Starting a Business

[Gautenger]

Part 21

Customer Care

It costs a lot of money to get a new customer, so once you have his business, it is important to keep it. This is done in a couple of ways.

a) Reward repeat customers - It doesn't matter what type of business you're in, you can offer your customers some kind of discount for regularly buying from you. This can take the form of a discount card, money back bonus, get every tenth free, etc. The important thing is to put a realistic time limit on the bonus and to make it worth your and the customers while. You want the person to shop with you regularly, on an almost clockwork basis so that you can "depend" on his purchases.

Get to know your regular customers - If at all possible get to know your regular customers on a name basis. Chat to them, make them feel welcome & special. This doesn't mean sucking up to them, just being interested in them. If you show them that you are not just in it for the money, but to serve their needs, they will reward you with their hard earned cash.

c) Hone your inter-personal skills - Send yourself on an interpersonal skills course, then go back and teach everybody in the business what you learnt, and ensure that everybody practices what you preach. Have you ever walked into a shop where the staff are all unfriendly? Did you want to shop there again? You can never hone your, and your staff's interpersonal skills enough. You need to above all learn to be diplomatic, more about this in the next point.

d) Diplomacy - The customer is not always right. He may be king, but kings also get things horribly wrong sometimes. This is where it becomes important to know when to stand your ground and when to give in. You need to take each situation on merit and see if the customer is just taking a chance or whether he has a genuine problem. In the end of the day you need to way up, at lightning speed, the pros and cons of losing that customer vs losing the profit. If the customer is at fault and you feel it isn't in your business' interest to "fix" it, then don't. A good example is a person that has printing done. The person signs that the artwork has been check by himself and is correct. Then two months later storms into the print shop demanding that the errant batch of printing be replaced. He only has a few of these cards left. In this case if it was a very good customer, you would profusely apologize and replace the cards post haste. If it wasn't such a good customer you would diplomatically tell him where to get off. Both customers are taking a chance and you know it, but the good customer is worth more than that batch of cards to your business.

e) Create a good company culture - Put me to the test on this one - next time you walk into a shop, etc., where everybody is as sour as grapes, you can be sure that the boss is a sour idiot. Treat your employees as you would like to be treated and they will treat your customers the way they want to be treated. Most people have worked for a lousy boss at some stage & can relate to this, you are the boss now. Remember there is a huge difference between being a tyrant and firm employer.

One could write a whole book on this subject, but there are many good ones on the market. Buy and read them all !!

Edited March 23, 2006 by Gautenger

[Gautenger]

Part 22

Company Culture

How do you create a good company culture with happy, loyal employees?

I had the privilege of working for a division of one of SA's top companies before starting my first full time business. This division (actually a separate company with majority shareholding by the ‘top company') had a stunning company culture, while the top company had a pretty lousy culture. This always amazed me as the two worked extremely close together. Through my years working there I slowly realized the difference between the two and this knowledge has stood me in good stead ever since. The company I worked for with the good culture, I will call Company 1 and the other, with the bad culture I will call Company 2.

The biggest difference between 1 and 2 was the top management. 1 had friendly top management who would walk in and greet each person by name as though they were equals. They never walked around with the ‘Me - Big Chief' attitude that is so prevalent in top management. They never just made huge decisions that would impact the employees on their own, they always consulted with everyone (through the designated division representatives). These consultations were always taken into consideration when taking the final decision. There doors were always open to anyone, once all other channels had not solved the problem. They had a forum in place where employees could suggest improvements to the business process. It was actually so encouraged that a very good ‘reward' program was in place for the best ideas. The good ideas where implemented and the person that generated the idea formed a part of the team that implemented the idea. This made everybody feel part of the team as opposed to the ‘us & them' syndrome that plagues other companies. This friendly, participative management approach had filtered down to the lowest ranks and it showed on the bottom line of the company. It dramatically improved it's earnings year on year while I was there.

On the other hand company 2 just implemented any changes it wanted to without consideration for it's impact on employees. Management were referred to as ‘Mr xxx". When a problem arose management simply said "You better sort it" to those below them, instead of the "What can we do to fix this, and what can we do to stop it from happening again?" approach of company 1. The employees felt like wheels in a cog that could be replaced at any time and often were. This caused a sour, unhelpful attitude with the employees.

Another huge difference between the two companies was that company 1 worked on a pro-active "catch it before it breaks' attitude and company 2 worked on the "it broken, whose fault is it" attitude.

Create a good company culture in your company by leading from the front. Get off your throne and get your hands dirty, show your employees that you appreciate them. Treat them with respect and realize that they will emulate your example whether you like it or not. Make sure that the example you set is the right one.

