Choices

Our first businesses are generally based on our familiar environments. We tend to work in familiar areas. That is understandable, but we can corral ourselves into a particular mindset in which we can believe that we are only good at one discipline. That can be a mistake and potentially very limiting.

What else would we enjoy? What ambitions did we used to have? What do some of our friends do which we think would be satisfying and fun?

Our marketing friends tell us we should always keep testing our marketing campaigns. See what works and what doesn’t, but give each idea a fair run. Why not adopt that method with our new enterprises? Why not market and sell our new service or product and just see if we are successful and we have fun doing it?

Why not?

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Better to have a business plan than have your dreams shattered

I was shopping in our village this morning and found the butcher’s shop was closed. There was a notice in the window, presumably put there by the shop landlord, which announced that the shop owners had paid no rent since they started trading last April, six months ago.

I always try to support our local shopkeepers, especially on a Saturday when I always go the village, sometimes with my wife. It is hard-going for many local traders. We are blessed with a very successful hardware shop who seem to sell virtually anything from light bulbs through egg-timers and fire guards to those things you use to unblock toilets. The business has been in the same family for 100 years and they know exactly how to cater for the needs of local people. Recently they have expanded into the shop next door.

We also have a successful baker’s shop. They do a roaring trade in the morning and also make sandwiches for the lunch time trade from local workers from the offices, shops and the factory units we now have down the road. They again cater for a known need.

Until a year ago, the village butcher’s shop was occupied by a local family of butchers, who also own a “farm shop” a couple of miles from the village in which they sell local produce – all the usual things you would expect a butcher to sell, including game. They closed the shop last Autumn because as they told me, the overheads in the village were just too high, and whilst the shop was quite busy they were not making very much money. They had decided to concentrate on the business out of town where they owned the premises on the farm and had more control.

The sad reality is that many people now prefer the one-stop shop available at the two large supermarkets within ten minutes drive and where parking is free. In the village, unless you know where to park, you will have to find 60 pence even for an hour, which of course discourages people for shopping locally even with the high price of fuel used in driving to the supermarket.

The people who took the butcher’s shop last April should have asked themselves why an apparently successful business from down the road could not maintain their village venture profitably. The likelihood is that the rents and business rates prevented the shop from being viable. Such a shop would have to rely on a very high turnover to cover the costs, which frankly they were never going to be able to do in the face of supermarket competition, and of course the farm shop owners who were their predecessors.

It reminded me of the cafe owners in a local town who asked me a couple of years ago to help them make their business profitable. They had a dozen tables, but were paying an annual rent of £17,000 as well as a large amount for utilities given that they were cooking all the time. It was clear that they could never make a profit even if they employed no one else. The figures did not stack up and never could have even before they opened. Rents based on floor area tend to reflect a higher expectation of profit often through a turnover of higher valued items. If you have a cafe you have to have a fantastic following or be really exceptional to stand out in a seaside town with numerous similar offerings. My clients lost the business they should never have started.

The lesson is to always have a business plan. A business plan is not just something we put together for the bank to raise finance. Sometimes we have to look past our romance and our dreams and think whether we really have a shot at making our ideal business work. If we have not done our sums properly and have not thought about contingencies for our teething problems and things that go wrong, our dreams can become nightmares and our hopes can be wrecked, as well as our financial security. A business plan is not just for the bank manager, but something that has to be carefully thought out, and adhered to. It can be changed as circumstances alter, but always has to make sense, otherwise starting a business will just be a leap in the dark.

© Jon Stow 2009

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Enterprise and risk

I have been talking about risk recently in another context. I was a little dumbfounded yesterday when my Mum said she was told by a family member that she should not sign up to Facebook because there was a risk of identity fraud. Of course there is a small risk. I am indebted to @royatkinson for this link and it could be said that I and all of us who are active with profiles on-line run some risk, but what is life without risk?

The reality is that most small businesses which offer services of any kind and very many who are making and / or selling a product need an on-line presence, and what is more, need to engage with their network. In fact, you need to be on-line to get a network beyond a comparatively small number of friends, which is not enough people to refer you. I was just trying to list how many websites where I have a profile. In terms of business and social networks I have at least ten, and must have more I cannot think of at the moment. I have four blogs: two for business and two personal.

