Short-term business follies

Over-sized garden folly

Over-sized garden folly

Sometimes I meet people who do not so much have a business plan as be after just making a fast buck. They try to follow every trend, or start implementing a strategy they just thought up in the middle of the night without thinking it through. The trouble with ideas they have in the middle of the night is that they may well be (well you have guessed it) dreams.

Anyway, there will be some product they can make or get and sell for a few weeks in the summer. It might be a pottery garden feature. “Hey, we can knock up a few of those.” Suppose the weather is poor (again) and no one can work or enjoy their garden? The summer doesn’t last more than a few months. Where is the revenue stream coming from then?

The truth is that we all need a longer term plan to make money. We need to plan our income for all four seasons. If our business is seasonal we need to think well in advance what income we can get in when our core activity is slow.

We all need to change and adapt in our business environment, and adjust our marketing strategies, but we also need to have firm long-term objectives to ensure the continuity of our income and survival.

I didn’t make up the garden ornament story. It was one example of having a “bright idea”; spending money and working hard without considering whether there was a demand and if so, how long that demand would last. Have you heard of any expensive dreams like that?

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Run too fast, fly too high

Janis Ian and me

Many successful people in business are prepared to take risks, which is why they get ahead of the game. I admire some who have take calculated risks to be a huge success. I guess Richard Branson would be one example of someone who stuck his neck out. Very often he has taken risks with finance and burrowing. Sometimes he has come to grief, but has had enough to fall back on. With the huge empire and brand he has, you have to admire his courage.

Sir Richard has always shown a certain prudence, though. He has never obviously put all his business interests at risk.

When I am out for my evening walks, especially on Friday and Saturday evenings, I have to take added risks in crossing the roads because of the boy racers; those driving at excessive speeds over the limit. They don’t worry about the statistics.  The adrenalin takes control and they take risks. So many more come to grief in the age group 17 to 24 than in any other age profile.

There do seem to be people who are the equivalent of those drivers in running their businesses. They take excessive risks. They do not consider the consequences of their actions down the line. They try to expand too fast, and they borrow money in order to do so.

Nowadays the banks appear reluctant to lend too much, and are very risk averse, yet somehow they allow businesses to borrow through credit cards at very high rates interest, with APRs well over 20% when in the UK our bank base rate is still only one-half of one per cent. At a certain point the high interest takes its toll in terms of cash flow, or absurdly in some cases, they make a decent profit and borrow so much against their success that they cannot pay their tax. And so the walls of the business come tumbling down either because the banks / credit card companies or indeed the tax authorities want their money, but the business owners have spent it on more assets which are not readily convertible back into cash.

As usual it is all down to planning. If you fail to plan…

There is always a temptation to try to fulfil as many orders as possible no matter what. It is very easy to overstretch both in terms of resources and in terms of finance. If we have a resources problem only we can pull our horns in and manage what we are able to deliver. If we are over-committed on finance and borrowing we can lose everything by running too fast, and trying like Icarus to fly to high.

Do you know anyone who has flown too near the sun?

Here is a video with Janis Ian about running too fast.

Click here if you can’t see it.



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Do you really have a business? Part 4

A business lost

A few years ago I said I would help a friend who was thinking seriously about buying a nightclub or “venue”; that is one which had live entertainment.

Of course I was happy to help my friend, and said she should ask for copies of the recent accounts produced for the business. What she received and sent to me were records which had been obviously compiled by the owner overnight using QuickBooks, and which in my view were entirely fictional. It was clear that they left out not just a lot of the more obvious expenses such as the bar cost; hardly any beer purchased compared with that sold; but also hardly any staff costs (either left out or paid in cash, no questions asked).

My friend did not understand that side and she was looking to part with nearly £100K.

So here is a tip. If you are looking to buy an existing business, even a small one, ask for certified copies of accounts from a reputable firm of accountants or tax advisers. If the owner is a DIY bookkeeper-accountant, ask your professional to go through the books and give an opinion as to whether they add up not just numerically, but in a business sense.

Don’t part with your hard-earned money until you know what you are buying and how much it is really worth. Buying a business is one of life’s big decisions. You need to get it right, don’t you?

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The physics of getting expert help for your small business and for yourself

English: Schrödinger equation of quantum mecha...

Schrödinger equation of quantum mechanics (1927) by Yassine Mrabet. Image via Wikipedia

I have a confession. I like to know how everything works. I like to know how my cameras work, ancient though several are. I like to know how the universe works so I buy and try to read the books about quantum physics and string theory. That is why I recently purchased, upon recommendation by a friend, How to Teach Quantum Physics to Your Dog (not an affiliate link).