[Gautenger]

Part 23

Employees

When starting up a business there are two situations that arise that you need to look out for. The one is that the new business owner has predicted X amount of revenue will be coming in, so he hires Y amount of employees to do the work. He then realizes that he over-estimated the income his new business would generate and he suddenly has to let staff go, with resultant pay outs. On the other hand the new business owner does everything himself. This means that in a 12 hour work day he has say 6 hours for doing the actual job, 1 hour for accounting, 1 hour for marketing, 1 hour for cleaning, 3 hours for collections & deliveries, etc. In between there are phone calls, crises, crashed computers, etc. to deal with. The 12 hour day soon becomes a 14+ hour day. As the business grows, so does the amount of time needed to maintain the growth. The problem is that the day ends after 24 hours and one needs to sleep and spend time with the family too.

How does one decide if, when and how many employees to take on?

Although this question is unique in each business, there are some guidelines one can follow:

Start with none and build up slowly, as and when the business can afford it. Never use working capital to employ someone, use demonstrated surplus cash. This way you can be sure you can afford that person. By surplus cash I mean money you have left over after you have paid everything and put some away for a rainy day. By demonstrated I mean not just surplus cash from one month, surplus cash from at least six months. "Employ" a person for six months, ie., put that money away and never touch it. If after six months you never missed it, you can easily afford that employee, and even have a six months reserve salary for them for if things get tough.

When your business is well and truly on it's feet, you can still use this principle by putting away the six month's wages. You just won't have to do it over six months anymore as you will have a better knowledge of your demonstrated surplus cash.

Always remember that it may be easy to employ someone, but to keep them employed is more important. You only see that one person who you pay every month, but that one person most likely has a family of two or more he needs to care for. If you just drop him because you cannot afford him, you are taking the food out of his AND his families mouths. If you have doubts about being able to afford an employee, then rather don't. Build the business a little more until you can easily afford to employ. Often it means cutting back on your personal luxuries in the short term to employ that person, but if you have chosen the correct person, they will earn you more than you are paying them. That is what being employed is all about - someone pays you less than you are worth, but they carry the risk in return for a cut of your worth.

More about employees next time.

[Gautenger]

Part 24

Keeping Employees Happy

Most people have worked for an idiot at some time or the other. I will never forget one boss telling me at increase time that he hadn't received an above average increase for ten years, so as long as I worked under him I can forget about getting one. This was despite working harder and longer hours than ANYONE could remember in the division I was working for. Despite doing what was expected of me, I had done a heap of projects that saved the company literally millions of Rands that year. Did I work my butt off after that? Hell no, I sat back and did less than what was expected of me until I could get a transfer to another division. Shortly after that I decided to do my own thing. Now I work my butt of for myself - not because I have to, because I want to. I enjoy it!

The boss I worked for, before the ‘idiot', was much better - he would at least give credit where credit was due and fight to get those under him that put in the extra effort due compensation. He did however have plenty of other flaws that made him overall a bad boss. I will discuss them shortly. Here then follows lesson no.1 in keeping your employees happy :

1) Reprimand in private, praise in public.

I am sure that everyone will agree to this statement. There is nothing more demoralizing than going out of your way to do something that is not even asked of you and not even getting as much as a thank you for it. Would you do it again? Hell no! But if the boss makes sure everyone knows what a stunning job you did, you feel like a million dollars and are already looking out for the next opportunity to shine. I would like to relate a personal experience here. I had done a huge upgrade to one of the businesses' key systems (outside of my normal work and out of my own). My boss (the better one) left a note on the division's notice board, during tea time, thanking me for the great job I had done. After tea time everybody walked past this board. Damn that felt good! Let your employees know that you appreciate them and the hard work they do for your company and they will reward you a thousand times over.

On the other hand, if an employee is messing around you need to address the problem el pronto. You have two options : a) Cr*p all over him in front of everyone or call him aside and have a serious talk. Which would you prefer? Nothing is more demoralizing than being humiliated in front of other people. Call the employee in and have that serious chat. He may have a perfectly reasonable reason for his constant transgressions. Often it is something that can easily be fixed and not necessarily his fault. I would however like to add that there are some people that need be embarrassed before they wake up and get their butts into gear, they are however few and far between. A good open person to person chat usually does the trick. By open I mean - tell the person you have X problem, what can the two of you do to solve it? This brings me to lesson no.2 :

2) Empathize, don't sympathize.

