondents under 40 were significantly more likely to state that their business is growing, and are more confident about general economic conditions.

The Asian average of businesses planning to increase employee numbers over the next year – a metric associated with growing businesses – is 49.4 per cent. This contrasts with a figure of 18.8 for Australian small businesses and 17.6 per cent for New Zealand small businesses.

2017 was a positive year for most small businesses across the region, especially in Indonesia and Vietnam, and these positive conditions look set to continue into 2018,” says Paul Drum FCPA, CPA Australia head of policy.

Small businesses and digital payments

The survey found that over 90 per cent of small businesses in Asia use social media or sell online, especially in Mainland China, Indonesia and Vietnam, while counterparts in Australia and New Zealand are lagging.

Amongst Australian and New Zealand small businesses, only about 60 per cent use these technologies.

The link between growth and technology is reflected in over 78 per cent of businesses that grew strongly in 2017 reporting that their investment in technology was already profitable. The emphasis on technology extends to payment systems, with Mainland China at the forefront. Nearly two-thirds of small businesses from Mainland China offer at least one e-payment option (from digital platforms such as AliPay, ApplePay, and WeChat Pay).

Over a third of these companies said that payments via digital platforms made up over 30 per cent of total sales.

Small business shy of bitcoin

There appears to be a wariness of cryptocurrencies such as bitcoin.

In Vietnam, however, 32.9 per cent of respondents said they accepted cryptocurrencies, although cash remains the most popular payment option for the country’s small business owners.

Cryptocurrencies are also gaining ground in Indonesia, where 24 per cent of small businesses accept it as a payment method.

However, in the other markets surveyed only a small percentage of businesses accept payment via such means.

Drum says that while there is a strong link between adoption of technologies and growth, “this does not always mean that investing in the latest thing is always a good thing – and bitcoins and other cryptocurrencies are a very good example of where businesses need to tread carefully.”

Exports and innovation are key to small business growth

Small businesses that have exports and innovation as a key part of their business model are significantly more likely to have grown in 2017 and to expect to grow in 2018. Amongst Asian business, 24.5 per cent expect revenue from overseas sales to grow in 2018, compared to only 6.7 per cent in Australia and 8.2 per cent in New Zealand.

“The survey results again show a strong link between innovation and growth – yet innovation is not all about white lab coats and Silicon Valley-types,” says Drum.

“Innovation can include introducing a new product or service to your market or investing in new processes – and this may come not just from a new invention but market research in overseas markets or tweaks to your existing product range.”

While technology is improving processes, small businesses in Asia were significantly more likely to introduce a totally new product, process or service to their market or the world than Australian and New Zealand small businesses.

This was especially true with businesses from Indonesia and Vietnam.

Of Australian companies, only 7.4 per cent expected to bring something new to the market (9.2 per cent for New Zealand), compared to an Asian average of 29.1 per cent.

Costs and finance hurt small business

Survey respondents cited customer loyalty, good staff and improved customer satisfaction as having the most positive impact on their business in 2017.

Increased costs and increasing competition were seen as the factors most detrimental to their business. Staff costs were a particularly significant cost in Mainland China, and rent costs were again named as a problem in Hong Kong.

Small businesses in Australia and New Zealand are much less likely to have required external finance in 2017 than businesses from Asia.

In Asia, as well as Australia and New Zealand, banks are the most common source of finance, and in most cases businesses borrowed to finance growth.

In Singapore and Hong Kong, however, there were large numbers of businesses that accessed finance to cover increasing costs. This is a worrying trend, pointing to high cost structures and potentially high levels of debt.

Reflecting the above-average use of social media tools, online sales and new payment technologies, respondents in Mainland China reported a growing use of fintech to finance their business. Over a quarter of these respondents who raised funds in 2017 said that their main source of finance in 2017 was peer-to-peer lending and crowd-sourced funding. The implications of this are not yet clear but it indicates that fintech is a growing field.

Growing cybersecurity threat to small business

Cybersecurity is a significant concern for small businesses across the region.

The survey average saying that an attack was very likely or somewhat likely in 2018 was 35 per cent, with Australia and New Zealand at the lower end (26 per cent and 19 per cent respectively) and Vietnam and Indonesia at the higher end (81 per cent and 76 per cent respectively).

Businesses that expect to grow in 2018 are the most likely to expect a cyberattack, with over 69 per cent expecting it.

