BBR: Ben's Business Review
One or two articles with subjective views on conducting business in small towns.
Three Bad Business Syndromes
(Yet another Entrepreneurship Article by Vogel.)
Strict personal financial control and the right attitude . . . right attitude ? Ever found yourself in the one of the following situations ?
1) I'll do it MYSELF . . .
During your 3rd iteration of the learning curve you realise that you just will have to be satisfied with the present attempt cause you've now spend double the amount that the professionals quoted you, and you are desperately behind schedule with al your other stuff.
2) I can do that TOO:
10 km radius . . . 33 estate agents, 11 garages, 15 bottle stores, 7 struggling pizza places - who also serve hamburgers - grilled chicken nowhere to be found. It is the struggle of Competition versus the synergy of Complementary Business.
By focusing on money people are loosing the passion. By trying to fill all the gaps the business is never differentiating itself, never excelling in its niche, never developing a competitive edge.
3) Bypassing the "Spungers".
O that feeling of satisfaction . . . you've just figured out how to bypass that local agent / shop and save a lot of money. Tired of local people trying to make money out of you, you go for regular business trips to other regions. After all the local shops are rather pathetic compared to the Big City Guys. You do your own garden and fix the car yourself.
I like to call the above the "3 bad business syndromes". Symptoms of an unefficient and underdeveloped business attitude that is detrimental to the success of your own and other businesses. Fortunately it is curable. Success is build on the application of abundance principles - sometimes contrary to normal human nature.
It is the way in which we do (or don't do) things that make us successful (or not) and it is our attitude that determines the manner in which we do things. Truly grasping a principle often results in an enlightenment of attitude.
Lets look in the next article at a few principles that can change the way we think / feel about business.
Eight Good Principles of Business
In the previous article we look at three syndromes of human nature that can harm your business. In this article we look at a few principles that can change the way we think / feel about business.
1) The value of Time.
Actually time has no value. It is how much value you place on WHAT YOU DO with your time right ? In the struggle between time and money - time often comes second. Problem is that the supply of time is at a constant - if you need more you cannot get it. The supply of money comes in bursts - and you can always get some more - even if you have to steal or borrow it.
2) Jack of all trades.
Learning curves are a fact of life. It means that although you believe you are a smarter guy than the plumber . . . he's done it before - meaning that he's found a smarter way to do the job. Also he's using the off-cuts from the previous job while you would have left a 3/4 length of pipe and 36 fittings lying in the back yard.
3) Complement don't Compete.
There is synergy in complementary business. That means if somebody is opening a chicken place next to your pizza den - he's not taking away your business - he's helping you both to do better.
4) More creates more.
Develop the market, have an abundance mentality. There will always be some people who believe in a limited slice of pie to be divided. Others know that human needs are unlimited and ever changing. They know that there is more than enough for everyone and they find new ways to make the pie bigger.
5) Don't copy-cat, be different.
Variety adds spice to life. Why do people go to the waterfront ? Because they find a variety of 50 restaurants in one place. Differentiation is a determinator of your position / place /nice in the market.
Be good in at least one thing. Economies of scale as well as best utilisation of time is achieved by specialisation. It is for a reason that you will not find pizza's at KFC or steaks at McDonalds.
7) Give others a gap.
The economy is working because everyone has a place / function in the economy. You can't be everything to everyone and you can't fill up all the places in the economy. Use other people and pay them for their services. It is called live and let live.
8) Allow others to make money out of your business.
Robert Kiyosaki (author of "Rich Dad, Poor Dad") says that he gets excited when his accountants & advisors makes a lot of money out of him . . . because they are working on commission and that means that he's making even more. If it is only you making money out of your business only you have to protect and grow it. If there are a 100 people making money out of your business you have 100 people looking after it.
Some of these principles might be contrary to the human nature of greed and fear - but the rewards follow for those who live by it.
The 5 Stages of Panic in a Small Business
Panic stage 0: will it work ?
So you got the bright idea . . . was unsure if it was the right thing . . . bounced the ideas off some people . . .
Some time later heard the rumour that somebody else is in process of doing exactly what YOU were planning !
Panic stage 1: be first to open !
In contrast to your previously cautious approach, you now want to kick yourself for waiting so long ! Suddenly money and common sense are not factors to be considered any more.
You are spending money on shop fitting, advertisements, new stationary, car magnets, sign boards, etc. There is a lot of excitement and joy in the air !
After going to bed at two o'clock, for the fourth night in a row . . . you open up the shop with a big bang. It is a week "late" for month end, and your spouse almost divorced you in the process, but there is some sense of relief at last.
Because of curiosity - you attract quite a few "customers". They don't necessarily buy anything . . . but make promises to return later.
You have a warm feeling being part of the local business community.
Panic stage 2: brands & stock levels
Since you are in a small town, you are desperate for business. You cannot afford NOT to help a client. The ultimate aim is to have everything for every one.