You have plenty problems of your own keeping your business in business, if you still have to solve other peoples problems you will end up a nervous wreck. Realize that your employees will have problems of their own. They will often turn to you for help. Help if you can easily do so, but don't become a dish rag. It is often better to empathize with the employee than to try and solve all their problems. Show them that you care and feel with them in their current situation, but don't get involved. You are in business, not in charity. This may sound harsh, but if you let your soft heart take over, you will soon be working for your employees and not the other way around. Ask me I made that mistake once.

More on employees next time.

Edited March 30, 2006 by Gautenger

[Gautenger]

Part 25

Delegate

You, as a small business, are spending good money to employ someone to help you build your business. It is up to you to ensure that you get your money's worth. Make sure each person knows exactly what is expected of them, when you expect what to be finished and how. If they are sitting around twidling their thumbs, they are wasting your money. Money you could do better with. Employees of small businesses most times need to be multi-skilled, if your employees aren't at this stage you need to start training them pronto pronto.

This long winded intro to delegation is most necessary as most business owners tend to feel that nobody can do the job as well as they can. They then tend to rather just jump in and do the job themselves. The employees then just idle along draining the business's cash and the owner is still running himself silly to get everything done.

If you had enough confidence to hire that person, then give them the job and let them get on with it. When your business is strong enough to employ people, you need to start concentrating more on the overall direction and running of the business as opposed to getting the job out. Any qualified employee can get the job out, but only you can effectively run the business.

Multi-Tasking

Always expand your employees horizons by constantly teaching them new fields of expertise. You will not only improve their performance and their worth as an employee, but you will end up with a dynamic, creative team that you can lead into any direction without them even flinching. If you had to do the same job day in and day out, it would become mundane to a point where your brain actually switches off while doing the job, like when you are driving. You can easily think about all sorts of stuff and your instinct does the driving for you until a dangerous situation arises. Your instinct then interrupts your conscious mind and tells it to take over. When this happens in a job situation your employees become machines that can only work in their narrow comfort zones. Their brains switch off and become lazy. They won't go the extra mile, solve a new problem, think up cool ideas for new products, show interest and pride in their work. If the business needs to shift it's direction, as businesses often have to, they will fiercely oppose it as you will be trying to shift their comfort zones.

Let your employees teach each other their jobs so they can fill in for each other when needed. Teach them your job so they can fill in for you when on holiday, etc. Rotate their job positions every eight to twelve months. This is the time when routine starts setting in and comfort zones start to form. Don't be stingy with your knowledge. Even though there is a possibility that an employee could eventually leave and become your competition, it is more likely that they will open your next branch / franchise. You will be glad they know what they do then as you will know you can trust them to do as good a job as you can. It also breeds loyal, happy employees.

[Gautenger]

Part 26

Be the Perfect Boss (Cont.)

To be the perfect boss is an almost impossible task, but you can make your company an enjoyable, rewarding and sought after place to work by doing some or all of the following :

1) Settling In

Welcome and show your new employees their new work place when they start. You can do this personally with a small business and this really helps new employees settle in quickly. There nothing worse than walking into a new job and you are not even introduced properly to your new co-workers, let alone shown where to put your lunch or where the toilet is.

2) Be Consistent

If you say no, it must always mean no. You can't let one worker arrive late without saying a word while another is reprimanded the next day. This causes tensions as the one feels they are ‘less valued' than the other. This invariably results in a reduction of work output for that worker. The reprimanded worker then also becomes negative. This attitude always snow balls to the other workers.

3) Set Definite, Attainable but Challenging Standards

If a worker knows that X must be done by Y time and that it can be reasonably achieved, then they know exactly where they stand and what is expected of them. Every job must be linked to a deadline otherwise a ‘tomorrow is another day' attitude will set in. On the other hand if the deadline is unrealistic, then they will not even bother to try and finish the job on time. Set each job's deadline by talking to the employee, see what they say they can achieve and see what their current workload is. You know what a reasonable deadline should be. Mention this to the employee and ask if they can achieve this. If they say yes, then they have effectively set their own deadline and feel part of the decision process. If they say no, then have the employee suggest a suitable deadline. If this deadline is okay, then they have set their own deadline again and will feel more bound by it. If they give an unsuitable deadline, then discuss what can be done to achieve the required deadline. I am sure you are getting the picture. You need to set your workers goals in consultation with them. They then know they are valued and have agreed to a deadline. It isn't a deadline that they where simply ordered to meet, but one they have personally committed to.

4) Quality Control

Set systems in place to ensure that all work that goes out adheres to set standards. Set these standards in conjunction with your employees so that they can again take ownership of these standards. Reward constant improvements to the standards and have penalties for sub-standard work. Again set in conjunction with the employees.