Even where businesses do not believe they will be subject to a cyberattack in 2018, the majority are still taking action to protect their systems. The most common cybersecurity actions are regular anti-virus, anti-spyware and malware scans, performing regular backups and storing the backup offsite or in the cloud, and using a spam filter on email accounts.

Actions such as insurance covering cyber risks, engaging a cybersecurity specialist, or having a “whitelist” application to block unapproved software appear to be fairly uncommon. Taking actions in these areas could do much to limit damage from a cyberattack, or even prevent it from occurring.

Related article: 8 cybersecurity strategies to protect you and your business

Drum says the outlook for 2018 is generally positive across the region, particularly for businesses from Indonesia and Vietnam, and those that make good use of technology, that are expecting to innovate and grow their revenue from exports.

“Businesses should be considering how to build their understanding of technologies so that they can invest in technologies that best meet their needs, and take time to learn about new markets. While such research may not result in an exporting opportunity, it may give businesses new ideas they can roll out,” he says.

The data

In total, 2952 participants completed the online survey, conducted from 13 October to 10 November 2017.

Survey participants, by country

Australia 511

Mainland China 606 (Beijing, Chongqing, Guangzhou, Shanghai)

Hong Kong 310

Indonesia 304

Malaysia 309

New Zealand 306

Singapore 305

Vietnam 301


Awash in red ink

Appearing in In The Black magazine, June2018


Australia’s big appetite for consumer debt


Whether they know it or not, many households are becoming financially stretched, but with a taste for the high life – and historically low interest rates – there seems to be little Australia’s savings rate is low, and getting lower. incentive to save.

If Australians are learning anything from the 2018 Royal Banking Commission, it’s that we have a big appetite for debt – and financial institutions have been happy to indulge us – with mortgages, loans, credit cards and overdrafts sometimes far beyond our means to repay. While the Australian economy continues to experience modest growth, saving levels continue to fall, and personal debt is increasing.

Indeed, many households are only one crisis away from financial hardship.

“This is a multi-faceted problem,” says Paul Drum FCPA, head of policy at CPA Australia. “We are seeing wage stagnation in many sectors, disincentives to save, and very high property prices. It’s a dangerous mix.”

According to the ABS System of National Accounts, the household saving ratio stood at 4.6 per cent in 2016-2017. The ratio represents the percentage of net savings on net income, and this was its lowest point in nine years. It continues the downward trend of the past five years, and it’s the longest run since 13 consecutive quarters of no increase in savings recorded between 1985 and 1988.

Providing an incentive

Drum notes that, at present, government policy provides no incentive to put money aside. He acknowledges that most Australians have superannuation accounts of some type, but he believes many people do not see them as a form of saving.

“It’s good to have super as a form of retirement savings, and its tax-preferred status has been effective for that,” he says. “But it does little to recognise the necessity for individuals to save income outside of super to cope with sudden problems or make capital purchases without going into debt.

“In fact, taxing income from savings accounts at the same level as the individual’s marginal personal tax rate adds up to a relative disincentive. Providing a tax discount would encourage greater savings and investment outside of super. Coupled with other moves, it might also encourage investment in assets other than only the family home.”

The 2010 Henry Tax Review into Australia’s taxation system proposed that there should be a 40 per cent savings income discount available to individuals for non-business related net interest income, net residential rental income (including related interest expenses), capital gains (and losses), and interest expenses related to listed shares held by individuals as non-business investments.

CPA Australia underlined its support for this proposal in its submission to the Commonwealth Government on the 2018 Federal Budget.

Increasing the total level of savings would provide a greater pool of funds for investment and would add a welcome element of financial diversification for many Australians, CPA Australia noted.

“Many people, especially younger generations, have become used to not saving much, if anything, from their disposable income, and comfortable with levels of debt that once would have been unthinkable,” Drum says.

“It may be because younger people have only ever really known a low-interest rate environment. They often have a high-consumption lifestyle, without realising that they are very financially stretched. Having a buffer would be a good strategy against the day when there is a personal setback or a general economic shift, such as a significant rise in mortgage interest rates. A tax discount means that a savings buffer would make financial sense as well.

“At the very least, we would like to see the proposal of a tax discount examined in more detail by the government. Some modelling by Treasury would be very helpful to see how it would affect the savings rate, and might suggest other policy moves to improve the picture.”

