Creative/Generalist

Spare Capacity

2025-03-17T09:48:29Z

AI reasoning models are now so good, especially with the introduction of ‘deep research’ type models that combine advanced reasoning with thorough content search capabilities, that they are generally my first port of call when tackling a complex, technical, open-ended question like “Should we pivot from product development to consulting services?” or “What business models could be built around such and such a website?”. This is not to say that I blindly trust the output, just that rather than making even a cursory effort to sit down and process the big questions off the bat, perhaps with a notebook and pen in hand, I’ll ask AI first.

Ultimate Rucking

2025-03-13T18:19:51Z

This article is a summary of an idea/project I worked on throughout 2024. It went through various forms - a Strava group, a website, and an unfinished eBook. In the end I decided I didn't have time to maintain it, so here's some of the content I created boiled down to a summary, mainly so the concept doesn't just get lost to the passage of time.

You've stumbled across the strange and exciting world of Ultimate Rucking. Let's get you up to speed.

SaaS is Dead. SaaS is the New SaaS

2025-01-02T11:00:00Z

Writing this at the start of 2025, I can say with a high degree of certainty that this piece is unlikely to age well, but at least we'll be able to look back and laugh about just how wrong we were.

Jumping right in - why might SaaS be 'dead'?

Death of the Backend

For context, let's restate Microsoft's Satya Nadella's December 2024 assertion that SaaS as we know it is dead:

I think the notion that business applications exist, that's probably where they'll all collapse right in the agent era, because if you think about it, they are essentially CRUD databases with a bunch of business logic. The business logic is all going to these agents and these agents are going to be multi-repo CRUD right, so they're not going to discriminate between what the backend is - they're going to update multiple databases and all the logic will be in the AI tier so to speak. And once the AI tier becomes the place where all the logic is, then people will start replacing the backends.

It's fair to say this interview sent shockwaves through the industry - not because it was the first time anyone had floated the idea that SaaS was moribund, but perhaps because it was such a concrete formulation of how it was going to happen coming from a senior industry player. But combing through the comments on YouTube, reaction videos and subsequent blog posts, it was clear just how polarised opinion was on how this might play out. A lot of experienced engineers refused to countenance the possibility that backend logic could be subsumed by LLMs, exemplified by comments like this:

Stock Ordering Maths

2024-01-01T11:00:00Z

How do most business owners order stock?

Well, honestly, they probably just eyeball it. A lot of business owners have been “in the game” so long they can probably just guess at how much to buy.

I ran a company that supplied restaurants and hotels for a good while and can tell you that precisely 0% of our customers were doing anything other than calling us from inside their walk-in cold room with a list scratched on the back of a chopping board directly from memory.

Markups and Margins

2024-01-01T11:00:00Z

Be honest - if I asked you what the resulting margin would be on a 50% markup, how quickly could you answer?

Given how fundamental margins and markups are to any product business, I think it's time we cleared this up once and for all. If you can't be bothered to read this, just grab the "cheat sheet" at the bottom of the article, print it out and keep it in a safe place.

VAT Rounding

2024-01-01T11:00:00Z

First, take a deep breath

If you've got here because you've worked yourself up into a state of rage because the fancy accounting/ERP/web system you pay all that money for each month has produced an invoice that doesn't match up with an invoice you've been given, or a customer has complained that the totals on an invoice you've produced are incorrect - take a deep, calming breath and know this: there is no single, correct way to calculate VAT.

The Milestone

2021-05-13T10:00:00Z

Last week Pakk reached a major milestone. Of course there have been many others: our alpha launch, our first live customer site, their first order etc. This one, however, was really big, both on a personal and professional level. This is the story of how that milestone was reached and what it represents — right from the very beginning. It’s a reflection on the past and future, on business and entrepreneurship, on technology, software and web development, on commerce and e-commerce. Mostly though, it’s about life: my life, our lives and life in general.

Online Store Design is Not Important

2021-03-26T11:00:00Z

If you’re just getting into e-commerce, there’s a high chance your top priority when shopping for a platform is “having a great looking store”. Are you finding yourself browsing through template galleries and customer portfolios? Obsessing over image carousels? Considering contracting a designer to help put your store together?

Sure, I get it, it’s natural for a business owner to want a “great looking store”. Wouldn’t we all? Why would we set out to build an online shop and not want to make it look as good as possible? I’m here to tell you though, that having a great looking store, even a good looking store, is not as important as you think. And I can prove it with one word: Amazon.

Nothing wrong with the aesthetics of Amazon — it looks, well, OK, but it’s not going to win any design awards — I think we can agree on that. So why is the way your store looks not all that important? Well, there are actually quite a few reasons.

What looks great today, might not look great tomorrow

The web changes. Fast. If you look back at web trends over the past 15 years, it’s mind bending how quickly styles have come and gone. If you’d have created an ‘on trend’ site in 2005, you’d probably have had to completely overhaul it 4–5 times by now to keep current. That’s expensive and tiresome.

Flashy things often bog a site down

It’s no coincidence that half the web is bust and the other half slower than a broken down bus. Often, in a misguided attempt to make their site “flashier”, designers and store owners load them up with widgets/plugins/carousels/themes or any other manner of digital cruft. Mostly it just gets in the way of the shopping experience. Then it ages badly and you’re back to point 1.

E-commerce visuals have become standardised

Ever noticed how easy it is to tell apart a small-business online store from one of the big players? The small store is the one with the black background, wood-panel-effect header, handwriting font and video carousel. The big ticket store is the one that looks, well, like every other big ticket store.

Will your site look good on a smartwatch, viewed underwater at a distance of 20 meters?

OK, that’s a complete exaggeration, but you get where I’m going with this. It’s hard to make a site look good across the modern gamut of devices. Not “design hard”, but “engineering hard”. You might be happy with the store you’ve created when viewed on a desktop with a lovely big monitor — but you also need to be sure that it looks that great on any of the 1000 handheld devices your potential customers might be using.

So if I’m saying you shouldn’t obsess about creating a great looking site, then what should you obsess about? I think it’s quite simple. Design-wise, this is what I would obsess about:

Clean, minimal, timeless style — doesn’t need to be updated yearly
White background across the whole site — few exceptions
Simple, high quality product shots — white background, high res
Subtly branded — think one or two colours, logo and font
Readable font size — if in doubt, go bigger
No moving or rotating elements — e.g. carousels, sliders
Prominent main product navigation menu — 5–7 main categories
Everything where you’d expect it to be — don’t make the customer relearn e-commerce layout just for your site.

I won’t go into all the different elements of functionality — that’s for another day. I think it’s enough to stress that aesthetics should take a back seat to efficient functionality. Go simple, fast and clean over flashy, gaudy and “custom”.

Unless you’re selling diamond rings or custom-designed travel experiences, you don’t need to tell a story — you just need to present your product catalogue in the most efficient way possible.

How to Sell Cherries

2015-01-03T11:00:00Z

A year ago, a little man with round glasses rang our doorbell and asked me if would be interested in buying some cherries. I was in the attic and busy with work so had to run down to front door, phone in hand. “Bloody annoying salesman,” I thought, and sent him on his way. Despite one’s natural tendency to treat any travelling salesman these days as a con artist (although a fruit-based scam would be almost worth going along with), I was just too busy to give him any time.

