Competition or attrition?

Blog pix 21 March 11 001I am in a service business. I have all the modern advantages. I can help people all around the world because we have email and the internet. I do not have to meet my clients, although it is great if I can. However, if they are in South Korea or Chile, they are a long way from the UK. If I can check exactly who they are and give them what they need, I am happy and I certainly hope they are happy.

There are people who have businesses on the High Street or in town, and their businesses look something like mine. I do not see them as competitors. I have working relationships with some of them. We can provide each other with skills the other does not have; rather symbiotic.

However, imagine having a business very near another the same where you are competing for the walk-in customer and where the footfall is limited. In the local village, there is a long-established men’s hairdresser, or barber if you prefer. There is the owner, who is the brother of a business acquaintance. He has two very competent assistants, one female and one male. I do not have so much hair these days, but I am quite happy to have such hair as I have cut by any one of the three. It was a good business, quite busy, and open Tuesday to Saturday.

And then…. A year ago another similar business opened directly opposite. That business takes quite a lot of the walk-in trade. Our village is not that big. I doubt there is enough work to go around. Both shops are now open seven days a week, desperately trying to out-do the other. It is a war of attrition as far as I can tell. One is bound to crack. I know the owner of the longer-established business feels under serious pressure, not just because of the new lengthy opening times, but because I see him looking across the road to see how many people are in the other premises.

If I formed a business relying on walk-in trade, I would not set up next to another. I would find a parade or street lacking my sort of business. We have only one greetings card shop. Why would anyone risk setting up another next door? We did have a florist come to our village to compete with a well-established one. They failed and have gone. Why would a men’s hairdresser risk a similar fight? Even if they “won” by putting my preferred place out of business, the fight must make life and cash flow very tough in the short term.

I do not have the answers, but it all seems crazy business planning.

Freebie folly

I had an email from an accountancy firm asking if I would give free tax advice in half-hour sessions over the telephone. I thought the guy must mean free to the client, but his firm would be paying my business.

It turned out he really did mean “free” and that I would be giving this free advice in the hope of picking up start-up businesses as clients as a result of their gratitude.

Things I have learned about free advice:

  • If you give it, you will never be asked for more advice for which you get paid.
  • Your insurance position is questionable if someone thinks they had the wrong advice.
  • Someone who wants it has no respect for all the experience, study and learning you have put in.
  • You could be being paid for the work you would be doing instead, rather than giving time away free.

Yes, I sometimes do give free advice, but that is on behalf of a registered charity. Never, never, never sell your work short, and never, never, never, never work for nothing except for a cause you hold dear.

Do you have a tax issue I can help you with? Get in touch and I will guide you.

Turning down work – really?

One of the mistakes many start-up businesses make is taking every project or job, no matter what. I made it myself.  It is very tempting to accept anything which comes along, but the new business owner needs to consider:

  • Is it within our expertise?
  • Will it be profitable?
  • Have we the capacity to do it?

If the answer to any of those questions is “no”, then we should decline politely.

Sometimes even more experienced business people can get this wrong too, and accept work which cannot be delivered satisfactorily. That may lead to damage to reputations. Never be afraid to say no. Feel able to refer another business for the work if you think they will be able to do it. That will make more friends too.

What does not make for a good reputation is a business owner saying “I will get back to you with an estimate or a quote” and then not doing that because they do not fancy doing the job. That is a good way of losing friends and again damaging reputation.

Never leave a prospect hanging. They will think more of you if you decline and tell them why.

Don’t be afraid to ask

When I started out on my own in business, I thought I knew a lot and in fact I knew very little.

Why did I think I knew a lot? Well, for a good few years I had worked with small businesses as clients, and my employers had called themselves “accountants and business advisers”. So, yes, I understood the mechanics of being in business. I had advised clients about their tax issues, how much they owed in tax and how much they could save.

So what was the problem? Well, I had never tried to visualise myself in their shoes. I did not understand the day-to-day challenges of sales and cash flow. I did not appreciate the responsibilities to employees and workers engaged. I did not realise that everything a business owner does has an impact on family, both financially and time-wise, far more than for an employee.

It is difficult at the beginning of our business. We need a new mind-set. We need to understand about being found by customers, making sales, managing our finances without a guaranteed monthly or weekly income, and in organising our time.

We need to ask our friends in business when we don’t know something. We need to call in help from the outset.