I have a general idea of how my car works. I have a manual for it. However, if anything goes wrong with it I wouldn’t have the first idea how to fix it other than changing a headlight bulb. Even that is really difficult with my car, just getting access past the air-con on one side and the water pump on the other.

So I have a guy who is a great mechanic. He knows how to fix cars. He has all the manuals. He has the computer and the software, and most of all he has the experience. That is worth a lot more than reading all the manuals. He is used to dealing with almost any problem and even if it is one he has never encountered in practice he will know where to look for guidance or who to talk to. He knows what he is doing whereas I couldn’t even start to fix my car.

Many of you may know I work with tax issues for businesses and in other areas as well as helping businesses with other problems they may have. Recently I was contacted via email by someone who had converted his private house into two flats or apartments he was selling and he was building two other flats in the garden, also to sell on. He wanted to know his tax situation.

In UK terms, this sounds a lot like property-developing liable to income tax on the profits, and I told him so, and offered my services.

He replied “What a load of old tosh! I can deal with HMRC myself thanx, thought you might know the answer.

By your account anyone who improves their own property could be treated as self-employed
property developers, what planet are you on? (Well, yes, if they do it with a view to short term profit)

I’ve worked out the answer for my self from the gov (Government) web site.”

I was polite in the face of this and suggested that even if he did not want to engage my services he needed to do some more research. He responded by suggesting that I was only after his money and was out to mislead him. He ended by calling me “Jonny Boy” which was no doubt supposed to be a put-down, though it was not an effective one to someone who was used to being called Jon-Boy in his youth after John-Boy in The Waltons.

If I started to take my car apart to find a problem I would soon get into trouble. If I tried to design a new brochure for my business I would make a mess of it because I haven’t the skill, the experience or the knowledge. If I tried to write my own tax compliance software or build my own website from scratch without having the right tools I would fail.

At a certain point there is no substitute for paid professional advice. We could read all the manuals in the world but without hands-on experience and good tutoring we will make a mess of things. Reading A Brief History of Time didn’t make me a cosmologist or astrophysicist and much of what I read in that book was very difficult to grasp.

I am still working on learning quantum physics as I mentioned. In the meantime I will leave the difficult stuff in my business that I can’t do for the specialists I bring in. Do you know when it is time to “phone a friend”?

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New Year business predictions – why we should treat them with caution


The slow train to nowhere?


Has your in-box suffered an influx of New Year predictions? Mine has. Some of the subjects are predictable of course:

  • How will the economy fare?
  • What trends will we see in the property market?
  • Where will technology go? By which they mean computers and gadgets.

Now of course we can make quite long term predictions in a vague sort of way and all credit to John Elfreth Watkins for imagining in 1900 many of the sorts of things that are part of our lives today. But of course dreaming about how the future might be is quite different from predicting how we might get there or knowing the technology that might be involved. Mr Watkins did pretty well; no doubt about that. It is the chain of events to get there that is impossible to know.

Railroads and sun roofs

Advance planning involves making predictions of course. Hence the newly revived high speed train link (HST) between London and Birmingham and ultimately beyond is a breathtaking gamble on an anticipated future. I am not part of the campaign to save the Chilterns from a blight although I know some of the countryside and see the opponents’ point. What I see is a huge amount of money being spent on a future world which may never happen.

What will be the demand for a quicker rail service in 2026 or 2033 when it reaches Leeds and Manchester? They are even projecting to 2043 in terms of “benefit”, demand and fares. That is over thirty years in the future. Thirty years ago those of us who were here had a Britain with a coal mining industry (maybe we shouldn’t have had), had not predicted the Falklands War although it was only a month or so away, had no mobile (cell) telephones, and had not started the fashion of carving holes in our car roofs so that we had a “sun roof”. The internet as it is today or was fifteen years ago did not exist except as an internal network.

Visiting Auntie Doris

So I could make some predictions about the future of the high speed rail system. Of course people will still want to see family in person even if they can video conference them, even though we might be transmitting and sharing the atmosphere and smell of another place by then. Will rail leisure travellers need to get there quicker?

I think the high speed aspect will not be needed because frankly people don’t need to travel so much for business unless they are hands-on engineers or architects etc. Most of us don’t need to commute except that somehow the cultural shift hasn’t happened yet to recognise that fact. But that shift will come within much less than thirty years. That’s my prediction.

Of course I may be wrong and have stuck my neck out. However, I am not sticking it out nearly as much as the HST planners.

A sticky wicket

Five years ago few predicted the credit crunch. Two years ago we expected there would be a recovery in the economy by the beginning of 2012, but we didn’t anticipate the Euro crisis. So never mind the predictions re investments, property prices and the like.