Fast forward exactly one year and the same little chap rings my doorbell again. Again I sprint down to answer the door, pen behind ear, dog barking in excitement. This time he holds out a full box of bright red, fully ripe cherries and says “Look what lovely cherries I have – would you like some?”. I looked down at the cherries and my mouth watered slightly in anticipation. I was sold. “Well how much are they?” I asked. “It’s a 2 kilo box for 5 Euros”. I’m no expert on fruit prices, and probably would have bought them at double the price, but 5 Euro for a full box of ripe cherries seemed like a bargain to me, so I paid him and took ownership of my fruit.

As is custom in Spain, we chatted for a while, eating ripe cherries in the sunshine. “They’re from my land in El Bierzo,” he told me. I had assumed that they were from the south, or imported, like most of the fruit in Spain. “Picked ‘em myself this morning with my daughter,” he said, showing me, at close range, his filthy fingernails as proof. Of course, I was delighted: I’d bought 2 kilos of locally-grown, same-day-picked cherries, direct from the farmer and his daughter (who was 6 or 7 years old in my mind – I pictured him holding her up to pick the cherries off the top of the tree (Do cherries even grown on trees? Spot the London boy). Alas, when she drove round the corner in the van, she turned out to be middle-aged and definitely unhoistable without mechanical aid).

I called over to my neighbour who was doing some work in the front garden. “Hector, look at these fantastic cherries,” I shouted, “they’re local and fresh picked this morning”. He strolled over, tried one and bought a box too.

So just a lesson for vendors really. Ask someone to buy your cherries, and they probably won’t. Show someone your lovely, fresh, bright-red cherries in their best light and you might just sell two boxes.

The Holy Grain of eCommerce Products

2015-01-03T11:00:00Z

Picture a fresh-faced entrepreneur breaking into the world of business for the first time and you might imagine them as being inspired by their personal interests or hobbies, and motivated by their passions. The custom car enthusiast opens a tuning garage. The footwear freak starts selling shoes on Ebay, the horse lover opens an online store selling riding accessories. By far the most popular advice that I hear when people ask “What business should I start?”, is a resounding “Identify your true passion in life”. The internet is currently bumper-to-bumper with courses and self-help packs designed to get you in touch with your inner passions with a view to making a business out of them.

Of course, it would be cynical to argue with that. There’s no doubt that doing something you love is part of the recipe for success. You’re much more likely to stick at it, work harder, and give more of yourself. But being passionate about what you sell is not an instant ticket to profit. In fact, it may not even be the most important factor. How many people do you think start business selling a product they are incredibly close to and passionate about, only to find that there’s actually no market for it, or worse still, the logistics of selling it are a complete nightmare. By the large number of startups that bite the dust each year, I’m willing to bet that it’s a lot.

There is another way – it’s much less sexy than following your dreams and I doubt very many people would be turned on by it – but it might just produce better results. I’m talking about bottom-up business design.

For the reasons just discussed, it’s highly likely that most small businesses selling a physical product start off as a dream in someone’s head. Some would-be entrepreneurs probably dive right in, without studying the demand or the practicalities of selling their particular product. Others, inspired perhaps by their studies, or experience in the commercial world, might undertake a feasibility study or do some market research, and then may or may not choose to proceed. This idea-based approach to starting a new venture might be termed top-down business design – the product or idea starts it all off, the rest just follows (or doesn’t).

So how do you do this backwards? Easy – start with all the crap and work your way up to the product. Let’s say you wanted to start selling widgets, and I’m going to assume, if you’re reading this, that you’re going to want to do it online (if you want to open a shop, you’re in the wrong place – try www.dinosaurbusinesses.com for help). What would the be ideal characteristics of the widget you are going to sell? I’m not talking about what interests you, or what you have experience in (that’s top-down). I’m talking about the essential and defining characteristics of a widget that would make a good, if not great, internet retail business. From my experience in selling what is probably the worst product to retail over the net (food), as well as talking to others who sell less than ideal merchandise, I’m going to suggest a few pointers.

Realistically, you’re never going to be able to fulfil all of these conditions – consider them a checklist for the absolute holy grail of internet retailable products. The closer you can get, the better.

It’s something people are actively searching for

The web is bursting at the seams with online retailers and they’re all vying for a piece of your eye-time. That means tons of dancing, flashing ads wherever you look on the net. If what you are selling is the type of product that depends on browsers, the kind of thing people buy on an impulse or the sort of article people don’t know even exists, you’re going to struggle more than those selling stuff that people are actively searching out. Those buyers go to Google and type in ‘Buy Widget’. Sellers of such widgets set up AdWords campaigns with the keyword ‘Buy Widget’. They spend a bit, but are instantly visible to everyone in the market for a widget. Easy.

It’s something techy

I don’t have the stats to prove it, but I’m sure that technologically savvy buyers are more likely, by an order of magnitude, to search for something on the web than tech cavemen. I’ve got to admit though, that this is fast changing in countries who are already used to buying online – a Google UK search for ‘Knitting Supplies’ would appear to prove that point.

It’s something that appeals to under 40s

On the same note, internet users are, on average, young. That’s not me being ageist. It’s just the way it is. Again, it’s probably changing quickly in lots of countries. Here in Spain, where I live, I barely know anyone who would buy something over the internet, let alone anyone over the age of 30.

It’s something mid-priced

Really cheap stuff, like products in the £1-£5 range, has a very unattractive price-to-postage cost ratio, especially if it’s not really small and light (see below). You probably don’t want to pay £3 postage and packaging for something that only costs £1.99. Bundling together such small, cheap products into packs could provide a solution, but in general I’d say you don’t want to depend on products in that price range. Of course, unless they have a huge margin, you also have to sell thousands of them to make any money. On the flipside, really expensive products, like high-end jewellery, or perhaps cars, will usually have to be physically viewed by customers before they decide on a purchase, so they don’t make for the best e-commerce items. For me, over the last 5 years, the average transaction value has been about £25, and the top end of the range is a little over £120. We don’t sell any single item priced more than about £80. I get the feeling we’re in quite a good price bracket.

Something with a high price-to-weight ratio

On a similar note, If you’re going to be doing logistics like 99% of internet retailers, you’re going to be using a courier and that means weight-based billing for shipping. The more something weighs, the more it’s going to cost you to send to your customer. That might not be a huge problem if it’s a high value item, but for cheap products, you’re going to have the same problem – the price of P&P is not going to be attractive compared to the price of the item. Believe me, customers hate paying for delivery at the best of times – they’re not going to be happy about £5.99 to deliver a bottle of mineral water.

The same advice applies to bulky or funny shaped objects – you’ll pay more to ship them, and unless you can recuperate that in the price, it’s a no-goer.

It’s something not fragile

Fragile products mean one of two things, but probably both: either extremely high packaging costs (which are constantly rising, by the way), and/or lots of breakages.

Breakages are the bane of any e-commerce operation – the costs implied are unimaginably high. Firstly, the customer unavoidably gets a bad impression of you (although it wasn’t your fault). Then there’s the cost of the replacement stock, to which you’ll have to add another shipping cost (because you can’t charge the customer shipping for replacing a breakage). Finally, administrating customer complaints due to breakages and suchlike can become a full time job for someone if the problem is bad enough.

I recently had a customer who was going out of her mind because of breakages. They had entered a product into one of these group buying offers – the margins were extremely tight and they had calculated costs to the penny. Unfortunately, the courier was smashing all the little jars of olives, which meant a tonne of losses and then the need to invest in much more expensive packaging, effectively wiping out her margins and then some.

For me, a fragile product would be a non-starter.

