Bulletin: September 2016

By: archerycapital

“Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” – Andy Grove

The mother of all businesses resumed last week. The Australian Parliament is back in swing with the Coalition returned on a wafer-thin majority. Given the extremely close election result, it is not unreasonable to expect that the Coalition should be on edge, and keep their gloves up against a rejuvenated Labor Opposition. But what instead happened in the first week, was that a number of government MPS, including senior cabinet ministers chose to take an early mark on the Thursday, and this ended up in the Coalition suffering the humiliation of becoming the first sitting government with a majority to lose a vote in more than 50 years!

This week it was the opposition left red faced with Sam Dastyari (finally) falling on his sword and resigning from the Opposition Front Bench following the mauling received when it was revealed that he had his expenses paid for by a Chinese donor. Regardless of the impropriety that this conduct indicates, the fact that a seasoned politician would allow this to happen is evidence of the complacency in his thought process. Just because he disclosed it, did not mean that he would get away with it in the court of public opinion!

The operating rhythm of any business in the SME sector seldom allows for an ‘early mark’, nor are they presented with offers to have their expenses picked up by third parties. In fact it is unfathomable that SME owners and their respective senior team would dare to be lulled into such a false sense of security and allow themselves to be exposed, which in turn would allow their competitors to pounce. Whether it is the business, political or sporting arena, it is important to remember that where competition abounds, staying ever alert and maintaining a degree of paranoia is what separates the leader from the pack. We strongly encourage you to remain alert, remain hungry, and clean that review mirror!

The Olympics are over, cue the naval gazing…

Our Olympians returned home from Rio, and it did not take long for the post mortem to begin as to why after such high hopes, and so much investment, Team Australia returned with 6 fewer medals than the London Olympics. Given the fact that we here at Archery Capital are uncomfortable with the level of expectation placed upon the shoulders of an overwhelmingly younger and newer team, we choose to congratulate, instead of criticise Team Australia. We also thank them for reminding us all that when you compete on a global stage to never forget that the competition might also be improving through training and investment into their respective sporting disciplines.

We believe that in preparation for the next Olympics, management and coaching staff should take heed and address the complacency that has been allowed to impact upon the execution of the plans for a larger medal haul. Finally, it is simply unacceptable that the Brits did better than us, and this cannot be allowed to continue!

Farewell, Glenn Stevens!

As anticipated by economists the RBA chose to leave the cash rate unchanged following last month’s cut.  It is becoming apparent that despite best efforts by outgoing RBA Governor Glenn Stevens and his team, the Australian Dollar remains resilient.  In all fairness, this is in part due to global economic conditions, with the term currency war now being commonly bandied around.  It appears that most countries had a similar plan to transition their economies by softening their currencies, in the hope that a softer dollar would stimulate investment into the other quieter components of the economy and drive overall growth.  What appears to have happened, however, particularly along the East Coast of Australia, is a continued increase in property prices driven by lower interest rates.

Further, Australia has now enjoyed 25 years of uninterrupted economic growth, and if it continues next year, we would have taken the mantle away from the Netherlands as the only country to have achieved this significant milestone.  Beyond sheer slipstream good luck provided by the growth of our regional neighbours, we should also be thankful in part to the active role that the Reserve Bank of Australia has played in carefully managing the economy, and it would be hard to accuse Mr Stevens of being complacent in his time in the role as RBA Governor.

In his final interview this week, Mr Stevens warned that Australia’s record growth should not lull us into a state of complacency, and indeed encouraged us to not view this milestone as a spectator sport and sit on the side line.

Some of our SME clients have identified an opportunity, and appear to not be wasting time.  The increase in value in their property assets, coupled with the 25 years of economic growth are seeing some of them utilising the extra fat in their property assets and borrowing against it to further invest in their businesses.  While no one can truly predict the future, it again appears that the SME sector has chosen to strike while the iron is hot.

Our observation of bigger corporates on the other hand, is that they have chosen to adopt a wait and see approach.  We hope that this state of complacency is not permanent.  All businesses require investment for growth, and when money is cheap, and the economic outlook is quite good, advantage should be taken to take a punt!

Deal of The Month!

Archery Capital was approached by a borrower who had an opportunity to purchase some land and needed to complete the sale urgently so as not to miss out on a discounted rate. The borrower had approached a number of lenders to obtain quotes on price and timing for the deal however, no one could confirm funding within the requested time frame. We were able to process the request from an application to drawdown stage in 1 business week. This ensured that the borrower could start the process of realising their dream of becoming a property developer, and with the discount applied they will be able to start renovations earlier than they had hoped.

UPCOMING EVENT: The City of the cheese stick, and the Deconstructed Coffee!

Both Paul Bailey and I will be in Melbourne from the 21st to 23rd September 2016 meeting with a number of people in Victoria in anticipation of forming long-term mutually beneficial relationships. For those in Victoria who are interested in meeting us both, please contact us so that we can arrange a time with you during this period for a coffee (not deconstructed) catch-up.


We continue to watch and report on matters that are important to the SME sector in our monthly Bulletins, and also attempt to also keep it topical. In this spirit, I invite you to please provide us with feedback if you feel we are not hitting the mark. Finally, as always, please feel free to contact us for a discussion on anything you believe we might be able to help you or your clients with. Have a good start to Spring everyone!

Related post