Rising indebtedness

The other side of the low savings rate is the increasing level of household indebtedness. According to the ABS Household Income and Wealth Survey, which asked 18,000 Australians about their household income and debt levels in the 2015-2016 financial year, about 29 per cent – or 1.9 million households – were classified as over-indebted in terms of their debt-to- income ratio. This means they had debt three or more times their annual disposable income. In 2003-2004, it was 8 per cent lower, at 21 per cent.

“There was a slight uptick in the household saving ratio at the end of 2017,” says Bruce Hockman, chief economist at the ABS, “but it appears to relate to employment growth, so aggregate income has been a bit higher. Household consumption figures are high and continue to grow, indicating that people prefer to spend rather than save. We are not in a period of ‘dis-saving’, as has occasionally happened before, when people have to dip into whatever savings they have to meet day-to-day expenses, but many people are living at the edge of their means.”

Households with a mortgage were the most likely to be over-indebted. There is an age co-relation, too: with property debt, younger households (aged 25 to 34) had higher rates of over-indebtedness, with 62 per cent over-indebted and owing about A$440,000. Among people aged 35 to 44, 51 per cent were over-indebted and owed about A$546,800. Even though interest rates are low, the level of property-related indebtedness has been driven by extremely high house prices.

Melbourne had the highest number of over-indebted households, 419,600; followed by Sydney, with 407,000, although the level of over-indebtedness is greater in Sydney.

Over three-quarters of over-indebted households lacked sufficient “liquid” assets to cover a quarter of the value of their debts. This is a major red flag, as it means that these households are at risk of defaulting on their loans if there is a reduction in their income, or they are required to repay more.

Significantly, it is better-off Australians – the upper 20 per cent on the wealth scale – who are the most indebted.

“About 47 per cent of the more wealthy households that have a property debt are over-indebted,” Hockman says. “In some cases it is because they have one or more investment properties, in others, they have bought a very expensive house. There is often an implicit assumption that interest rates will stay low. That’s a worrying assumption. People with this level of debt are susceptible to real problems if market conditions change, or if there is a change in household economic circumstances.”

Over-indebted high-income and high-wealth households (with property debt) owed an average of A$912,700 and A$924,400 respectively, in property debt. High-income households paid a total of A$754 per week towards their property debt, about A$110 more than high-wealth households. According to ABS calculations, if interest rates were to increase by just one percentage point, these households would have to find an additional A$170 per week to keep up with repayments.

Looking at the broader community, the average amount of household debt was A$168,600 in 2015-2016. This, after adjusting for inflation, is almost double the figure of A$94,100 for 2003-2004. Three-quarters of Australian households have debts, with the most common form being credit cards, held by 55 per cent of the population. Student loans are held by 17 per cent of the population.

“Continually financing a lifestyle on debt, and on the expectation of rising asset prices, is a recipe for trouble,” Drum says. “Many people should sit down with a finance professional and take a close look at their position, and make sure they can weather any storms that come.”


Drowning in debt

“For many people who seek our help, there has been an event that has upset their usual financial arrangements,” says Janet Inglis, a financial counsellor with the National Debt Helpline. “It might be a sudden illness or the loss of a job, and suddenly money becomes a real issue.”

The National Debt Helpline is a not-for-profit service that helps people tackle their debt problems, which includes ensuring they know their rights, identifying ways to increase income, prioritising debts, and providing emotional support.

“Our clients come from across the spectrum,” Inglis says. “An increasing number are casual workers whose working hours have suddenly been reduced. Underemployment and job insecurity are often linked to indebtedness. Trouble with repayments on car loans is another common reason for people to seek our help.

“When people have exhausted their savings, the stress and anxiety compound. It is a real blow when letters of demand begin to arrive and debt collectors start to knock on the door. A good part of our work is to ensure that people are aware of their rights, including hardship provisions. We provide guidance on how to negotiate payment terms.’’

For people with few options to tackle their debts, financial counsellors explain what comes next and what creditors can do to recover their money, including taking legal action. This usually leads to the difficult conversation of selling assets.

“It is always better that people take control in such situations and to not wait for the creditor to act,” Inglis says.

“The key is to plan for the unexpected. Acknowledge that bad things can come out of the blue. Work out how much of a buffer you might need to ride out tough times, then do what you can to build a reserve to that level. Be realistic about your income, your lifestyle, and expectations. If you have something in reserve and never need it, well and good. But knowing it is there can provide peace of mind.” For further information, visit National Debt Helpline or call 1800 007 007 to speak to a financial counsellor.

Saving or spending?