It’s something not normally prone to failure

In the tight-margin world of e-commerce, anything that causes the need for administrative intervention is going to cost you more than you can afford – and product returns will do just that. Not only are you going to be paying collection costs, re-shipping costs and possibly replacement stock costs (if you can’t recoup them from the supplier for some reason), but managing the whole returns and complaints procedure can become a black hole for your company’s cash.

It’s something uncomplicated

This is related to the above, because if it’s highly complicated, then it’s highly likely to fail at some point, even if it’s the fault of the buyer in some way (which they are not going to ever tell you, of course). If your product comes in 250 pieces and needs to be built by the customer, imagine the aggravation because of missing parts and problems caused by sub-standard installation and usage. More importantly, the more complicated and harder to use a product, the more requests for support you’re going to get and the more resources you’re going to have to devote to supporting the product. Computers are complicated, so big computer companies have to hire armies of support staff just to avoid rampaging customers who are unable to identify the power button. Do you have the resources to hire such an army? Wouldn’t you rather sell wooden blocks? Or shampoo?

It’s something that won’t devalue (too much) with time

If you’re planning on holding stock, products that expire quickly are likely to do serious damage to your bottom line for obvious reasons. If you can’t sell it on time, you’ll end up just giving it away. This can be especially painful at the start, when volumes are low, or when launching a new product into the market. Until you build up enough momentum behind a product, you might not be able to shift batches before they are obsolete. The most obvious example of this is food, but nearly everything has a ‘shelf-life’ (think gadgets, or fashionable clothes).

It’s something one-size-fits-all

I have a lot of contacts working in fashion e-commerce. They are almost universally unable to comprehend how their employers are still in business. They tell me the returns rate is huge – up to 75%. People see a shirt they like and they order one in every colour and in two or even three sizes, only ever intending to keep one. The amount of customer service and logistics overhead this produces is enormous (and tells you something about the margins some fashion retailers work with). Clothes are inherently problematic – what works for you might not work for me, and it is practically impossible to represent those variables (i.e., size) online. If customers are not able to immediately identify whether the product you are selling will ‘fit’ them, the result is likely to be an administrative disaster and a high returns rate. Food is pretty bad for this too – people complain that the sausage you sold them doesn’t taste the same as the sausage they tried in Spain. Luckily, customers tend to understand that food is non-returnable, so it’s not a problem. Subjectivity in e-commerce sucks – try to eliminate it.

It’s something exclusive

So, by now I can hear you all screaming at me – “Well done smarty, if there’s a product like that, everyone’s going to want to sell it!” Of course, you’re right. But not everyone will be able to sell it. You must identify other barriers to entry that stop the market getting flooded – perhaps you invented it, perhaps it’s manufactured abroad and you can get an exclusive import deal, perhaps you need a special licence to sell it, perhaps it’s new and you can get a first-in advantage. If it’s not exclusive to you, or somewhere close, you’re likely to drown in the competitive waters of today’s net.

OK, so please don’t come at me with a million examples of businesses that break all these conditions and are surviving nicely. I don’t doubt they exist. Hell, I even run one myself. I’m not saying that you can’t make a success out of selling products that are cheap, heavy, fragile and complicated. If you can make a big enough margin then you probably can. You might argue that in the free market, the price of products will adjust to take into account these complexities and that this higher price will reflect the skill and added value provided by a retailer who attempts to sell them. After all, if you’re not adding value, what are you doing? Just selling shampoo (my idea, I thought of it first).

Go ahead. Give it a try. Just don’t blame me if you go bald in the process. I’m not joking, sometimes selling food online turns me into a raving psychopath.

Eating Out in Spain is No Longer Good Value

2015-01-03T11:00:00Z

When I first came to Spain, in 2004, it was a cheap country by most standards. In some ways, it still is, but one of the most notable shifts over the past 5+ years has been a dramatic rise in the cost of eating out. I remember visiting a bodega restaurant in Valdevimbre, Leon in 2006. The bodegas in Valdevimbre are famous all over the province – good, rustic, home cooked food served in unique caves carved into the hillside. And they used to be great value for money too. We paid €26 for lunch for three of us, including a whole tortilla guisada (stewed Spanish omelette), grilled wild mushrooms, lamb chops, bread, wine, desserts and coffees. I remember being so struck by the price that I kept the receipt to show people.

Consumer Surplus

2015-01-03T11:00:00Z

Consumer surplus is one of those useful little concepts you learn about in elementary economics that, once understood, sheds light on all manner of commercial activities and pricing decisions.

Without getting too technical, it’s the area under the demand curve and above the market price, as illustrated in red in the above diagram. The traditional notion in economics is that demand starts low when price is high (red line, start at the top left) and increases as price comes down (follow the red line as it falls to the right). What that suggests is that even at the highest price, at least one person is willing to buy it. But as we know, goods are sold at the market (or equilibrium) price where demand equals supply (also shown on the diagram), which means that the one person who was willing to pay top dollar, and all the people who were willing to pay at least something above market price, have got themselves a bargain, right? That quantity of money (all the people who were willing to pay more multiplied by the amount extra they were willing to pay) is the consumer surplus.

To an individual company, exploiting the consumer surplus means trying to charge each consumer just, and no less than, what they are willing to pay, which is notoriously difficult. Astute traders have known this for centuries and exploit the consumer surplus essentially by letting you haggle. Starting with a high price, a good commercial bargainer will quickly ascertain how much you are able or willing to pay for an item and try to sell it for you for just that. Sell high to the people who can afford it, and sell low to the people who can’t. Student discounts do exactly the same. Companies know that students have less money to spend, so they sell them exactly the same products at a cheaper price. This is not some seedy tactic – it’s going on in most of the shops in your local shopping centre. Fair? Probably not. Commercially effective? Definitely.

Once you grasp this concept, you’ll begin to see it all over the place. Another of the tactics that companies use is to repackage the same (or very similar) product in some way so as to be able to sell it at different price points to consumers. At your local supermarket, there are probably 3 or 4 different types of baked beans, or tinned tomatoes, ranging from the shop’s own brand, to some sort of gourmet brand in black packaging with gold writing. Do you really think there is much difference in these products apart from the salt content and/or 2 cents worth of oregano or some other ‘gourmet’ ingredient. No. They do this so that people who can afford to pay 3 times the entry level price will. And they’ll feel good about it too. I think Apple do this with iPads and iPhones. Does it really cost them anything significant to go from 16 GB to 64 GB? Probably very little. But the products are priced hundreds of Dollars apart. Why? So there are options for consumers who can only afford entry level units, and there are options for consumers with money to burn. Classic consumer surplus.

Anyway, why the hell am I rambling on about this on a Friday morning when I should be doing something more productive? Well, Jessi ordered some stuff online yesterday, which arrived today. We had a little theory about this order related to the concept of consumer surplus which proved, I think, to be correct. Let me explain.

Stradivarious (at least in this context) is a clothing brand with a chain of stores and an online shop. Jessi ordered some clothes yesterday (Thursday). Since she spent more than 60 Euro, she qualified for free delivery. When she got to the checkout, there were two delivery options: the ‘standard’ (free) one, which was quoted as taking 2-3 days, and the ‘express’ option for 6.99, which was next day. Since we operate an e-commerce business ourselves, we were pretty confident in thinking that mainstream national couriers, like MRW used by Stradivarious, do not offer anything other than an overnight service. It wouldn’t make sense. Since their infrastructure and procedures are built around getting a parcel from A to B in less than 24 hours, they’d probably have to work even harder to make it take longer. No, I suspected that what Stradivarious were doing here was exploiting the consumer surplus. Of course there will be customers who are very keen to have their stuff the next day, and will be willing to pay an extra 6.99 for the privilege. But then there will also be customers who balk at paying delivery charges. Great pricing tactic, no?