5) Stay the Boss

All the above said, there will be times when your employees will try to take chances. You must learn to be firm. Your employees should always still realize that you are in charge of the show and cannot just do as they please. Any and all financial decisions must always be cleared with you first. Never give an employee signing power on your business account. No employee should be able to place substantial orders for goods without you approving it first. You are responsible for the bill.

Create an enjoyable place to work, but always ensure your worker know who has the final say. In the end of the day it may be nice seeing them and treating them as ‘buddies', but you should try not to get too involved with your employees. Tomorrow you may need to fire or reprimand that person and will need to be able to keep your emotions in check to do that. They should still respect you as the owner of the business. By using the above pointers you can achieve this.

[Gautenger]

Part 27

Now we should also look at some other aspects of owning and running a business. I will discuss them as they pop into my head, so they are in no particular order.

1) Stock Management

Any and all goods you have in your store at any one moment is dead capital at that moment. It is also potential income. This follows that even though you have a lot of ‘money' on hand which could potentially make you even more money, you also have a lot of money lying around. Would you leave your wallet lying around with all your money, your bank cards and their pin numbers? Of course not. The same goes for your stock. You need to keep an almost iron grip on the stock situation in your business. If someone steals a pen which you bought for $1 and sell for $2, you haven't lost $1, or even $2, you have lost $3 as you have to replace the stolen item. This means you have to sell three more of those pens just to ‘break even'. Well sort of, you have still lost $3 profit in sales from those three pens, so you never recover that money you lost. The bottom line is, install the best security measures you can afford, set up stock control measures that you enforce as though your life depends on it, your livelihood sure does!

[Gautenger]

Part 28

Pricing

Pricing you products correctly is as important as marketing them correctly.

You can have the best ad campaign in the world, but if your competitor next door has the same product at half the price, you are going to lose not only sales, but face, big time. Pricing must be one of the most under-rated and least thought about issues most businesses deal with. There are three trains of thought when most people price their products, which do you follow?

1) High - If I price my products with a high markup, I can then market it as an upmarket product. I will then only sell two or three a month, but make a fortune doing so.

2) Medium - I will look around to see what my competitors are charging and charge a little less. They are doing pretty well as far as I can see, so by charging slightly less I should be able to steal a few of his customers on top of selling just as much as he does.

3) Low - My products are exactly the same as the bloke next door, so I am going to charge a low markup and sell millions more than him. I will make way less money on each product, but the sheer number of products I am going to sell will mean a lot more profit.

Each of these three scenarios has their pros and cons, lets look at them :

1) High - Yes you will make a fortune on each product, if you sell any. If you reach your target you are earn an average income. If you exceed your target, even only by a small margin, you will really be coining it big time. If you don't reach your target, you will go down the tubes big time and in record time.

2) Medium - By only slightly under cutting your competition, even by half or one percent will mean you will gradually win over your competition's business and keep them. Yes, you will sell just as much as your competition in the beginning too. You may also spark a gradual price war as your competitor will also be watching your prices. He will then follow the same tactic as you to win back his customers. A snow ball effect occurs.

3) Low - Drink your energy pills because you are about to work your *ss off. People will flock to your shop in the droves to buy your product. You will also be working ten times harder than your competition for the same amount of money, while sitting with a huge cash flow problem trying to supply the demand. Your profit is so low that if you break one of these gizmos you are selling so cheaply, or one gets stolen, you will have to sell another five just to recoup your loss. You will be banking so often that your bank charges will eat your meager profit away. Your bank manager will kiss you goodnight every night and your customers will tuck you in. You will close your eyes exhausted and rich or exhausted and broke.

Geez, it doesn't really look like there is a good method for pricing then, does there?

There is, and it is very simple.

Each business has it's core product and some auxiliary products. Price your core products equal or slightly lower than your competition (Medium), they are what keeps you in business and are the bulk of your income, never mess around too much with these prices. See which of your auxiliary products you can run at low or no profit (Low), these are your specials which attract the customers to your business. The food stores call these products their ‘loss leaders'. Then see which of your auxiliary products you can sell at high profit (High), preferably one you supply exclusively with little or no competition. These products are the jam on your bread and a bargain if you sell them.

When deciding to go High, Medium or Low you should also consider the quality of the product concerned, amount of labour and time involved and even more importantly the perceived value of that item by the customer. Eggs have a much lower perceived value than video cassette, yet they cost about the same to produce. The video cassette is sold for more than the eggs because of this.

[Gautenger]

Part 29

Accounting

Counting the beans need not be an elaborate affair when running a small business, but you do need to do it correctly. If you don't it is going to cost you heck of a lot of money at the end of the financial year in accountants fees.