According to World Bank data, in 2015 Australia recorded a figure of 23.5 per cent for gross savings as a percentage of gross national income. This was behind Singapore, at a relatively healthy 48.4 per cent, mainland China (48.3 per cent), Thailand (33.8 per cent), Malaysia (28.8 per cent), Indonesia (33.2 per cent), India (32.7 per cent), and it’s also below the world average of 26.4 per cent.


Planning for transition

Appearing on In The Black Digital, June 2018

url: https://www.intheblack.com/articles/2018/06/08/considering-career-change


Considering a career change? Plan carefully.


The days of having a step-by-step career in one organisation are past, and new models of work are emerging. Changes once seen as radical are no longer seen as unusual, but to make them work takes planning, awareness and self-organisation. Michelle Gibbings outlines how to make a career leap.

“Many people make a major career change because they realise they are no longer being challenged,” says career consultant Michelle Gibbings, author of the book Career Leap*.

Michelle GibbingsThere might have been a change in their life situation that makes them think about what to do next, or they might be on the brink of burnout, feeling the physical signs of stress, says Gibbings.

Of course, there are cases where it is not a choice but pushed onto them by redundancy, she adds. “That can be traumatic in the short term but in my experience it often turns out to be a blessing, opening up opportunities for personal and professional reinvention that might not otherwise have been considered.”

For people in the finance sector, the most common transition is a shift from a corporate environment to a consulting practice or small business. If the move seems radical, however, there is usually some point of commonality of skills, which might be management, financial advice, or strategic knowledge.

“I had one client who moved from a corporate role to start a florist business,” says Gibbings. “The point of commonality was her business knowledge, as she was managing the business, not arranging flowers. She was very happy with the change.”

How to start your career change

An essential first step in making a career leap is to work out where you want to go, which entails deciding what you like to do.

Surprisingly, many people do not actually know what they like to do. This is particularly true in the finance sector, where it can be difficult to find the time for self-reflection and consideration.Career Leap

“Look at it as an audit,” says Gibbings. “An examination of your work, your life, and the balance you want to have. It can be a hard thing to do on your own.”

She suggests talking to as many people as you can, including those different from yourself in outlook and experience.

“People often find that they can do more than they first think they can,” she says.

Warren Coxall, associate partner at recruitment, search and advisory firm FutureYou, agrees.

“Making a career transition may mean making sacrifices in the short term,” he says. “This may be taking on a more junior role, completing additional study, or taking an initial pay cut. But anyone can make a career change at any stage.”

Coxall is in a good position to know. He has made a number of career changes, including from the entertainment industry into recruitment and search, and now into a talent advisory role.

Research your career change

Both Gibbings and Coxall emphasise that a career leap should not be a leap in the dark. Once the direction is chosen there should be a period of research to identify what will be needed.

It might be necessary to develop new skills, especially if you are going out on your own. Adjusting to the lack of support provided by a corporate environment can be a problem, especially when it comes to learning new technology and processes without experts to call upon.

Another issue in moving out of a large company is the change in social dynamics. Working for yourself can be isolating for people used to having others around them, so it can be important to have a supporting network of friends and family.

“No career can be considered in isolation. The best career path is one that aligns with your personal purpose and values,” Coxall says. “Consider how your new career path will impact your relationships, finances and daily life.

“It’s important to ask yourself the tough questions and be honest with your answers. Are you willing to relocate for a new career opportunity? Are you willing to sacrifice financial reward for professional growth?”

Many people will want to give you advice and Coxall says you should be judicious in how you evaluate this. “It is ultimately your decision so don’t be swayed, and seek out others who will help you along the journey.”

Don’t rush into a career change

Coxall also advises that the decision to make a career leap should not be rushed.

He took over a year to decide how and to where he should make his own career leap into the talent space, and has never looked back.

Likewise, Gibbings notes that adjusting to a new pattern of work can be difficult. “Don’t assume that what worked for you in your old career will work in the new environment,” she says.

Be prepared to throw out the old rulebook. “If you take your leap for granted and are not strategic about how you position yourself, build connections or focus your effort, then unfortunately you’ll most likely land face first.”

Five tips for making a successful career leap

  • Understand why you want to leave where you are
  • Take some time to decide where you want to go
  • Conduct a careful audit of your skills
  • Determine what you will need in your new role
  • Understand how your change will affect your personal life and the lives of those around you


* Career Leap: How to Reinvent and Liberate Your Career by Michelle Gibbings, Wiley, ISBN 9780730352198.