We tested the theory – Jessi chose the free delivery option. Sure enough, at 9am this morning the courier turned up with the parcel, clearly labelled as having been sent on an overnight service.

So let this be a lesson. To e-consumers – watch out for this tactic. I’m not sure how widespread this particular trick is, so keep an eye out for premium delivery service charges that don’t seem to add up. And to online sellers – depending on your degree of morality, perhaps this would be a good pricing tactic for you to milk a little more out of your customers. We won’t be doing it though.

The Maths of Mixed-Rate VAT

2015-01-03T11:00:00Z

If you managed to get past the title of this post and are still here then this article could potentially be of great help to you. If you’re bemused by the title but have stuck around thinking this might be an entertaining read, leave now – you are horribly mistaken.

Specialisation Fallacy

2015-01-03T11:00:00Z

“Avoid generalisations” – that’s what were taught from the very beginning. If you generalise, you’re either racist, sexist, ageist, appearancist, intellectualist or some combination of the many other undesirable ‘ists’ with which we’d rather avoid being labelled. As any serial generaliser already knows, ’sweeping generalisations’ most often get swatted down with a “you can’t say that”.Technically, you can say anything you want, so what’s really meant by “you can’t say that” is more like “you can’t conclude that”, or in a slightly more mathematical-socialogical way: “you can’t extrapolate the characteristics of one individual to an entire population or subset thereof”.

Whilst generalisation is one of those crimes of reasoning, logic or simply attitude with which we all get familiar from a young age, its opposite concept, specialisation or particularisation, is most often overlooked and it’s something we’re all guilty of to a greater or lesser extent.

Specialisation, for our purposes, means extending the perceived characteristics of a group to oneself. The consequences of deciding that a certain rule applies to you because you have observed it or heard that it applies ‘in general’ can lead to, at best, errors in decision making, and at worst, personal catastrophe. And it’s something I see happening more and more around me. People say things like:

- Now is a good time to buy, but if I wait for the housing market to drop even further, I’ll get a better bargain.

- Populations with high levels of fat consumption in their diets tend to exhibit high levels of obesity. Fat consumption makes you fat, so I’ll go on a low fat diet.

- The economy is bad at the moment, I’ll wait to sell my business.

- I can’t afford to go out and eat, this country is in the middle of a financial crisis you know!

Last year, I was looking around for a small flat to buy in order to make a smart financial investment for the future. The housing market in Spain has fallen massively since its peak in 2007 and there were some very good value potential purchases out there. Yet I argued almost weekly with my father-in-law. “The market still hasn’t hit the bottom yet, you should wait more,” he’d say. “Prices are predicted to fall another 10% within the next 12 months – if you wait you’ll get a better bargain”.

Here’s the thing though. I don’t care whether the housing market drops another 10% or rises 15%. These percentages are averages of millions of properties up and down the country. I wasn’t planning on buying the whole available housing stock of Spain, or even a statistically significant representative sample of it. I was looking for one flat. I only needed to find one emergency sale, conduct one successful negotiation, or find one isolated anomaly and I would have my bargain. It wouldn’t matter if the price of housing were to drop 10% in the 6 months after my purchase – as long as I could get the flat under value I would have done well.

Don’t get me wrong, finding a bargain is significantly easier in a buyer’s market, but concluding that a general 10% fall in house prices will mean you can get the house you are interested in for 10% less is a mistake is a fallacy of specialisation.

Of course there are markets with such low variance in the value of transactions that the general is a perfect indicator of the specific. If I want to sell some shares and their price is 10% lower this month, then to a very tight degree of accuracy, I’ll get 10% less for them. If I partake in a fund that invests in a basket of shares and suddenly 50% is knocked off the value of the stock exchange, then I just lost about 50% of my money.

But even if the stock market falls 50%, somebody always comes out winning. Why? Because the headline statistic is always just an average. And averages are made up of a lot of stuff in the middle that follows the trend pretty closely, and then a few outliers that do crazy stuff. In the stock market example, there were probably a load of stocks that fell by about 50% along with a few that fell by much more and a few that actually rose.

Therefore, your task is to be on the positive side of average. To rise when everything else falls.

The current employment situation in Spain is bleak and has been for a long while. Youth unemployment is up somewhere around 50%.

What does that actually mean? Well, on average, across the whole country, only half of the young people eligible for work are actually in work. That’s the general picture, and it’s a genuine tragedy for the current ‘lost generation’. But that’s just the group perspective. If I am a young person looking for a job, what should I read into this static which is trumpeted loudly on the news almost every single day on national television? Should I assume that I have only a 50% chance of getting a job? Should I assume that I will have to wait 50% longer to find a job? That I will earn 50% less?

I’ve heard all of these conclusions.

The truth is that these statistics are almost irrelevant to any one individual. Yes, we should worry about them from a point of view of social consciousness and group economic prosperity. But to an individual, averages are just that, averages, and any individual has the ability to buck any trend with relative ease. You are one in ten million, a hundred million, 2 billion, do you think that the statistical world will implode because you have managed to find a flat for 20% less than its value, or find a job when 50% of your competitors can’t, or lose 10Kg on a high fat diet when the general advice is that high-fat diets make you, well, fat?

Did you know you have a 1 in 119 chance of dying by suicide? Damn, better be careful then. Or perhaps just don’t commit suicide.

Let this be our little secret. You are you, and that’s it. You are not representative of the average. The general does not apply to you. Be wary of generalisation, but be even more wary of specialisation. When the news tells you that taxes, divorce rates and the cost of of living have gone up, that educational standards, living standards and life expectancy have gone down, and that we’re in for a rubbish summer, turn off the TV and say “I don’t care – this year I will be richer, happier, smarter and healthier than ever”, and go out and do something to make that happen.

Don't Give Credit

2015-01-03T11:00:00Z

If you’re running a small business selling goods to other small businesses, the chances are you’re giving credit. There’s also quite a good chance, especially, I would guess, if you’re a ‘family’ type business, that there’s a bit of ‘give’ in your credit policy. You know what I’m talking about. Supplying customers with too many open invoices, or too much balance in excess of their agreed limit. Perhaps you do it because you understand their predicament, perhaps you’re too weak to say ‘No’, or perhaps you’ll think they’ll stop buying from you if you don’t keep extending them credit. The truth is that they very well might stop buying from you. And the problem is that the reason behind their decision probably won’t be financial, it’ll probably be personal. In my experience, the worst thing about giving customers credit is not the endlessly mounting Accounts Receivable ledger, it’s the fact that it almost always ends in tears.

Customers Don’t Like to be Told ‘No’. They take it personally.

Even with the best intentions and the most regularly paying customers, you’ll almost certainly get into the territory of having to make uncomfortable decisions about extending credit. Perhaps in very large corporations it might be possible, out of sheer bureaucratic indifference, to stick to a hard-and-fast credit policy, but I doubt there are many small businesses who can just say “Sorry £500 is the limit”. We all know the phone call: a trade customer right on the upper edge of his credit limit who is just desperate for a delivery and who will pay you first thing on Monday morning – promise. How can you say ‘No’? And what kind of person will you look like if you say ‘No’? All the credit control manuals and “How to Run a Small Business” books say that you should absolutely refuse and that your customer will understand and respect you for it. Sorry, but that’s bullshit. Your customer will absolutely not understand and will absolutely take it personally, since as the business owner, the decision is entirely yours. They may well decide not to bother buying from you any more and you know that. You’re treading on thin ice now. How do you know when to say ‘No’? Truth is, you don’t. You just use your best judgment and sweat it out at night while you lose sleep over who owes you money. Wouldn’t it have been better to never get into this situation? When this customer approached you three years ago and asked “Hey, do you mind if I pay you after delivery? I’ll pay you the very next day and it’ll never be more than £100”. Maybe you should have just politely said “Sorry, we don’t do that”. End of story.