Running a business is hard at the outset. It will be worth it and it will be very rewarding to succeed through our own efforts, knowledge and dedication. But don’t be afraid to ask.

Great sausages, but plan your business in advance

A long time ago when I was in my early twenties, my Mum thought she would like to run a pub, a free house which is one not tied to a brewery. This was following lunch at a very good one when I was driving her to the West Country. I remember the sausages were great and I liked her idea.

The more we thought about it, the more we realised that the commitment and the long hours, the organisation and the large amount of money made the dream unattainable. At least it was for us, with no previous experience in catering.

On the main road through our village someone opened a restaurant. This would be around three or four years ago. I think that since then, the business has changed hands twice, or the tenants have changed.

I have not tried the restaurant although I have not heard bad things about the food. However, it has never seemed very busy. They do not seem to get enough customers.

Why would this be? Well, there is no parking outside except for a lay-by for four cars to serve four businesses. It is on a very busy road and the noise must be a deterrent. Sitting at the two tables outside would not be a pleasant experience, and I have never seen anyone trying it.

This is no place to have a restaurant . Surely there is no hope of having a viable catering business on this site other than for fast food, and even that would be restricted by the parking issue?

Any business needs to sell the right product in the right place. It does not take a genius to know where is the wrong place, and we should all ask our business friends before committing a lot of money to start a new venture.

I feel sorry for business owners who fail, but do look before you leap.

Having a sense of direction

It is no good starting in business if you don’t have a plan and ambition, or you are doing so for the wrong reasons. It is no good going for a job working for someone else if you don’t really know what you want to do.

I well remember, when I first started my business, meeting someone who had started his to undermine and destroy the guy whom he thought had destroyed his father’s business. Having left his father’s rival in the smoking ruins of his business he had no further purpose for continuing. That is no way to go about business or life.

A young person I know wants to leave home and get a job without knowing what she wants to do. She needs a plan, and just wanting to leave home is not a plan without something positive to build her independence in the way of a career.

If you want to start a business or get a job, just think what you would enjoy doing, and work out how you can achieve it. Running away without direction will have you ending up where you do not want to be.

Getting the sack

Are you ready?

Are you ready?

Getting the sack is what launched my “career” as an independent person. Yet as an employee, if you are “terminated” it is a terrible shock, the stuff of nightmares. I had a bad dream about it last night; being called in to the boss and taking only a few seconds to realise what was going on.

I must confess that when it did happen to me, I told my then boss exactly what I thought about him and the firm that was getting rid of me. I quite surprised myself, and even looking back, what I said was uncharacteristic even bearing in mind the provocation.

Immediately after being told I had to clear my desk and go that very evening I knew something very serious had happened in my life. I did not know quite how serious because I supposed that being at the top of my game I would find another post quite quickly.

How wrong I was! I was “over-qualified”, I did not have the right sort of education decades earlier, my skills did not quite fit. What no one said was that I was too old to get a new job, which was what most employers thought when they gave a reason not to employ me or to not even to grant me an interview.

Never mind. As you know I had to get myself a new income, and I started out to earn some money. Helped by my wife, we ended up with four businesses entities between us, and four distinct “flavours” or types of business. Of course not all of them are a roaring success. One business earns much of the money, but the others in different niches help potential customers decide what they want, and even the biggest earner comes in two “flavours” through separate websites and marketing.

Getting the sack, getting fired, being terminated or whatever you want to call it is not the end of the world. You have your brain and you have your experience, and if you cannot get another job or do not want to work for someone else, you can really succeed as an independent. “Living on your wits” is perhaps over-dramatic, but if you have become unemployed it really is a starting-point for the rest of your commercial life and not “game over”.

Be positive, think what you can do best and what you want to do, and get started on your whole new life as an independent business person.

The Success Shop?

Hairdresser and restaurantOpening a new shop is a daunting experience, and if you are going to do so then you must plan very carefully. I have already mentioned that the level of overheads is an important consideration. Property taxes and especially rents are a very large cost beyond which you must raise your turnover by a very substantial amount in order to have enough profit to live on.

If you are not sure what sort of business you want, have a look at a franchise. You have to make sure that there will be enough profit for you after paying the franchisor, but the advantage is that you will have a tried and tested business model. Talk to current franchisees in the sort of business that interests you.

Decide whether there is a need for your shop in the local community.