Rule number one is always to get and keep a receipt for every single purchase you make, business and personal. You, as a business, are entitled to all sorts of deductions off your tax every year. This is one of the incentives the government gives so that people can start businesses and grow the economy. If you can't prove your income and expenses, then you can't claim. Even some of your personal expenses can be claimed so keep everything.

Rule number two is to stay organized. This is often as simple as slotting all those receipts into a file with sleeves for each month. You and your accountant can then easily find a receipt when needed. At the end of each day record your incomes and expenses into an accounting program like Pastel or Quickbooks. It only takes five minutes everyday. If you leave it to the end of the month or year it becomes so much that it is often ignored. Next minute the tax man is knocking on your door and it isn't for a cup of tea.

Rule number three is use an accountant. Not for your everyday accounting needs, but for your yearly tax return. The tax man looks out for red flags when evaluating your tax return. You may advertently or inadvertently have cooked the books, they will pick it up and come and audit you. From then on you are on their hot list and will be watched like a hawk. If you however give your tax return to your accountant to fill in he will, if he is worth his salt, ensure that the maximum is claimed without raising any red flags. A last note on accountants - they are expensive, but save you more in taxes than their fees so are actually a bargain. In my opinion if you as a small or micro enterprise have to pay in tax then you need to fire your accountant.

Rule number four - never claim tax back ever. The tax man is one of the governments businesses and just like your business doesn't like to run at a loss. If you claim money back then they want to know why and start nosing around. It is better to fly under the radar than to try and score a few bucks only to become a target.

Next time more on accounting

[Gautenger]

Part 30

Accounting Cont.

Rule five - Know your bank balance every single second of the day. The minute you lose track of what is going on in your bank account, you lose control of your business. You need to know if there is even the remotest chance of a cheque bouncing. If you see that you are going to go into the red, immediately phone your bank and make arrangements. This way you stay in their good books. Just don't make a habit of it though. Every bank account has a risk factor attached to it. The higher your monthly balance, the fewer bounced cheques, the higher the monthly turnover, the better your rating becomes.

Rule six - Keep a healthy balance in the bank. Just like the tax man and yourself, the bank is a business and is trying to make as high a profit as possible. They use other peoples money to make money. If you have a constant balance of $ 1000, then they know that they can loan $ 1000 to X and make some interest out of the deal, sick isn't it? The minute you have little or no balance in your account they have non of your money to loan to someone else and this irritates them. They retaliate by increasing your risk factor, ie., you are worthless to them.

Rule seven - Show a good turnover in your bank account. The more deposits and withdrawals you make, the more bank charges you pay, the more the bank likes you. They don't want to see two or three big deposits a month, they want lots of small ones. Keep them happy by banking every day, no matter how small the amounts. At the bottom of your monthly bank statement you will see a few columns, one is for money in (deposits), another for money out (withdrawals). This is all the bank is really interested in. The more that goes in the happier they are. If there are more deposits than withdrawals then they are ecstatic. As a new business you may not have heaps of money to bank, no problem, deposit say $100 today, tomorrow morning withdraw $95. Add that $95 to your $200 takings when you go bank this afternoon. This way you have shown a $ 395 deposit and a $ 95 withdrawal even though you only had $ 300 in reality. Excellent for building up that credit record.

Rule eight - Always have debt. "WHAT? You said earlier to get rid of all debt before starting a business?" That is still correct. Get rid of every debt that is putting even the slightest strain on your finances, they will kill your business. Do however buy two or three small things, that you could have bought cash, through loans. The reason is that you cannot get a loan later when your business needs it to grow if you don't have a credit history and references. By constantly taking out small loans and paying them off early you quickly build up a good credit history.

In business your bank can either be your biggest ally or your biggest enemy. The minute you realize that they are also a business and treat them accordingly, you are on the winning path in your forced relationship.

Next time we will look at Time Management

[Gautenger]

Part 31

Time Management

As a small business with little or no employees you need to plan and schedule your time very carefully to ensure that you don't waste your valuable time. The saying goes that time is money and it sure is. In one day you have to get the job done, market the business, keep employees happy, do the books, collect and deliver merchandise, pay the bills, collect debts, etc. Where do you start and what do you do next?

Solving this problem is actually easy if you follow a very simple method : Delegate, Prioritize and Overlap.

You do this the day before. At the end of the day sit down and write down on a piece of paper all your tasks you need to complete the next day. Use your diary, (you do have one and use it don't you?), to help you remember all your tasks and appointments for the next day. Write them down one below the other.