Customers Don’t Like to be Credit Chased. They take it personally.

Then there’s the monthly call – the one you dread making. How many times have you heard these common excuses?

- “The person that deals with the payments is on/has been on holiday”

- “I’m sorry, it’s just been so busy over the last couple of weeks, I’ll pay you tomorrow”

- “Can you just give me a little more time, we’re really slow at the moment”

- “Really sorry about that, I’ve been in hospital recently”

What type of heartless bastard doesn’t accept those excuses? But what happens after the third or fourth month running without payment and the continual stream of excuses. Do you insist? Do you get angry? Do you make threats? Well I’m sorry to say that once you’re into that territory, this customer is gone. Finito. And it’s not because he doesn’t want to pay you. No, it’s because of your disgusting aggressive attitude towards credit chasing. He, after all, knows that he’s a decent, honest guy with full the full intention of paying you straight away, so why are you harassing him? It’s only been, like, 4 months and you should know he’s been closed for a month while he was in Tenerife and his girlfriend’s mum’s sister’s had chicken pox. Didn’t you know that?

Wouldn’t it have been better to say ‘No’ 12 months ago when he asked you if you wouldn’t mind just making an exception this once because he didn’t have his card to hand?

Customers Can’t Organise Their Accounts Payable. You’ll Have a Disagreement. They’ll Take it Personally.

This is the one that gets me most and I have to say, it’s probably the most common one too. When customers pay up front, there are exactly zero administrative complications. An invoice is raised and paid in the exact same precise second, their account balance is always zero and their statement is a nice, shiny blank A4 piece of paper.

When credit starts, all that goes out of the window, and if your customers are anything like mine (restaurants), they will have their brother Tony doing the paperwork at the bar at 1am and will be leaving you voicemails (at 1.30am) saying things like

Hi Jon, it’s Brian here from the Turkey & Mongoose. We’ve just received your statement which says we owe £1350.96, but according to our records we only owe you £2.50. Of course, the chef is a woodpecker and eats most of the invoices, so we might have missed the odd one here and there and oh, I found one down the back of the cooker the other day but it was covered in pickle sauce so the accountant wouldn’t accept it. Would you mind sending us a copy of every invoice since 1998. Of course, seeing as all this is in fact your fault, we won’t be paying you for another month. Please let me know if you disagree with any of this.

Wouldn’t it have been easier….

We Are Not the Courier

2015-01-03T11:00:00Z

A couple of months ago, I signed the company up for TrustPilot, one of the new breed of review collection services that prompt your customers to give you a score and leave you some feedback after placing an order. TrustPilot then collates these reviews on their website and pushes them out to aggregators, like Google. All this review stuff may or may not be important in the future, as search engines try to get a handle on commercial reality rather than just empty keywords, so I figure it’s good to be on board as early as possible. TrustPilot seemed like a good option – easy to set up, fairly comprehensive feature set and a competitive price. I’m satisfied with the service and would recommend them.

But that’s not what this article is about. What concerns me is what customers are saying in their reviews.

We’ve got a couple of hundred responses now – most good, some bad – and I’m starting to recognise the pattern. Let’s have a look at a smattering of typical good ones:

(5 star) Ordering on line was straightforward and goods arrived within a couple of days extremely well packaged with no breakages. No complaints at all and will certainly use again.

(5 star) Goods ordered late Tuesday and delivered early Friday, just what was expected and glad to recommend them.

(5 star) the products i bought where good quality and a quick good delivery service ,will continue to order in future

(5 star) Delivery as promised great service

And now for the bad ones. There aren’t too many (thankfully), so I haven’t had to be very selective. These are the worst:

(1 star) I ordered some of their products as a wedding present for some friends in France and it took 15 days to arrive to them. It looks like there was a first delivery attempt (according to their tracking system) but no card was left at the house so my friends could not pick it up.

(2 star) only part delivered and my staff tell me your courier wanted to wait until Tuesday and my staff insisted we had part delivery

(3 star) Everything about the service from tapas lunch company was good however I would normally expect swifter dispatch of items. The third party delivery service provided decent online awareness of delivery progression but I stipulated a telephone number to call for delivery. This was not used on my initial delivery day when I was in the flat all day long. They did ring it on the second delivery day but I was out and in meetings so could not answer the phone and on the third attempted delivery day a UK mail van pulled up outside my flat and delivered a parcel to a neighbouring permises. He was about to drive away when I ran out to question whether there was an item for me that I actually got my delivery.

Looking through all 200-odd reviews, the vast majority of positive comments centre on:

1. Fast despatch of order.

2. Good packaging of order.

3. Easy to navigate, pretty website.

4. Most importantly – successful and efficient completion of next-day delivery service by courier.

On the flip side, the bad comments all focus on:

1. Products arriving broken (interpreted as bad packaging by customers).

2. Non-immediate despatch of order (usually only if out of stock of a particular product).

3. Some problem with the website.

4. Most importantly – failure of next-day delivery service by courier.

Few comments say much, if anything, about:

1. The product – it’s quality or anything else.

2. The price.

3. The customer service they receive from us.

To be honest, I find this quite depressing. When we started out in this business, we wanted to bring fantastic authentic Spanish food to the UK and offer it at a sensible price. We also committed to being an open, honest and friendly company that would treat customers well, so that they would enjoy dealing with us. Looking back, I might just as well have set up to sell empty boxes, but with the commitment to offer them through a beautifully designed website with a guarantee of same-day delivery.

To make things worse, like many online sellers we outsource our logistics and delivery service – we have a warehouse that pick, pack and despatch our orders and a courier service that delivers them. That’s to say, aside from constant goading and remonstrating, there is little to nothing I can do to affect the quality of the service coming from these partners. Of course we are constantly monitoring and talking to account managers to try to improve things, but at ground level, on a transaction-by-transaction basis, it’s out of our hands – which means we live and die by their strengths and weaknesses. So the praise we are getting, mostly for speedy delivery, is really praise of the courier service. Likewise, most of the criticism we get is really nothing to do with us, but more directed at the logistics providers. It seems our core proposition, offering great food, at a great price, coupled with great service, is entirely overlooked by the customer.

It’s frustrating, but of course the truth is a little more complicated. Firstly, the reviews are skewed by sampling bias. Only 5% of customers actually bother to leave a review, which means the results are exaggerated. Reviews tend to be either 5 star or 1 star, reflecting the fact that customers will only respond if they are elated or seriously pissed off. The others just receive their order and get on with it. More importantly though, I have a feeling that these reviews show how e-customers are evolving (or not) with the times. In an online world where you can get pretty much any product from a hundred sources, it is the customer-facing aspects of the business – like the website and delivery service – upon which customers judge your performance, even if to you these are only fringe aspects of your business.

“I’m really sorry, but WE ARE NOT THE COURIER”, is a phrase I repeat about 3 times a day. I’ve had to use it in an attempt to excuse anything from a customer being on the toilet when the van arrived to an unshaven delivery driver. Clearly, it’s quite ridiculous for the customer to be judging us on these factors – but guess what, they do. They don’t care who’s who in their transaction, they just want their stuff, and quickly.

