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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Don’t follow your dream? You can if you plan it.


Life by the sea

I am all in favour of dreams. I have them myself. The trouble is that as a tax and business adviser, I have come across a lot of shattered dreams.


Life by the sea

I was reminded of this again the other day when watching a re-run of a Relocation, Relocation programme. If you haven’t seen it or don’t live in the UK, it’s all about people moving from one part of the country to another, as the title suggests.

A couple were looking not only for a new home in the South-West of England, but also for a cafe-bistro to run. It sounded a lovely idea.

As regards the cafe they were looking at, the owners wanted about £70,000 for the business, which might be roughly what their profit was, plus about £200K for the premises. £70K sounds great doesn’t it? However, the couple would have to borrow the money. It struck me that they could well end up paying about £20K in interest. Had they thought about their children’s childcare? Running a cafe is pretty full-time. If they weren’t going to be on the premises all the time wouldn’t they need more employees to cover the childcare times?

The thing is, the idea of running a cafe in a seaside location does sound idyllic, doesn’t it? It just needs planning and adjusting not only lifestyle in terms of time, but in terms of costs of living. Do they want their luxuries or do they want a comfortable life without pressure to spend on extras? These are questions that have to be asked.

Déjà vu

Some years ago, I saw another couple who had started a cafe in a seaside town, because it had been their dream. They really hadn’t thought it through. Yes, there was plenty of trade passing, but not so much coming in, because there was a cafe in every other shop along the main drag. The rent was extortionate, and they were trying to supply full short-order hot food. That meant more electricity and gas, but the few times they were full up, they had simply not enough covers. In small premises a cafe-type business is better supplying cold food, sandwiches, rolls and cakes with a choice of eat-in or takeaway (or carry-out). The turnover and therefore profit would be much higher. This couple went out of business and lost their savings because they had not done their homework.

Planning the dream

I am all for following the dream. It’s just that the dream needs a plan which involves adding up the costs including the rent, the utilities, the business rates to the local authority and also employee costs. Then think about how much you need or expect to draw out of the business to have a good life. Then look at the expected takings. See if you find out how other similar businesses in the area do.

Ask the previous owner about takings and profits if it was a similar business and check that the accounts they show you make sense. Get a second opinion from a professional. I have been asked to check the accounts produced by a vendor and could see that they were complete fiction. Don’t take it all on trust.

Do follow your dream. Just plan it first. Take advice. Write down the plan. You might have to write one for the bank when you need a loan, but write a proper plan for yourself. One that makes sense. Not one to try to convince yourself it will work if you know in your heart it won’t.

If after you have thought it all through properly and taken the advice you need you know your dream is there for the taking, grab it and hang on to it.

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Personality, marketing and business principles

Those who know me well are aware that I prefer a logical approach to my work and pay attention to detail. That is the nature of the business I am in, helping people with their tax problems and teasing out and rectifying problems people have in their businesses. I am not saying that we should not take a step back now and again and look at the bigger picture, but like any mechanic I know that a major problem can arise from just a small failure. It is finding what has gone wrong which is the key to getting on the right track with things ticking over smoothly.

I have a similar approach to running my own business and to my marketing. I test and test what works, and spend money where I think it is best applied. While I have a pretty decent web presence it is not through being flamboyant; just through making friends and trying to help others online which is also really nice even where it makes no money.

I am definitely not an arty person. I can’t draw or paint. I don’t make big gestures. I don’t bother about sparkly things. I don’t throw myself into big campaigns without having some certainty of outcome. Yet those who do launch into major projects blindly, or seriously big marketing or advertising campaigns may come up trumps.

I wonder if deep down our approach to business reflects our personality and we cannot change it. Both methods work; the showman Richard Branson and the understated Warren Buffett. Is it better to be a shining light in the firmament with a Mac and an iPhone and an eye for the bright lights, or like me, an XP, Windows 7 Android sort of person with a touch of Linux, but pretty plain vanilla. Is it all down to our personality Operating Systems?

What do you think?

© Jon Stow 2010

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You are more versatile than you think

As we know, there is far less job security these days. It is not just because of the recession and hard economic times. There is less of a tradition of working for one employer one’s whole life. People tend to want to move and somehow the entire job market has changed. This was a process which started twenty or thirty years ago.