For a new shop you need footfall. Unless you are very specialist then you should try to be on a busy street on or near the main drag. Of course that will put up the rent.

You need a marketing strategy both before you open and ongoing. Get someone experienced to send a press release about your Grand Opening. A feature in the local paper will help you hit e ground running. Have some special offers in your first week and mention these in the press release.

Have flyers with special discounts sent round to households with the local newspapers, but make sure you are still making money and leave yourself a decent profit margin.

Many shop owners say they have not time to go networking and they need to be in the shop behind the counter early in the morning. I would suggest breakfast networking. We can all get up extra-early one day a week, can’t we? Friends in the business community will refer business to you, and of course you must reciprocate or get your referrals in first to build your relationships and your income stream.

Remember to consider:

  • Tried-and-tested – a franchise?
  • Footfall and passing pedestrians.
  • Local parking.
  • Publicity
  • Pre-start-up and ongoing marketing.
  • Networking with the local business community.

We can achieve most things with a great plan. You must do your homework before rushing in, but how exciting to be making a difference in an independent business!

Was it small business or the internet that changed my life?

Seafront bikes

Seafront bikes

It is no secret that I started my own business after the world of employment left me, and I could not get another job. There was no grand plan. I just got “on my bike” to get some money coming in.

Back then, 2002, the main way of getting business (I thought) was advertising. I have written before about the money spent on directories such as Yellow Pages and Thomson Local. They were a waste of time and that was because they really said nothing about my business apart from listing it under a category, but also because customers were actually talking to each other, exchanging information on-line, and yes, getting out of the door and networking.

I did not have much idea about social media in those days, but they were early days. I wonder how much I would have become involved if it had not been for business needs. Would I ever have “done” Twitter and Facebook? I suppose it was the other way round as Facebook was first, but I “do” Twitter a lot more.

It is not as though I ever was exactly afraid of computers. I am a techy sort of guy. I had a Sinclair ZX81, a BBC computer and an IBM AT PC running DOS. I programmed in Sinclair BASIC and in MS BASIC, not very well, but I had the enthusiasm. I frequented bulletin boards. It did not make me social.

In 2003 I had realised that face-to-face networking might be a good idea. I had a business coach who thought it was, though he had not tried it. I went to the local Ecademy group, and three days later met Thomas Power at a seminar in London. He and Ecademy taught me so much about networking, on-line and off-line that it is hard to imagine a business or personal life without it.

I have become a very social person, and social media and on-line marketing are how I get most of my business. Of course the biggest benefit is in making so many new friends; real friends who have helped me as I hope I might now and again have helped them.

I know a lot of employee techies who do not really “get” social media. They may mess around on Facebook but I wonder if they have really made new friends as I have, or whether they just interact with the old ones. Some techies view all social media with disdain and are paranoid about personal security and identity theft. They know how everything works, but they cannot see the purpose or the potential, only the low-risk threat.

For myself and my business there is a great world out there, I have made a lot of real friends I could not have found in any other way, and I am grateful. I think I am a totally different person from the one I would have been, stuck in a job in town. I feel I am happier and more at ease with myself as an independent player, and have been set free by the tools I first found through Ecademy. Being in business brought me to social and business networking. Would the second have happened without the first? I don’t know.

Has your life been changed in the same way?

Forgiving the tyre-kickers

 

Ford Model T

Ford Model T (Photo credit: Jon Stow) – Don’t kick these tyres

Most of those who inquire after my services know what they want. They know that what I do will give them value. If they do not understand that, I hope I am able to persuade them of the value they will get.

Just now and again I hear from people who do not know what they want. They may think they might. It is a bit like wanting a car and thinking “luxury” in their mind’s eye. After going to the showroom they realise they only want to be able to get from A to B, and perhaps choose a cheaper option in an older basic model used car. That is fine and it will probably work, but they will not get the care and attention and after-sales service that a dealer in new cars will give as part of their three or five year guarantee.

I get prospects like that. My firm offers a great all-round service (I would say that, but we do our best to make it true), but if someone wants the basics and is scouting around for the best deal based on price, all they want is their papers filed and no after-care. So I forgive, refer them to a provider of basic services, and warn them against going with the cowboys.

Some people do just want the basics. Maybe that is not what they need and they could do better, but persuading them against their mindset will not result in retaining them as clients for very long.

I forgive the tyre-kickers and send them on their way. What about you?

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