The Bottom Line

As business people, we’re constantly offered services that allow you to ‘focus on your real business’, anything from contracted accounting, customer service, admin or logistics. Supposedly we’re supposed to be ‘doing what we do best’ – which I guess is some kind of business development to allow us to offer bigger better products at lower prices. But before you get stuck in developing your next killer product, think about the empty-box scenario above. Perhaps you need to give some more thought to those ugly, customer-facing aspects of the business on which your customers are judging you. I know I do.

Up For the Fight?

2015-01-03T11:00:00Z

So, here’s what happened. Since January we had been living in a little flat with a big problem – there was a flaw in the plumbing installed when the building was remodelled which meant that sewer gases could rise through the pipes and escape freely into the bathroom. It smelled like a public toilet all the time.

We talked about it with the owner who told us it was a construction mistake and couldn’t be rectified. Every time I spoke to her I mentioned the fact the we weren’t happy and that the smell was sometimes so bad you would put off peeing as long as you could just to avoid going in there. Once, when the landlord visited, we talked to some of the neighbours who had the same problem. The couple upstairs who had two bathrooms even told us that they couldn’t use one of theirs (the one directly above ours) because it smelled so bad.

We had a minimum years contract, but told the owner at the beginning of April that we would have to leave because of the smell and would be out by the end of the month. We went and found another flat and moved all our stuff out.

The end of the month was this week, so we went over there to give her the keys back and officially sign off. I had trusted she would do the right thing, but my partner had had suspicions all week that she wouldn’t play ball. She was right. She refused to give us our deposit (1 months rent) back because we were breaking the contract early.

Now, we had always tried to behave reasonably towards the owner. We had tried to solve the problems ourselves. We had poured countless Euros worth of bleaches and chemicals down the tubes. We had even called a plumber at our own expense. In the end, when we couldn’t stand it any more, we gave her plenty of notice and told her she could bring people to see the flat whenever she wanted so she wouldn’t have the flat empty for any extended period of time. When we gave the flat back, we left it cleaner than when we first took the keys.

Given the circumstances, I trusted she would see that we had behaved reasonably all along and would choose to do so herself. Unfortunately, she obviously saw it as a chance to make some easy money from our horrible experience. All she could say was: “Do you need me to read the contract to you?”. She had also bought her beefy policeman dad as backup. This is a person who knew about the smell, who had deliberately covered it up with air-fresheners the day we saw the flat and who had personally heard from the neighbours that their equivalent bathroom was unusable.

When we first met her, she seemed like a very pleasant and reasonable woman. I wondered at what point her greed had overcome any natural human kindness instinct she might have had. Yes, she did have the contract on her side – there was no clause that said “The bathroom will not stink”; there wasn’t even a ‘fit for use’ type clause. So I guess if it went to court she’d probably win. But really, is that the point? Shouldn’t any reasonable person see that the contract means nothing if you can’t live in the place because it smells so bad? That morally, not legally, she had no right to keep our money? I asked her how she would be able to sleep at night. The dad got aggressive.

When we came out of the meeting, both my partner and I were emotionally knackered. We are non-confrontational types and recognised that the half hour intense argument had taken its toll on both of us. We sat on a bench for a while and nursed our wounds. When I got home I asked Google why we should feel so tired after a ‘fight’. Apparently it’s something to do with hormones.

The whole episode got me thinking about whether these types of fight are actually worth it in the long run; and small business owners will recognise that when every day is a never ending fight with suppliers, customers, salesmen, con-artists and everyone else who wants a piece of your business, the battle can be exhausting.

The problem in the short term is the immediate desire for moral victory – “It’s not about the money, it’s the principal”. You hear it all the time. The problem is that when you’re up against an army of cold-hearted, empty-headed opponents, getting them to see the just truth is a very unlikely outcome. And even if you do, as a non-confrontational person the victory might cost you more than the prize is worth. So should you let people walk all over you, just for an easy life? What’s the right action – fight or flight?

After running a small company for almost 4 years and taking a lot of crap and giving a lot back, I’m starting to think that either I don’t have the right personality for it, or that I’ve got the wrong approach. When you sell stuff to the general public (and I’m sure all merchants will agree), there is always a small percentage of ‘bad customers’. And I mean bad in every way. The have a chip on their shoulder from the very beginning, demand discounts and special treatment, point out mistakes in your webpage or sales literature, behave irrationally and expect you to comply with their whims and then inevitably, ask for their money back.

In our business, problems are mostly delivery related. Maybe 2-3% of deliveries go wrong. People don’t take the time to read the information on the website, fail to receive their order and then expect us to bear the cost or responsibility. When the customer is calm, genuine and reasonable, I never hesitate in helping them out, even making a loss on their order just so that they’re happy. When the customer is an arsehole, it costs a lot more. You’re left with a stark choice:

1) Argue with the customer, exchange 6-10 heated emails, all of which leave you a little drained, get a chargeback on your PayPal or credit card merchant account, write letter(s) to them explaining the situation, exchange more emails and/or phone calls, worry, possibly progress to legal action, possibly win financially/morally, possibly not. Or,

2) Give the customer their money back. Forget about it. Move on.

What about suppliers who deliver late and mess up your whole logistics schedule? Do you argue, complain, explain that their mistakes have cost you time and money, ask for compensation, risk ruining a stable relationship? All of this takes time and emotional investment. And it’s constant.

I know what my choice is. But does that mean that I’m letting people walk all over me when I should be standing up and fighting my corner? And I’m not just talking about customers – these situations arise constantly in business and come from all angles. Fights with suppliers about pricing or delivery errors, with employees about behaviour, with customers about service and payment – business is a battleground, and my feeling is that the winners are the ones that are up for the fight, the ones who are prepared to not let anyone stand in their way, the ruthless ones, the ones who don’t care too much about other people outcomes or feelings. Ultimately it’s survival of the fittest and a competition for resources and not everyone can win.

Me, I don’t want to fight so much. So is the conclusion that I’m no good as a businessman? Maybe. No doubt that a more aggressive, less sensitive personality would serve me well in this particular domain. But to be honest, I’m not that person and don’t want to be either. I’m not prepared to force a change of personality just to get on in business. Maybe I’ll learn to be more selective, to pick my fights better. Maybe I’ll get naturally better at confrontation and negotiation. Maybe I’ll find way to get others (professionals) to fight the bulk of my fights for me. Maybe I’ll get comfortable with selectively letting people ‘get their way’ in pursuit of peace. Maybe I’ll find a less conflictive business.

Maybe the hard edge of business is just for a different type of person though – and that’s a thought that troubles me.

Major Version Your Business

2015-01-03T11:00:00Z

We often think of our small businesses as growing and developing gradually and consistently. We look at typical business indicators, such as revenue and profit curves, customer metrics or website hits and what we see resembles a car journey. Sometimes it’s a motorway, and progress it fast. Sometimes its a windy country lane and progress it erratic, at times rapidly accelerating, at times braking hard. Sometimes you’re stuck in a dead end and just have to reverse. And sometimes you’re just parked. But it always looks like the same journey in the same car.

In the software industry, development traditionally takes the form of major and minor releases of applications. Version 1 comes out – it’s not perfect, but it’s usable. Bit by bit, the developers nail down the bugs and the functionality glitches, gradually releasing updates and patches – Version 1.1, 1.2, 1.3 etc. By 1.6, it’s a perfect app – it does exactly what it’s supposed to do with no bugs.

