Why Australian Businesses Seem to Be Failing

Hungry Jacks in Sydney - Remind you of Burger King?

I am not going to sit here and even pretend to be an expert at Australian business.  I have not been in Australia long enough, or done any kind of research on Australian businesses, to proclaim that I am any kind of expert.  However, I am an expert when it comes to American businesses and why American businesses often fail.  I have researched hundreds and even thousands of individual businesses, their revenues and expenses, their attendance, their local demographics, etc, etc, etc, and thus I have an excellent idea of what will make any business work, no matter who the customers are, or where the business is located.  Thus, because I have tons of research experience locked away in my head, I can’t help but analyze the businesses I see in Australia and what they are doing right or wrong.

Why do I think there’s something wrong with the businesses in Australia?

Quite frankly, there are two reasons.  The first is that the locals keep telling me so.  Here are a few paraphrased quotes I’ve heard recently:

• From a resort manager:  “There are so many same-type attractions in the area because when one person opens up a new successful attraction, other business owners see that it’s working, and they figure, ‘if it works for them, it will work for me.’  Thus, a bunch of the same attractions will all open up at the same time, all offering the same business models and elements with nothing new or unique, and then all of those attractions will suffer.”
• From a restaurant manager:  “In Melbourne alone, there are 20,000 restaurants – all offering the same menu and service.  Since none of those restaurants differentiate themselves as extraordinary, approximately 30% of the restaurants in Melbourne close each year, but just as many open each year, so the number stays fairly stable.”
• From local parents:  “There’s no reason for me to go more than 10 kilometers out of my area.  All the stores that are 10 kilometers away, are also at my local shopping center.  So why should I bother making the trip?”
• Also from a local parent, “The government does not encourage tourism in this area because we already get flooded with tourists every Summer, and we don’t want them.  So, the government makes laws that limit what the businesses can do.”  (That’s a very strong reason why businesses can fail, right there.)

If you've ever been to Venice, then you've already seen the million masks for sale there...

Those were just a few of the comments I’ve heard.  (Whether or not they're 100% accurate is another story.)  There are many other quotes I’ve heard on the news, in TV shows, and from eavesdropping, but I’m going to move on so I can get to my point.

The other reason I think Australian businesses are failing is:  We just bought a brand new GPS while IN Australia, and yet 90% of the businesses we search for, no longer exist by the time we get there.  It’s a NEW GPS.  Since GPS information is supposed to be less than two or three years old, I can safely assume that business turnover is high.  (I know, it's a silly reason to think Australian business may be failing, but it does kind of prove my point.)   On top of that, it seems like many businesses you walk into are basically ghost towns.  You see a handful of customers at most, and you can’t help but wonder, “How is this business doing?”

Why the Businesses are Failing

While I am a huge advocate of giving exceptional customer service to get and retain customers, I don’t believe it’s the customer service in Australia that is making these businesses suffer.  For one thing, 99% of the Australians I’ve met have been incredibly friendly and talkative – even in the bigger cities.  In the smaller towns especially, people seem genuinely curious about what brought the Americans to their region out of season, and what our plans are during the duration of our visit.  They seem more than willing to sit and talk for a while, and more often than not, I have to make some excuse to get out of the shop and continue on my way.  In fact, there are at least two instances where I revisited a restaurant location with my family (only for the SECOND time, mind you), and the cashier actually remembered our orders, right down to the number of sugars we liked in our coffee.  Now that is EXCELLENT customer service.

So if the business offers great customer service, why are they still failing?

Here’s are three reasons I can cite from the time I’ve been in Australia (and the last six years of market financial feasibility research):

1. A Sterile Environment:  Every country has businesses that make this mistake:  A business owner opens up their business, and they end up being so strapped for cash, they decide to skimp on creating a warm and inviting atmosphere.  Instead, they go for basic white walls, a few generic pictures, very basic fluorescent lighting, possibly some wood paneling, and the floors are often covered with the most basic industrial wall tiles that can be found.  While all of these choices can definitely save money, they do not create an atmosphere that people want to return to.  In Australia, I’ve seen plenty of businesses that make this mistake, PLUS, they skimp on the heating and the lighting.  The end result is that the patrons leave as soon as the cold room penetrates their multiple layers of clothing, and the patrons often get “creeped out” by the dark, unwelcoming atmosphere.  The end result of a sterile environment is that customers do not want to hang out for any length of time (or return), which can mean smaller profits if you run a business that involves impulse shopping – like a retail store or even a café.
2. They’re All the Same:  Again, this is a problem I see in America just as often as I see in Australia – businesses all have the same business model.  For example, a while back, I researched cafes in my hometown.  There were NINE Starbucks in my town alone, and well over 30 cafes.  The menus for those cafes were all the same (even at Starbucks) – a variety of coffees and teas mixed with high-carb pastries.  In addition, they all offered free internet.  The problem with that is when a lot of businesses offer the same product in the same business model in a small market area, those businesses will end up sharing the same customers and those customers will often end up going to whichever business is closest and most convenient.  Thus, the more businesses are the same, the fewer customers that business will have.
3. Bad Location: Today I went looking for a restaurant that served steak.  Because I was following the GPS, I ended up on a beautiful hillside overlooking the ocean – a view that would have been perfect for a big, fancy, way-too-expensive steakhouse.  What I found instead was a plant nursery.  The restaurant was already gone, and it was easy to understand why.  As nice as the view was, the road to get there was winding and steep, and there were no other businesses around – only houses.  It was NOT an ideal location for a restaurant that needed tourism to thrive.  Every business, I don’t care what the business is, needs other businesses to thrive.  Not only do they need other businesses, but they need parking that can accommodate the customers they do get.  If a location is too “out of the way” or offers no parking, then customers will find other businesses that can accommodate them better.  The worse a location is, the harder the business will have to work to get customers to come back.  And in all honesty, that’s what any business comes down to...getting the customer to come back.

If you’ll notice, I have not mentioned bad customer service or freebies, like I did in last week’s article about American Style Customer Service.  I stuck solely to the factors that can quickly ruin any business, no matter where they are in the world.

Tomorrow, I will blog about how to balance out these factors to help a business thrive, even if the cards are stacked against them.  Because the truth is, there is hope for any business to survive and thrive... you just need the right tools.

If you agree or disagree, or if you have seen "Obvious Business Mistakes" anywhere in the world, please share it in the comments below.  I love it when people share their knowledge because it helps others improve whatever needs improving.