As you only have 8 to 14 hours in a day to complete all your tasks it is important to plan your day correctly. Your tasks will be divided into three categories :

a) Must do myself.

Can give to others, but need to supervise.

c) Can delegate without supervision.

Make three columns on another sheet of paper and mark them A, B & C for the above categories. From your original list, write down each task in it's correct category. If you now look at the items in each category you will notice that the items in the B & C categories are tasks that can all be completed within a few minutes. The tasks you have in category A however are all time consuming. You will also notice that the tasks in the A column is dramatically less than your original list. This principle is called the 80-20 principle and goes like this : 80 % of your time is spent on 20 % of the work (the tasks you have to do yourself) or other way around 20 % of your time is spent on 80 % of the work (the tasks you can delegate, supervise or overlap).

Now we need to prioritize each item in each column. Look at only one category / column at a time and decide which of these tasks is the most important. If something unexpected happened tomorrow and you could only do one of these tasks, which one would be the most critical? Use the following criteria to decide :

1) Will it hurt the business if it is a day late?

2) Will I lose money if it is a day late?

3) Will I lose customer(s) if it is a day late?

4) Will it damage the business' reputation if it is a day late?

5) Would it be too late to do it a day later?

6) Does this task need to be completed before another can be started?

Assign the task with the highest priority a number 1 and each lesser important item after that a 2, 3, 4, etc. Do the same for columns B & C. You have now prioritized your tasks for the next day.

Use a new sheet of paper and rewrite your columns so that your tasks are descending, i.e., highest at the top. You can now start to overlap your tasks.

More about overlapping tomorrow.

[Gautenger]

Part 32

Time Management Cont.

Overlapping Your Tasks

Your first priority every day must always be to get as many tasks rolling simultaneously as possible. You should already have a clue how to do this from the previous post.

The items in category B & C are the key to this. Assign the first hour or so to complete all the tasks in category B & C. This should be as easy as holding a morning meeting or making a few phone calls. You will then have several tasks (80) already running and you have only spent an hour or so.

Copy your Category B & C columns into your diary.

Next look at the tasks in category A. Are you positive that you need to do all these tasks yourself, or can some of them be moved over to the category B or C columns. If not you need to see which of these tasks can be overlapped. Look for natural pauses in the processes of each task, e.g., if you have a printing business, like Stuart, you would first need to do the customers artwork, then fax or email it to them for approval. You then have a natural pause in the process as the customer first needs to look at the artwork to see if it is okay before the rest of the printing process can be completed. Estimate the time you think this pause will take. Look at the rest of your tasks and see if there isn't one that can slot into that time frame. If there is then write it down next to the main task. You can also look for tasks that can be split up into sections. Tasks that can be interrupted and resumed without losing track of where you were.

Also look for tasks that are similar that can be done one after another. If you do similar tasks in succession you will find that, although a little monotonous, can be done quicker than when jumping from one task to a completely different one, then back again. I call this ‘going into machine mode'.

You now have a list with higher priority items at the top with lesser priority items in a line next to them. Estimate the time it is going to take you to do the tasks in each line. Be as realistic as possible. Rather over estimate than under estimate. You can now fill these lines of tasks in at the relevant times in your diary.

"I have a problem, my diary only goes to 16h00 / I still don't have enough hours in my day" - Four solutions :

a) Buy a better diary, use a computerized diary or PDA.

Let the lower priority items stand over till the next day (when possible).

c) Time for some serious overtime, either your previous lack of time management has caught up to you, or you are being blessed with a surge of work, or

d) if this is an ongoing problem you may need to look at another employee.

I once had to work for four days and three night non-stop to get rid of a sudden surge of work. Although this is good as far as the money coming in is concerned, but very bad for your health. If I had used good time management techniques I would have been able to get some sleep. Use my easy techniques and you will even have time for that round of golf.

[Gautenger]

Part 33

Discipline

Discipline goes hand in hand with Time Management and needs to be worked on constantly.

When you work for yourself you are suddenly free from that direct accountability your boss placed on you. If you want to take the day off, go play golf in the middle of the day, go for a pub lunch everyday, or stay home to watch the cricket, you can. That is the freedom that an own business affords you, especially when you work from home.

Before you jump up and head for the pub though, consider this : Will the work continue seamlessly without you there, can you effectively run your business from the pub, does watching the cricket bring you in more money than being at the office? Of course not !

I have a very sad story to tell : Someone I knew started a very profitable business. This person was making mega bucks, in fact he was headed to becoming a millionaire within his first year. Very few people get that right. Then he started going for the occasional pub lunch. These started off with the traditional Friday lunch and got progressively more until he ended up trying to ‘run' his business from the pub. He employed a ‘partner' and didn't even bother going to work in the morning - straight to the pub. Within a year & a half of starting his business it imploded and he ended up an alcoholic. A year later he committed suicide.