We must rely on our business experience, work at our marketing and change if it isn’t working. We must ask our peers for help. We must play according to the current conditions as a good cricketer batting must adapt to the wicket and the deliveries bowled. It is no good thinking about making a century when you have made a few runs in a damp atmosphere.

I think we have to accept business is difficult now and use all our skills together with all the help we can get to deliver a better service than our competitors. Therein will lie our reward. Defend when we have to and attack when the time is right.

How is your batting form?

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Running your business the right way








Most of us are very serious about our businesses. Many people work very hard but do not use their time well. It is so easy to get involved in matters which don’t make money.

  • Some people try to do all the admin themselves; all that form filling on-line and off-line.
  • Some people using marketing methods which experience should tell them isn’t working, but other people still do it.
  • Some people offer the same product or service as everyone else in their line, and wonder why they never increase their market share.

It’s just like those people in the gym who waste their time or do exercises which address their fitness needs.

In a small business:

  • You have to be different.
  • You have to be memorable
  • You need to show your personality or personal brand because your customers buy you.
  • You have to stop wasting your time.

I am a business fitness trainer. It ‘s a great advantage to have someone from outside looking in. A mentor, an extra brain, someone who will get their hands dirty on what needs to be done and who can work alongside you when you need it.

Can you count on help and advice when you need it? It’s all very well ploughing your own furrow, but sometimes you need someone to tell you that you are on the straight and narrow. Who do you ask?

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How to get the right result in your service purchasing

A Roman denarius, a standardized silver coin.

Image via Wikipedia

We know what we want?

It is easy to think we know what we want when buying in services, but we do need to check what our supplier thinks we have asked for. After all, if we buy a new TV or dishwasher, we need to know it fits our requirements; whether it is the right quality or has enough capacity. We need to make sure that the item is of a suitable specification.

I am sure we have all made mistakes with our purchasing. If it is not a high value item we can shrug our shoulders and learn. If we have spent a lot of money we need to make sure we are getting what we expect.

Often in business we do spend quite a lot when buying in services. It might be on marketing, it might be on our telecoms purchasing, or finance or accounting services. It is vital that we give our suppliers all the information they need to know that they can fulfil our requirements.

From the other end

As a supplier I have on occasion found that I have not been told what I needed to know. Once I had a very detailed brief from a client, and asked the questions that seemed obvious from the instructions. I started work on the project and then found out something that changed everything. I did not learn of this additional factor from the client. I won’t say I found out completely by accident. Sometimes we can make an educated guess based on not much. However from where I started I could not have known about something which was so left field and which for legal reasons meant I could not complete the project as originally instructed.

Looking back, the client had no excuse not to tell me. It would be akin to forgetting to tell the builder putting up an extension to your house that there was a disused mine shaft underneath.

Lay it bare

The moral of the story is that if you are buying in services, whether it is website design, accountancy, financial advice or re-fitting of your shop you need to specify exactly what you want and tell your supplier everything. It is always better to tell them too much than too little, and use common sense to decide what they might need to know but couldn’t guess. Otherwise everyone ends up with egg on their face. I prefer my egg in an omelette and I cook a decent one. I don’t like wasted money, wasted time or wasted eggs.

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Really not a football post

Manchester United vs Chelsea 1-1 (3-0 after pa...

Image via Wikipedia

And I don’t mean a goal post. It is just that sometimes we can use sport to illustrate a point about business.

So to a cliched quote “If you keep on doing what you’ve always done, you’ll keep on getting what you’ve always got.” attributed to W L Bateman. This sentence is used everywhere to entreat business owners to change their practices whether it is their purchasing, their marketing or their office practices or whatever. Of course, if things aren’t being done well and the business is struggling, it is best to turn over a new leaf and get help.

Sometimes, though, using tried and tested methods and having continuity is what brings success, not just now and again but year after year.

No, this is not a football post

Which brings me to football, the variety known better in America as soccer. I will let you in on a secret. Manchester United is not my favourite club. Nevertheless I have to admire their achievements year on year, and their pragmatism in accepting that they cannot win everything every year. Just the same they have a pretty good average.

United have won the Premier League again in 2011. They reached the European Champions’ League final. It is a great achievement (he says grudgingly but admiringly). How have they done it and how do they do it? By sticking with the same manager year on year (yes, Sir Alex Ferguson for nearly a quarter of a century), a manager who is the best at what he does and is single-minded, and doesn’t care what people think of him. Success brings money, and whatever the financial antics of the owners, the football business is self-perpetuating in its success.

United have won the Premier League four out of the last five times. They won the Champions League in 2008 at Chelsea’s expense.