What we now have is choices. We can be independent. We can work for ourselves. We have broadband. We can run several businesses at the same time. We may need to to earn a decent living. Life is good, or it can be if we make it. Don’t be afraid. The future is ours, and it is different.

I am not the only one to think so. Look at (not an affiliate link) and also listen to Chris Brogan’s thoughts.

Do you agree? What do you think?

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Related posts:

Have we bred a dependent society?

Realism, job seeking and cats

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Why we should not always take the easy way in business

If you are as lucky as I am, you will enjoy your work and running your own business. We have at least some control of our destiny even given the trials and tribulations of the economic downturn. However, I was reminded the other day by a non-business story I heard that because we are happy with something we do or want to do, that does not mean that we have the right approach.

A couple I know have a perceived issue with the husband’s elderly parents who live in a rural village a couple of hundred miles from our friends. The son and daughter-in-law both work full-time in the Big City and live during the working week in their apartment in town. They have a house in the country which they use at weekends. They do not often manage to make time to visit the needy pensioners; maybe only three or four times a year.

Because the senior citizens have slight mobility problems and poor health, our busy pair suggested that they sell up and move to somewhere near their own country home so that they could be “on call” in case they were needed. Of course they would only be able to visit for an hour or so at weekends because work commitments in the City would keep them away from Monday to Friday.

The whole problem with this plan is that it is not a solution. What the old couple need is to have proper support provided at home through the social services or “meals on wheels” and at least someone dropping in every day to see they were all right. They need to feel they still have their independence. They do not need to be uprooted from the village they have lived in for so many years and taken away from their friends and neighbours. The plan is just to make the slightly younger generation feel better in that they have done something, but it would be the wrong thing and inadequate in terms of support even if the seniors agreed to the move.

There is a risk in business that we take what seems the easy way out in a similar vein. We avoid some marketing which makes us uncomfortable, some allow their fears of networking to prevent them from getting out, and many of us keep picking up and servicing the same sort of unprofitable clients and customers because we are used to doing it and we do not have to get out of our comfort zone. We may even be tempted by these “Get Rich Quick” schemes with which we are assailed via email and the post.

Well, sometimes what may make us feel better in the short-term is simply not good for us. By gritting our teeth now and maybe doing something which goes against the grain (as long as it doesn’t hurt anyone else) we can be happier in the longer term. If we make the changes we have feared to make our business better, we will be happier down the line.

When I was a small boy (this dates me) the doctor sometimes prescribed some horrible pink medicine which came in a bottle with a cork. It tasted nasty but it made me better. Have you got that pink stuff in a bottle on your business shelf? Find a spoon and take the medicine. You won’t regret it.

© Jon Stow 2010

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Why your brand and your USP are important

Have you ever been confused by a marketing message or an advertisement that seemed out of place with the product? My on-line and sometimes off-line friend Rod Sloane quite rightly described McDonalds’ current TV ad in the UK as “bonkers” which was exactly the word that had come to my mind.


Possibly McDonalds feel that their burgers have to be portrayed as a wholesome product made with 100% British beef but the ad does not even show the product, only pulling us back at the end with the familiar McDonalds banner. Otherwise it is along the line of some of those car adverts where we think “what on earth was all that about?” Of course I understand that the healthy option food police have suggested that burgers are dangerous with all that cholesterol, but let’s be sensible. Healthy sports can be dangerous. As a fit though not talented skier I did myself a lot of damage once. I do not think we should ban skiing and I do not think we should ban Big Macs or that McDonalds should almost pretend they do not sell them.

I have more than one business, and perhaps I should not tell you so as not to confuse you. I think if you are here then you are more likely to buy into me and my personal brand (this is not a selling blog of course). However, my businesses are marketed separately and distinctly, and I hope people are not confused between them. We need to keep our propositions simple. If someone is a landscape gardener who also knows a lot about keeping coy carp and goldfish, and excavates and sets up ponds, it is probably better to keep the propositions separate. Otherwise potential clients will say “is he / she a gardening expert or a pond expert?” They might think that they are looking at a gardener who dabbles figuratively and otherwise in ponds, and it blurs the offering. Of course a person can be very good at more than one thing, as I think I am, but for someone who does not know the business owner, it can be very confusing and that person may go to whom he or she considers the “expert” rather than to a supposed dabbler.