This isn't the only person I know that this has happened to, another decided that he didn't enjoy one of the core parts of his business, i.e., giving quotes to customers after hours. He then just made appointments during the day. This however meant that he missed out on his target market of working adults who weren't available during the day. It took about six months for him to go bankrupt.

In both these cases if they had just stayed focused & worked on their discipline, they would have been very rich men now. If you use your time management techniques correctly, you will have enough time for those pub lunches and cricket matches after your work is done.

Alcoholism is a problem with business owners, follow this rule and you will be okay : Work is work & play is play, don't play during work time & but do work during play time. This means that under no circumstances should you drink during work hours, it makes you ‘sleg', do however drink as much as you want to after hours, it is possible to build up contacts at the pub - remember my post on alcohol at your business' launch. You can put in a full night's drinking, if you wish, as long as you put in a full day's work tomorrow.

[Gautenger]

Part 34

Improving your Turnover

If you sell one product an hour at $100 and your store is open for 8 hours a day, then the maximum you can collect for the day is $ 800. There are now only two ways to improve your takings for the day, ie., work more hours or improve your selling rate. Obviously you need to improve your rate of sales.

How do you do this? There are a few ways let's look at some of them.

1) Reduce the time taken to make a sale. Do this by educating your customers through articles in an email or post news letter, you do run one don't you? Tell them more about your products, how & when to use them. Show them unique ways to use the product, tickle their creative juices and tempt them with ideas they would never have thought of.

2) Increase the profit made on each item - although this doesn't actually increase your rate of sales, it has the same effect. Do this by cutting overheads, personal and business expenses, finding a new supplier, etc. Remember that you are not married to your supplier, no matter how good your relationship is, if you can get the same item at a better price, then graciously wave goodbye. Just remember that you cannot, and must not, cut costs by visibly reducing your service or quality to your customers - it is this that keeps them coming back.

3) Employ more staff - Be careful with this one - always ensure that, that extra staff member will

be able to bring in more profit than he costs and that there are enough customers for him to do so. See my previous posts on employees

4) Increase your product range to include more common, off the shelf items. You don't need a salesman to sell you a can of beans, a pen or a blank CD. It is these cheaper, off the shelf items that plug the holes when you have a tough month and put jam on your bread when you have a good month.

5) Hold info / demonstration sessions / parties - This way you are showing (selling) the product to many people at the same time. Do the maths and you will see how powerful this technique is and if you still don't believe me, ask the time share guys. One of my businesses uses this technique to great effect - we get paid for these sessions and still ‘score' permanent business out of the deal every time.

There are many ways to improve your turnaround time, it just takes a bit of creative thinking. If you come up with a new way, let me know, we are always looking for new ways to improve our turnover and our turnaround time.

[Gautenger]

Part 35

Creative Thinking

To stay competitive in business, you need to keep two steps or more ahead of your competition. Having your neck in front is not enough - they can still bite your *ss. To do this you need to think and act creatively.

If I own a green grocer and sell tomatoes, how on earth could I have any kind of edge over my competition? What could I do to make my tomatoes sell better than my competition down the road? Tomatoes just aren't a creative product you think - wrong! No matter what product you sell, there are always ways to improve it, increase perceived value, increase awareness of it, etc. It is simply a matter of putting yourself into another person's shoes - your customers. Let's take a look at some of the ways you can do this.

1) Become a customer - Drive to a neighboring town, where nobody knows you, and go shopping for your product. Drive past the competition's shops, see how they are advertising your product. Write down any interesting ways - or even better take a photo. Walk in. See how they are advertising & displaying they product. How are they packaged? In what quantities? Are they grouped with other products? Next to which other products are they being displayed?

Let's buy some tomatoes - If I buy tomatoes, it would traditionally be for a salad. The salad I like has tomatoes, lettuce, onion, cheese, green & red pepper and celery in it and a french dressing thrown over. Your taste may vary, but many of these ingredients will be the same. It stands to reason that the most common ingredients, like lettuce & onions should be next to the tomatoes so that the customer doesn't have to run from one end of the store to the other to get what he wants.

2) Convenience - Now think how you could make it even easier for your customer to buy your product than what your competitors are doing. How about making up pre-packed salad mixes - all the ingredients in one bag along with a packed of pre-measured sauce? Now I can just grab-and-go.