The point is that we have to give some of ourselves in order to be noticed. There are then several steps until we get to business. We need to enhance our reputations (or hope to) and be helpful and give useful information to others, but we need a public presence on-line to get known to further our businesses.

I think the contrast between me and our relative telling my mother not to sign up to Facebook is that I am in business on my own account. The relation has been in a large, safe, cocooned corporate environment for thirty years and is involved in IT security, and she clearly cannot see beyond the small risk to her employer (“more than my job’s worth to access Facebook at work”) to allowing my Mum to have a bit of fun making friends and signing up to her favourite jockey’s fan appreciation society.

There is no success in business without risk. If we are in the front line with our own businesses then we assess the risks and take them if necessary, looking at the likely though seldom certain outcome. It will be hard for those coming out of large corporates in the recession job losses, because they may be too risk-averse to start well in the freelance world. Those of us who have been round the block have learned to live with the risks, which reminds me that I will help my Mum sign up to Facebook next time I drop in.

© Jon Stow 2009

The excitement of independence

In my previous article I referred to Penny Power and her recent blog, and she and subsequent contributors including her husband and co-founder of Ecademy referred to the different attitudes we need as small business owners to those we are required to have as employees, particularly in a larger corporate environment. I started my first job in a bank, and whilst it was no ordinary bank, it was a large institution. When I finally left it was because I felt I was an under-rewarded number as opposed to a real person with aspirations and needs.

My next job, in which I lasted a good few years, was a smallish firm with one office. Whilst life was not always happy there, with occasionally difficult bosses with alcohol and mental problems, we had some great times too and the firm felt like a large family. Many of the problems are those which one might have in an extended family, but at the same time we had fun as well as doing some good work. Also, in those inflationary times, the partners did their best to pay us properly and to keep up with market rates. That, combined with the fact that the work was challenging, technically difficult and challenging in a geekish sort of way kept me pretty happy work-wise until my boss’s declining mental health (as I realised only later) forced me to move on.

One of the attractions of the next firm I joined was that it was small and I was in charge of a whole department, such as it was. I had had a brief encounter at my previous job with modern technology in the form of computerization of the department of which I was an assistant manager, and my brief in the new firm was to run it more efficiently and preside over the introduction of information technology. As it happened I also thought that it would be good to acquire wider computer skills with both hardware and software so that I was more adaptable in case I lost my job in the recession of the nineties. What actually happened was that I was not only running my department but also IT troubleshooter for the whole firm, from dealing with dodgy cables to “undeleting” what the secretaries had accidentally deleted. Such faux pas were all too easy then and I earned the gratitude of ladies who had inadvertently deleted entire reports which their bosses had spent hours dictating. It was easy stuff, we had a family atmosphere in the firm and I could more or less do what I liked within my domain without interference as long as nothing went wrong, and it didn’t, I am pleased to say.

Came the time when the firm’s useful client base was bought out by an international firm, along with the staff, and I found myself in a huge corporate environment in which one could hardly wipe one’s nose without logging it, where there were rules, a compulsory conference, and “bonding” days spoiled by people being so competitive. What was worse was that as a guy with a small firm background I was never given any decent technical work; the partners were prejudiced against all of us “hicks” whom they felt had been dumped on them and worse, these partners had no idea about commercial realities and economics.

That is why I thank the heavens every day that through whatever circumstance, I am an independent business owner in charge of my own destiny. I make all the decisions (well, I consult my wife often) but the buck stops with me, and that is fine. Also, I can do whatever I like as long as it is legal and ethical in order to make some money.

I have been trying to explain this to a small start-up business client that he needs to get out of a mindset that he only does one thing. Of course he did only one thing when he worked for someone else. Now he needs to be more flexible for his family’s sake.

I explained a while back that my wife and I needed to be open to running any sort of business for which there might be a demand. That is why we have several businesses. I love my independence, and am looking forward to starting the fifth business venture my wife and I have between us, which has come to me through networking. Those two words in that last sentence, independence and networking, illustrate why having one or more of one’s own businesses is so much fun and is so rewarding.

© Jon Stow 2009