But any good software company doesn’t stop there. In fact, the minute Version 1 came out, they were probably already thinking “Hey, this app does x, but wouldn’t it be good if it did y and z too”. So a year or two after Version 1 came out, they release Version 2. It does more, it does it slicker, it does it bigger and it does it better. It’s not compatible with Version 1. You might even have to buy it again if you bought Version 1. It’s not an upgrade, it’s fundamentally different.

Look at how we’ve come to think of and call the current phase of the internet ‘Web 2.0′. It’s not just a geek thing either. In our hearts and minds we know something has changed in Web 2.0. Perhaps, if you’re not a techie, it’s hard to put your finger on. But back in 1999, in Web 1.0, your grandma wasn’t keeping up with your shenanigans on social networks was she? Most of the software you used was on your operating system, not through your web browser, wasn’t it? Web 2.0 is different from Web 1.0 in many, many ways. But the key is that they add up to a step change. A fundamental shift in the way we use and perceive the internet and the way it shapes society.

Now what if we were to think of our businesses this way? What if we went from major version to major version rather than just notching up an endless string of minor versions? What if your business was ‘Your Business 3.4′, rather than ‘Your Business 1.87′?

In fact, such a conceptualisation is incredibly empowering. Thinking of your business as a serious of ‘major version releases’, each of which is fundamentally separated from the previous version by a step change, can only motivate you to push forward to the next iteration. And in my eyes, step changes are not (or at least they don’t have to be) sharp jumps in metrics like sales or profits. New major versions are triggered by changes that are fundamental to what your business really is, what it represents, what it offers, how it operates and what it brings to or takes from your life and that of others that are involved in it.

I’m not going to go into details here of of my own business (that’s for another post), but just as an example, we went to ‘Our Company 2.0′ to ‘Our Company 3.0′ the day we first stopped doing the physical warehouse work ourselves and moved to a contracted-out logistics solution. This was a fundamental change for us – it changed the way the company operated, it changed what we could offer, it changed what we did on a day-to-day basis and it changed how we thought about our company and its prospects.

Major versioning is not all about the past though. Of course, with the help of hindsight, you might look back and easily determine where your major versions were, and if they were positive, or even planned. But really, major versions are all about the future, about where you’re going. Don’t ask yourself where you see your business in 5 years – who knows what shape the world will be in in 5 years. Better to visualise the next major version of your business – what it will look like, what will be fundamentally different about it, how it will change your life and the lives of others. Does it excite you? If it doesn’t, you’re jaded.

So why not get started ‘major versioning’ your businesses. Look back to the past and then look towards the future. Ask yourself the following questions:

Starting back from My Business 1.0, how many major versions have there been?
What major version am I at now?
What were the characteristics of each major version?
What will the next major version look like? How will it be characterised? How will it be fundamentally different?
When will the next major version be?
How many more major versions will there be? Does the project have a ‘final version’?

Phone Orders are the Bane of My Life

2015-01-03T09:51:00Z

Time, in business, is money. If, like me, you run a low-margin e-commerce business and allow customers to place orders over the phone, you might seriously question whether the cost of employee time spent on taking phone orders is actually compensated by the profits those orders generate, especially when most customer calls seem to go a little something like this…

J (Me): “Good morning, how can I help?”

(The voice on the other end is quiet, wheezy, crackly and nervous – a gentleman of advancing years who may have already had two gin-and-tonics by 11am.)

C(ustomer): “Is that the sausage people?”

J: “Um, yes, we do sell sausages. How can I help you?”

C: “Excuse me?”

J: “How can I help you?”

C: “Meat stew?”

J: “HOW CAN I HELP YOU?”

C: “Oh yes, my wife was on your pages thing last night and she’s asked me to call you to order one of your chorizos ‘cos it’s always quicker to speak to someone isn’t it?.”

J: “We have 12 different types of chorizos, did she say which one?”

C: “Say what?”

J: “Which chorizo, we have 12.”

C: “Ooh, dunno, better ask ‘er. Give us a second. (A deafening scream causes you to wrench the phone away from your ear). BAAARRRBBARRRAAAAH. BARRRRRRRBBBBSSSSSS. BAARRRRBBBBIE. (A quiet female voice in the distance responds). WHAT BLOODY SAUSAGE DID YOU WANT – THE BLOKE SAYS THEY’VE GOT TWELVE. (Barbara responds). She says it’s the big red one.”

J: “They’re all big and red I’m afraid.”

C: “What?”

J: “That doesn’t help much, I’m going to need more details.”

(Barbara, clearly irate, forces her husband off the phone and takes over.)

C: “Look here. I don’t want any trouble. My son-in-law’s brother’s wife had them on holiday in the Canaries last year and she loved them. You should know which ones I’m talking about.”

J: “Yes, sorry about that, do you think they might be the small cooking chorizos?”

C: “Yes, those are the ones.”

J: “OK. That’s fine. How many do you want?”

(Barbara has passed back to husband.)

C: “Who?”

J: “How many packs of the chorizo do you want?”

C: “Yes, chorizo, that’s what she said.”

J: “HOW MANY?”

C: “BAAAAARRRRRRRRRBBBBSSS. How many do want? (Barbs’ voice is heard in the background). Enough for 4 people.”

J: “Well, it depends on whether you’re serving it as a starter or main course. It could be one or two packs.”

C: “Oh god no, we only want one pack.”

J: “OK, anything else?”

(Silence on the other end of the line. After 1 or 2 minutes waiting, it is clear that the call has been cut off. After 5 minutes, the customer calls back.)

J: “Hello, how can I help?”

C: “Who’s that?”

J: “This is Jonathan – you were talking to me 5 minutes ago.”

C: “No, I was speaking to a nice young lady.”

J: “No, you were speaking to me. Would you like to order anything else other than the chorizo?”

C: “No.”

J: “OK, that will be £2.99 plus £5.99 delivery.”

C: “Oh dear. That’s terribly expensive. Can you not deliver it for free?”

J: “I’m afraid you order is for only £2.99. We couldn’t possibly deliver it for free.”

C: “Can I get a discount then?”

J: “No.”

C: “OK – let’s go ahead.”

J: “OK – I just need to take your details. Can I have your name please?”

C: “It’s J F W G Flanarghloughsly-Weinhartstatten”

J: “Could you spell that?”

C: “Spelt as said – with a double ‘t’.”

J: “Sorry, I’m going to need you to spell it.”

C: “What?”

J: “Please spell it.”

C: (Through a crackly line, customer painstakingly spells his name, whilst coughing and spluttering. He forgets where he is and starts over 3 times.)

J: “Thank you. And your address?”

C: “It’s in Pontllanfraith near Ystrad Mynach.”

J: (i resist the strong temptation to gauge my eye out with a biro). “I’m going to need you to spell it please.”

C: (Another 15 minutes of l’s and y’s, coughing and faults on the line.)

J: “Thank you. How would you like to pay?”

C: “Thank you. See you soon.”

J: “No, I’m going to need you to pay for the order.”

C: “Right, of course, let me go and get my wallet.”

(I listen to every painful wheeze as the customer retrieves his wallet from the third floor of his mansion and returns to the phone.)

J: “Can I take the card number?”

C: “Oh the numbers are so damn small, I’m going to need my glasses. Can you just wait a minute.”

(Customer returns, painfully, to the third floor to retrieve his glasses. Ten minutes later he is back on the phone.)

J: “OK, what were those numbers?”

C: “57 (break and crackle on the line) 743 (crackle) 4 (break) 45 (crackle)”

J: “I’m sorry. I didn’t get that. Can we try again?”