3) Think Outside the Box - Why just sell tomatoes? Why not grow them yourself? Why not harvest them for their seeds and sell them to the nurseries and other growers? Why not use them to make & sell your secret tomatoes sauce? How about taking your prize tomato, making a mould of it and casting plaster of Paris replicas of it. Sell them to craft or interior decorating shops. Dry them. Sell them to the circus for the clowns to throw at each other. Give courses on how to cut them so that they look like flowers. Start a local tomato dunk day where every person that buys a tomato gets to dump it in a huge container, at the end of the day the container is dumped on the mayor's head - some of the proceeds go to charity, you keep the rest.

4) Think Practical - Would you want your tomatoes all ripe, all almost ripe, some green with others ripe to use now? This always used to irritate me when I was still single. I needed the tomatoes to be at various stages of ripeness so that the bag would last a week or so, not all green or ripe at the same time. Again put yourself in your customers shoes.

5) Hire your Friends as Spies - Ask a friends to go a buy your product at your competitor's shop. Make sure these friends have as little knowledge as possible about the product. Then let them buy from you. They will then be able to give you unbiased feedback as to their positive and negative experiences at your competition and your store. They will tell you where you failed and where you are better. Improve everything that you where inferior at. Get feedback as to what they thought everybody can do better then implement those ideas.

6) Start a 007 File - Always walk around with a pocket notebook (007 File). Ideas come at the strangest and most unexpected times. Write them down immediately so you don't forget them. Just having your 007 file on you will keep you on the lookout for new ideas.

[Gautenger]

Part 36

Is the Customer King?

I am going to end this series of posts with one of the most controversial issues of running a business : Is the customer really King?

We are always taught that the customer is always right and must get what he wants, is this so? I say hell no! Picture this : A chap walks into your cellular phone store and hands his phone in for repairs. He tells you that he dropped it in the toilet, but immediately retrieved it and dried it off with a hair dryer. It worked fine for a day or so, but now it won't accept the pin number. You know that a phone with water damage can rarely be fixed as the water gets in underneath the components and gradually corrodes them away. The phone then just gets worse & worse until it blows out it last gasp and dies. You then proceed to tell this to the customer informing him that even if the phone can be repaired now, it will soon die. He readily agrees & you book the phone in. You then send the phone off to the manufacturer for repairs. It arrives back two weeks later in a black box with a cross on it, you phone the customer with the bad news. He comes to collect, pays & leaves. A short while later you get a call from the same customer, now extremely irate. He screams at you that when the phone was booked in he could switch it on, but it wouldn't accept the pin number, now it does F all - are you trying to take him for a ride, do you think he is an idiot, you have * up his phone, etc., etc. What do you do?

I'll tell you what I did : I stayed calm & explained to him - over & over again - what I had told him from the beginning. I knew that he was trying to score another phone out of me, I had dealt with his kind before. When he saw that I wasn't falling for this trick, he kept on becoming more & more abusive and irate. Eventually I told him in the language that he seemed to understand best that if after he had phoned the manufacturer and they confirmed that it is even remotely possible that I could have damaged / sabotaged his phone, then I would gladly give him a brand new one. If they confirmed what I was saying or if he didn't like what I was saying then he should rather just come into the store so that I could bliksem him, with that I hung up. He phoned back an hour later as sweet as pie and profusely apologetic. After that he became one of my better customers.

The moral of the story is : You should strive to keep your customers happy all the time, but it isn't possible. It is a two way street. If you give your customer the best service and he ducks and dives to pay you, then he is a king without a crown so you better take his throne before someone else does. There are always those customers that make it their business to try and take others for a ride, when this person walks into your store, you better be ready for him. I can honestly say that in all the years I have been in business we have had to write off less than R3000 in total. We achieved this by being wide eyed every minute of the day. It eventually becomes like a sixth sense, you see them coming mile away.

I could carry on with many many more topics, but I feel that this info should give those that are considering starting a business a good head start. Please feel free to ask any questions, I promise to give my humble, honest but biased opinion.

PS - The info I have been giving here is for use on SAAustralia only and remains my copyright so please don't use it elsewhere.

[Barnone]

Thanks for these postings Gautenger ...

I have owned several businesses now & I certainly learned from your postings & even if I knew a lot of the stuff I often get into a rut & forget that I know a better way...

Good luck with the book ...what about an australian version ?

as you may know I will soon be starting (or buying) something in Australia, in order to comply with the business skills subclass 160 business owner TR visa then hopefully the 890 PR visa.

[Gautenger]

Thanks for the encouragement Barnone. I just wish I had more time to sit down and finish the damn thing.

How about adding some of your wisdom to the pile here too.