So I believe that when we market our business by whatever means, we need to keep our product or service clear and distinct, and whilst we may talk about the problems we solve, we do not need to get involved in the fluffy stuff such as McDonalds’ pastoral scenes and bucolic frolics. McDonalds are selling fast food, aren’t they? They should stick with their USP.

© Jon Stow 2009

Being lucky!

As I have been telling everyone, notably on Twitter, I have had a lot of problems with IT over the last three weeks. I am pretty dependent on the technology working to keep my business running smoothly. I use many on-line services, paid-for and otherwise. In fact, the way I work as a quite small business would not have been possible fifteen years ago, and not too easy a decade ago. I started seven years ago as a fairly early adopter originally being on-line with 24-7 dial-up before broadband reached our area. Without the technology I would be a lone voice crying in the wilderness and never heard, and whilst the recent problems bring headaches, I have to be thankful that when the technology works (which is usually) it is magic. I am genuinely lucky that my business is facilitated (made easier – but the thesaurus isn’t that helpful) this way as a while back I would have been one of the unemployed with little prospect of getting work in a downturn.

Lots of people have similarly been unshackled by the technology and have genuinely a much greater chance of getting businesses off the ground to earn some money in hard times. I am not talking about dodgy MLM and “network marketing”; I mean real B2B and B2C business. Of course there may be a difficult market but there are opportunities to make a difference, to help struggling businesses and to be innovative too. For those who are computer-literate and can be flexible there should be a viable business (even if only providing a subsidiary income) using their talents or exploiting their knowledge in a hobby to go in a different direction. If you have experience in a market as a buyer, you can probably be a seller.

Today we have through technology the potential to gain knowledge my parents could never have dreamt of, and a much greater insight into what is going on in the world. Political and economics intelligence is available to us all and at little or no cost, so in a way there is no excuse for ignorance, though we should never be afraid to ask for help where it is needed.

I could get into trouble for this kind of article because many do not like the optimistic perceived coach-type pieces we see published so often. Some of my best friends are coaches. Chuck what you wish in terms of virtual brickbats. We ARE lucky in that we do not have to do as we are told and can go our own way, and all because of technology.

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Dispatches from the front – age discrimination

Some of you may have seen a Channel 4 Dispatches episode this week about age discrimination, mainly not in the workplace (which is covered by Government legislation) but discrimination preventing more mature workers from being taken on in the first place. The whole thing was pretty educational, but the first few minutes concentrated on a qualified accountant in his fifties and his trainee accountant daughter. They both applied to specialist recruitment agencies. Despite the chap in his fifties having vast experience the agencies just tended to lose his records and CV, and did not bother to interview him whilst his daughter was invited in for meetings and had emails from agencies with which she had not even registered. In putting older candidates off, they are told that the role is “dynamic”, that they would be bored because they have too much experience, or they would not be suitable for such a junior role.

None of this surprises me in the slightest, of course, as it reflects my experience, though I am now very happy to work for myself and have my own business. I was turned down for HMRC’s tax legislation re-write project a while back because I did not have a university degree. I was surprised as I would have been ideal. As an eleven year old I won a free place at a “posh” school where learning the strict rules of English Grammar was considered essential and I also have an ‘O’ Level in Latin to remind me of the importance of grammar and the origin and structure of our language. This may be a surprise to those of you who think I write in a quite casual way but I would have been an ideal candidate given my technical background too. I realise that this was only one of a number of possible excuses for not putting forward such a mature candidate.

However, I will mention that when I started work for the first time a good while ago I was eighteen. Most new recruits joined banks, insurance companies and accountants straight from school between thirty and forty years ago; some even joined their employers in these sectors at sixteen. That was the “baby boomer” way and to require a university degree is a pretty good age filter for those whose parents could not afford to put them through university. Not having a degree from thirty-five years ago is hardly an indication of unsuitability, especially with a long and respectable track record in between.

In these hard times it will be easier for employers to discriminate and use younger trainees in accountancy etc. to provide cheaper labour than that perhaps thought to be expected by more experienced job candidates. The tragedy is that the trainees will get older, qualify and have a few good years. Then their careers will founder on the “Rock of Ages” in the same way.

For the present, there will be more older candidates seeking positions due to the economic downturn and the huge losses to their pensions pots, and they will have to compete against much younger qualified people who have also lost their jobs.