Really, it’s not about football

Oh yes, on the other hand, there is Chelsea. The club has loads of money at its disposal, or rather, the owner does. Chelsea have won the Premier League Title three times in the last six years which is also a great achievement. I have to declare an interest here. I have supported Chelsea since I was a lad, seen them relegated to the old Second Division twice, and then promoted back to the first. I followed them from one end of the country to the other.

Chelsea nearly went out of business in the eighties. They were saved by an astute character called Ken Bates, whose hobby is rescuing football clubs. He made Chelsea a top-rank successful club by most standards, had the vision to employ managers from overseas because they were the best for the job, and Chelsea won the FA Cup and played in Europe.

Mr Bates sold out to a very rich man whose apparent ambition is to own a football club that wins the Champions’ League. Chelsea have actually been a bit unlucky not to have reached the final on one occasion and not to win in the final on another, but that’s another story.

The owner is single-minded on winning the Champions’ League. He has sacked several managers because they didn’t quite make it after two or three years. He is so impatient. This season he sacked the manager’s well-respected assistant, Ray Wilkins, back in November. The club was top of the Premier League at the time.

The team stuttered for six or seven weeks and lost their place at the top. From January, though they had a great league record. I think if they hadn’t sacked Wilkins they would have won the league. The other top clubs including even United have not been at their best this last season.

I am not taking anything away from United. They got the points and Chelsea ultimately didn’t. Carlo Ancelotti, a great and successful football manager was then sacked at the end of the season because Chelsea hadn’t won the Champions League.

So, it’s not about football

This is a difficult post to write for me. Yet United demonstrate along with Sir Alex that if you have a tried and tested formula and you keep doing the right thing in business, whether football business or anything else, you WILL succeed. United didn’t win the Champions League in 2011, beaten by a better side. However, you wouldn’t say that because now Apple has a larger market capitalization than Microsoft that Bill Gates is a failure, would you?

If it is not working, change. If it really does work, don’t let anyone tell you that you are wrong. Sir Alex wouldn’t. What do you think?

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Did you miss the boat?

Don’t rue your luck

Nr. St. Brelade, Jersey

Recently I have witnessed people publicly regretting that they did not manage to create a worldwide on-line network before Facebook appeared. Why didn’t their big idea grow the way Facebook did? The fact is that hard though they worked, and entrepreneurial though they were, Messrs Zuckerberg and co were very lucky in simply being in the right place at the right time. The right time was neither before they planted the seeds or afterwards, but exactly at the time they happened to start. That’s life.

Others may think “should we have sought venture capital rather than going alone? Should we have asked for support from this media person or that?” It doesn’t matter. The time has gone. We need to deal with the present.

We all make “mistakes” in our working lives. Sometimes we can benefit from them and learn. Just over ten years ago I left a comfortable but boring job with a large accountancy firm to go for what looked like a more interesting opportunity with a niche consultancy. I was warned against it by my then boss. “You will regret it” I was told. “They don’t treat their staff with respect.”

Being fired

Of course I didn’t pay attention. I took the new job. Thirteen months later I was given fifteen minutes to clear my desk when I had been under the impression that I was giving a presentation on the firm’s latest ideas to an invited audience in Jersey the following week. I had been puzzled that my flight and hotel accommodation had not been confirmed.

No regrets

My departure from that firm cast me into the world of self-employment. Do I regret joining that consultancy? No, it was the right decision at the time. I enjoyed the work hugely in that thirteen months. It boosted my confidence. I realised that I was very good at what I did, which I had begun to doubt having been starved of quality work at my previous employer.

We cannot dwell on what might have been. As independent business people the future is more in our hands. We may think sometimes “suppose I had accepted this offer or gone for that contract”. Such thoughts are a distraction and no more useful than wondering about how our lives might have been had we stayed with a past girlfriend or boyfriend.

Our past experience is how we learn to plan the future of our business. We just keep getting back in the saddle, and as business owners, at least the horse belongs to us.

Don’t look back. Does this ring a bell with you?

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Why starting a business is hard work for the brain

Holiday times are when we have space to think about the future, and for some it will be to seek new opportunities in starting a business.

When we go back to first principles to start a new business we need a business plan, and not just one for the bank. We need to think whether:

  • There is room in the marketplace for our business
  • We can stand out from the competition.
  • We have enough money to spend and to survive on before we get into profit.
  • If we borrow money we can pay it back
  • We know how to market and have done our research
  • We have support from our family and friends

We need to think hard about each of these things. We need to spend time going through each aspect. We need to think about lifestyle changes and the effect on our families and ourselves.

Getting on our bikes is never easy but it can be very fulfilling. It is not wrong to accept help along the way and even to hire someone else’s expertise or their bike of course. Just do it!

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