You realise that there are a few prominent brands that you do not yet stock. You embark on a frustrating process of trying to register as a dealer with these important and prominent industry-leading-suppliers.
You realise you have to get a web site, your own email address, a company registration number, a VAT registration number, your own letterhead (with your own logo of course) and a checking account in the name of your company.
You lie about your turn over and expected sales, fill in all the forms and sign surety for your COD account.
After two weeks you get the good news that you are qualified to buy from them. It almost feel as if you graduated !
Then you learn about . . . minimum orders . . . and . . . committing pre-orders for the coming season.
You borrow some more money from the home mortgage flexi account and artificially inflate your first order in order to save face. You derive an amount of comfort knowing that part of the stock is actually some stuff for yourself, and you got it AT COST . . . yippee !
With great excitement you unpack the newly arrived stock and set about to display everything in the best possible manner (only to realise that your shop fitting is not only wrong but also inadequate.)
After a month of sales you absolutely have no idea which stock was sold, stolen, or taken by yourself. You have kept track of sales every day and of the big expenses. You realise that a invoice book is not the best way of keeping track of debtors, and that you don't remember all the small daily expenses after a week. Welcome to the expensive and confusing world of POS (Point of Sale) and Accounting Software !
Panic stage 3: Jack of all or master of one ?
Vertical integration is the process of cutting out the middle men. This means if you are selling ice cream, you consider milking your own cows and doing everything in-between. Horizontal integration is to include all similar and complementary products. If you are selling ice cream, you will include don Pedro's, frozen yoghurt, cold deserts, iced coffee, slush puppy, Italian kisses and fruit smoothies to your product offering.
After you have extended you product offerings to include every category imaginable of every type of merchandise remotely connected to you main line of business . . . you find that not only have you become a general dealer, but somehow, people are always looking for the sizes, colours or styles that you do NOT have in stock.
You soon realise that "ordering" does not work since the client wants it NOW . . . and this is besides the fact that the courier cost is more than the profit that you were going to make.
Panic stage 4: my spot is wrong !
Panic stage 2 normally kicks in after about 6 months.
You are still sitting with most of the original stock . . . plus . . .
You realise that the initial curiosity has weaned off and that business is not what it should have been. You realise that the credit card machine's flat fee of R 600 per month plus 5% of sales is not such a clever idea any more.
You begin to search for answers and sooner or later you stumble upon the "locate, location, location" sermon - and jump to the conclusion that your spot is wrong.
You immediately try to secure a premises in the "buzz" area. The rent is almost double, the minimum term is 12 months, you have to sign surety, get new sign boards, redo the shop fitting . . . and then . . . the strangest thing happens . . . excitement !
The mere prospect having a new goal, a new project
suddenly brought the hope and excitement of stage 1 back. Everybody
is motivated, fired up, and ready.
Repeating itself, the whole process starts over again ... at STEP 1
Why are there Copy Cats in Business ?
Some small business start ups are the result of an owner's desire to share their passion with the world. The business is an extension of who they are, their view on the world and their unique approach to whatever makes them tick. The business serves as an exhibition, a showcase and a share-and-exchange point for the subject of interest.
This all makes the world a richer place to experience and other people will find this enjoyable and even contagious. The majority of people will admire, appreciate and encourage the entrepreneur, curious to see what new innovation is about to pop out next.
But alas, the world is not a perfect place. There will be others that feel deprived of the perceived lime light. They will try to outdo, outsmart and outshine the entrepreneur. These people are not entrepreneurs at heart, they are followers ... copy-cats ... fame chasers. Their focus and intention is the lime light, the status and what (they think) people are thinking of them. At heart they are angry at themselves for not coming up with the (attention catching) idea in the first place, and they feel that making the money will compensate for this. They want to prove that they are a force to be reckon with.
This all would be OK, if the entrepreneur would be able to ignore the other crowd as a secondary offspring of the entrepreneur's creativity. Normally the other crowd will tend to attract their type of person to what they are doing, and all can live happily ever after.
Easier said than done. The problem is that while the entrepreneur is focusing on his / her passion, the other crowd has nothing to focus on (except of course ... our entrepreneur.)
The other crowd are reasoning that by being close followers, most of the people will be confused about who is who. The other crowd will tend to spend a lot of money and effort on being visible and being prominent. The are reasoning that as long as the entrepreneur is surviving, and they are following close enough, they will also be able to survive.
If this was the only dynamic, all would still be fine and OK. The problem arises when the entrepreneur looses focus. By being "in your face" constantly like the other crowd is, the entrepreneur can't help but to become aware of their actions. As soon as the entrepreneur takes this personally (which is 100% human), he / she can easily loose focus.
As soon as the entrepreneur starts to focus on the other crowd we have a mess in the making. The passion is lost, the joy is gone. Suddenly the market is totally forgotten. It is now all about strategy and predicting the other crowd's next move.
It is about forgetting the ball and playing the other team. And the risk is that soon the two teams might be fighting each other in the middle of the field, while the spectators are busy leaving the stadium, demanding their money back.
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