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Workplace tribalism

In the week that we learn from the CBI that 38% of small businesses have laid off staff in the last quarter of 2008. Workplace tribalism many of us will feel uncomfortable over the strikes at the oil terminals and elsewhere over the employment of foreign labour. At times when the economy is weak and there are job losses, workers of larger organisations tend to blame the foreigners for their problems, whether or not the local labour force is qualified to do it; indeed as we know in more recent and prosperous times foreigners have been doing low paid jobs that resident workers (not just British workers) have not been prepared to do because the pay was not good enough. At the Lincolnshire oil refinery where the recent wave of strikes started the workers brought in are from an Italian contractor. I suppose it is pointless to mention that these workers have freedom of movement within the EU and British citizens are entitled to work in Italy if they wish. There would be arguments over the effect on family life but no doubt these issues have already been addressed by the Italian families providing the contractors at the Lindsey plant.

I do not want to get into the issue of prejudice. That is a touchy subject and one on which I am hardly an expert, though I was once shouted at in racist terms (no, twice, come to think of it) and it is pretty unpleasant to be on the receiving end.

What the whole business of apparent xenophobia in the workplace does bring into focus is the tribalistic “we are all in it together attitude”. In a large business the workplace camaraderie is often a great asset in ensuring that all workers pull in the right direction. In the same way that the print industry skiving which existed up to the seventies was proliferated by its own culture, it is also true to say that such sticking together can make for better and greater productivity and less shirking on the basis that the lazy let everyone down. At the same time an unsatisfactory work culture can lead to a lowering of morale and lower productivity due to a loss of respect and loyalty for management. I have seem both ends of this spectrum when an employee.

Anyway, a workforce that sticks together is admirable, but because employees become used to a stable environment, when something goes wrong there is a need to apportion blame. I have written recently about those in charge taking responsibility. We in our own businesses know that we are largely responsible for our success and avoiding failure. However, sometimes accidents happen; at least events over which we have no control even if we think Governments or regulatory bodies ought to have had. I do not think we could quite have imagined in 2005 or 2006 (2007 perhaps) that a steel producer providing material for ships, cars and particularly construction would suddenly find itself short of orders. It is no good blaming the company or its orders. They had a niche in the economy producing materials that were needed and they were hostages to fortune. It is not their fault if they have to lay off workers any more than it is the car manufacturers fault if they have to close for months because no one is buying new cars. In as much as these companies and their workers can be, they are victims of an accident. It is human nature to blame those closest but if there are culprits they are further away.

The point is that as employees we are paid weekly or monthly. We know that the money will appear and while we might do our work diligently we only have responsibility to ourselves and our comrades. The fear over the potential or actual loss of a job is terrifying. How can we survive? You need someone to blame close at hand. I know, I have been there, but lashing out and soft targets is not the way.

Small business owners are making hard decisions over job cuts and have to face the music and their workers. Some businesses could not be viable with less than a certain number of workers if the work is hands-on. I saw an example on television this morning of a small bakery down to a core of five staff. For many there is just a minimum number of workers without whose output the business cannot pay the rent and make any money. It is even harder for small business owners to make tough decisions because they are close enough to their workers to be part of the “tribe”. However when out of a job you are out of the tribe which is a terrible shock, and an owner letting an employee go is at risk of being out of the tribe or family too depending how the other employees take the loss of their comrade.

Despite my comments about taking responsibility, I am not going to say that laid off workers should all start their own small businesses. That would be absurd, especially given the current economic climate. Some may and I wish them all the best. Doing something for yourself rebuilds self-esteem which is the biggest loss when you lose your job. Nor is this a “be positive” pep-talk though It does help to be happy with what we have. As a population we will not be as badly off ever as in the only two Third World countries I have visited where the level of poverty and especially poor sanitary conditions was shocking for me even though I thought I was prepared. No, we have to stick it out, help families who have no incomes through taxation of our own and future incomes as we can. This is not a sermon, so I will not say we should be thankful; just remember that we are better off than many, no matter how long the recovery takes.

Just look past the tribal culture and be tolerant. Almost the whole world is in this economic mire and we will not solve anything by using our valuable workplace tribal culture to bash foreigners. If we have to let people go, handle the matter as kindly as possible and if we do know of any niches with our friends, businesses, see if we can facilitate a move through our network.

© Jon Stow 2009

Owning our mistakes–not an earnest business blog

We all make mistakes. We try not to, but admitting to failure is a way of helping us to do better. Fortunately for most of us, the errors we make will be relatively minor in our work activities, but a big blooper can be a source of considerable worry. I remember getting something badly wrong when a junior manager back in the eighties. I was terribly upset, and it took me months to put it right, though I did without any damage in the end. It was coming up with the solution that took a lot of thinking. I learned from it, firstly to be more careful, and secondly to give myself more time with testing issues. With hindsight, I had too much work put on me because of the resignation of a colleague at the time and the long term sickness of another. There was a lesson there too in that one needs to know the pressures on staff, which my senior manager and bosses were unconcerned about. Those mitigating circumstances were not enough to let me off the hook in my view. The actual mistake was mine.

I can also think of mistakes I have made either in making career moves or not making them at one time or another. It is however no good thinking “if only I had done this” because if I had done something else at any point I would not be where I am, which is quite happy even if not a billionaire (yet). In business for myself, I have made mistakes, mainly in persisting with the wrong sort of advertising way after it should have been clear it wasn’t working.

Someone whom I knew and alas is no longer with us was a man full of bright ideas; indeed he was a very clever man. He was good at inventing new processes and was an excellent engineer. Something he was not very good at was business, exploiting his ideas or indeed being able to understand whether there was a market long term for the concepts he came up with. He would have been better working with and trusting someone who had a better business brain than he but because of his considerable ego he always knew best; he thought anyone who doubted his abilities to turn his ideas into money-makers was obviously wrong, and consequently his companies would go bust. Ultimately he was risking not only his reputation and means to carry on future projects, but also the security of his loyal family who ultimately had to pay a considerable price because he thought he was always right.

This brings me to the British Government. We have a major economic “downturn” as they call it, but it is clear that we have a serious recession perhaps even comparable with the crash of the early thirties. The Prime Minister blames events in America, and of course they have had a huge impact on all of us, and I am not going to bore you by going through that which you already know. Nevertheless, we (in UK) are much less able to ride the storm than our compatriots in other Northern European countries, largely due to the level of borrowing the Government already has, and the even higher level it is facing in an attempt to buy its way out of the slump with building projects etc. to create jobs. These splurges of our money are described as investments, but we all know that investments have to be in viable long term projects that will return a decent amount in the future. There really is no way of calming a storm once you are in it. You have to ride it out. The expenditure announced by the Government is enormous compared to the likely return even if these expensive jobs which are being purchased are viable long term. Of course the savings to income ratio in Britain is amongst the lowest in Europe, and of course not encouraged by Gordon Brown’s pensions grab, his first act when becoming Chancellor of the Exchequer in 1997. The same move also hit small income investors in British business, who were denied the privilege of reclaiming the tax credits on dividends as had the pension funds. Therefore people have not rushed out to take advantage of the ill-judged and expensive cut in VAT. Few have any cash to spare until the storm blows out.

Coupled with all these mistakes is the failure of the regulatory bodies to do their job, partly because of the splitting of responsibilities. We had the Equitable Life failure over seven years ago, which should have woken up the FSA (whose faceless members later failed to spot the dangers of the US sub-prime market and the practices of the lenders). The FSA, the Bank of England and the Treasury needed to take swift action over the Northern Rock affair which was the first serious breakage, but dithered. The “independent” Bank of England’ was obsessed with the housing market (not translated into wondering where the mortgage money was coming from) at the expense of business, and it was apparent in early to mid-2007 that interest rates were actually far too high. I discussed this with colleagues at the time and found the other day an email on the subject.

The Government is complaining that somehow it is not its fault that the economy’s wheels came off along with those of some other nations, but they did not spot the wheels were loose and tell other nations about their loose wheels. Now we have crashed and we are more badly hurt than many. The consequences for the UK and (which I will talk about soon) the knock on effects for Third World nations who depend on us to a greater or lesser degree are frightening. Somehow the Government and its ministers are not taking responsibility for their blunders, and surely they cannot do so unless they acknowledge them like the rest of us. Their egos are their weakness, but that is why they are politicians. They are no different from my engineer with the bright ideas and no inkling as to how to harness them. They may understand that they are wrong but won’t own up.

Sky News has been trailing their new programmes fronted by Jeff Randall, former BBC business Editor latterly with the Telegraph. Jeff says in the clip “If I were Prime Minister I would resign”. So would I, but that would amount to taking responsibility, wouldn’t it?

© Jon Stow 2009