(After 4 attempts and 15 minutes, I manage to take down all the card details)

J: “I’m sorry, that card has been rejected.”

C: “That’s impossible, there’s plenty of money in that account. We’re seriously wealthy you know.”

J: “I’m sure there is, but the bank has rejected it.”

C: “Oh silly me. There are two cards stuck together here and I’ve given you the security code from another card.”

J: “OK, so can you give me the correct security code.”

C: “Damn, these numbers are so small. I’m going to need my other glasses.”

(15 minutes, 3 flights of stairs, wheezing and coughing)

C: “Right, let’s see. Oh bloody hell, they’ve been rubbed off. I can’t read them. This is too much bloody trouble. Can I send you a postal order?”

J: “No, we stopped accepting them in 1984.”

C: “What about a cheque?”

J: “1998”

C: “Well we’ll just have to leave it then I’m afraid. Your service is disgraceful. Good bye.”

What Does 'Average' Really Mean?

2015-01-01T11:00:00Z

We probably all remember how to work out an average from our schooldays, but what does the concept average really represent? Do mathematical averages mean anything? Is there a better way to encapsulate ‘averageness’?

The Top 6 Eating Habits of the Spanish

2013-02-22T11:00:00Z

If cultural observation is one of my favourite sports, then there is no better arena than the dining table.

Travellers' tales are full of eating-related anecdotes. How many times have you heard the story about the visitor who offended his or her host by burping, or not burping, by putting his or her elbows on the table, by arranging cutlery in a cross rather than parallel - the list goes on and the potential pitfalls for the culturally ignorant diner are numerous.

Eating in Spain, as you can imagine, is steeped in tradition, culture, habit and simple everyday repetition. Even so, the possibilities for causing offence are probably less prominent here in Spain than in other, more sensitive, cultures (unless you should dare start eating before everyone has their food - that's a big faux pas).

So, rather than an etiquette guide, this is more like a list of observations of the Spanish in their natural habitat - enjoying a good meal with friends and family. They are small, mostly completely insignificant details - points I've picked up on over the years as an Englishman living in Spain. If you're sensitive to national stereotyping and stuff like that, perhaps don't read on - this is lighthearted stuff, meant for a laugh and a bit of discussion. Nothing more.

Healthy Skepticism

2013-01-03T11:00:00Z

I hate to say it, but a lot of the business advice you’re googling for is either outdated, inapplicable – or both.

Let’s face it, there’s too much advice out there these days – and yes, I am only making the problem worse. From your closest network of friends and contacts, to the furthest extremes of the net, your world is most likely populated by gurus who are more than happy to throw a constant stream of wise words your way.

In day-to-day life, choosing which advice to follow is somewhat easier than when it comes to business. Of course, there are hard decisions to be made from time to time, but gut feeling and a strong sense of morality or principle are often enough to get you through. Not so in business. The entrepreneur’s path is continually bisected by a myriad of minute technical decisions that need to be made, all of which have a potentially explosive effect on business? Sell on Amazon, or not? Increase Adwords budget, or decrease? Go with product x, or choose product y. And that’s often where so many people turn to google. Try it now – go to Google, and type in the words ‘should I’ – what suggestions do you get? Currently, for me, it’s

- Should I stay or should I go

- Should I buy an iPad

- Should I text him

- Should I upgrade to Lion

Not that it’s of any relevance, but my advice would be ‘go, yes, no and yes’ respectively.

There’s a lot of people with a lot of doubts out there, but there are more than enough ‘experts’ available to fill the gap. But what do you do when your ‘advice stream’ gets overloaded with repeating, differing and contradictory statements? How do you identify what’s most applicable to you.

I have to constantly remind myself that everyone (including me, of course) writes or speaks from their own perspective born of their own experience married with their own values.

Back when man sat around fires telling stories and eating dinosaurs, the wisdom imparted to younger generations by the elders could pretty much be accepted without question. When food is plentiful, stash some away for winter. Don’t get into fights you can’t win. When faced with bear, run in opposite direction. Life didn’t change much from year to year, and what worked a hundred years before, probably worked a hundred years later.

But now we live in a world that changes at breakneck speed. What’s here today is gone tomorrow. What worked this morning, might not work this afternoon. So beware advice that comes from ‘years of experience’ as we so often hear. It might just be outdated.

This is especially true in the internet era, when business models are being creating destroyed in a continuous, rapidly moving cycle. An entrepreneur might extol the virtues of a model that has worked well for him or her, and you might be tempted to go the same way, but ask yourself first – does this still apply?

If you read, in isolation, some of the ‘first wave’ blogs written by internet entrepreneurs who started before about 2005, you’d be inclined to think that with a little work you could be bringing in $40,000 a month just through blogging. If you read some of the stuff written over the last year or two, you might come to the conclusion that blogging is dead in the water for income generation. Before taking anything you read on the internet to heart, take a look at the post date first. I’m not saying that absolutely all advice has a sell-by date; nor that everything that was written yesterday is more useful than that written a year ago. It just pays to think about the landscape that gave rise to any particular piece, and consider whether it might have changed significantly since then.

Of course, it’s not just the passing of time that gives rise to irrelevancy. An entrepreneur, when giving advice out of experience, speaks from a singular perspective. Perhaps you operate in the same industry, with the same products, even with the same client base. But your business is ultimately yours and represents your unique combination of past decisions and future aspirations. What works for him, may not work for you. In fact, the reverse might be true, it might do your business harm.

At the end of the day, a business, at its core, is just a system to produce profits for its owner(s). Engineers define systems with formulae and algorithms, with their constants and variables. Each unique system is defined and described by a unique formula. When trying to discover the formula that describes a particular system, a good engineer will certainly look to the past and to similar systems and their underlying formulae. But he will realise that the object of his attention is unique, that he must experiment, tweak and iterate in order to discover the inputs and outputs of his system.

Each business is unique, and so is the formula that describes it. Learn to identify the variables and separate them from the constants, the concepts and ideas that change very little as times passes. Good customer service, proper branding, effective marketing, solid financial control – these are all concepts that have shaped businesses for decades, if not centuries, and the best advice stands the test of time and applies to the vast majority of businesses. Variables – the combination of factors that make your business unique, are much more individual and transient. Only you can find out what particular combination of products works for you, how much you should spend on adwords, whether you should sell on Amazon, Ebay, both or neither. Searching for advice can help you envisage and set up the system, but the variables that have to be plugged in are yours to discover through experimentation, test, success and failure.

Take what others say with a healthy dose of skepticism. Accept the uniqueness of your business. Accept that what worked for others, even in apparently identical circumstances, won’t necessarily work for you. Experiment and find your own formula.

How the hell are you going to make money out of that?

2011-01-03T11:00:00Z

This is a lighthearted concept introduction and the first in a series of pieces looking at business models in the modern economy and what they mean to potential Non-9-to-5′ers. If you are an expert economist, probably best to look away now.

If you don’t know what a ‘business model’ is, join the club – nobody really does. It’s a concept that entrepreneurs and bank managers toss around casually but when it comes to the crunch, good definitions are hard to come by. That is, unless you’re a business studies professor, in which case you might say something like: “an architecture for the product, service, and information flows, a description of the benefits for the business actors involved, and a description of the sources of revenue” Got that? No? Here’s an easier way to think of it: it’s the answer to the question “How the hell are you going to make money out of that?”. Listen up.

- Hey Bob, I’ve got a brilliant idea.

- Oh yeah?

- Yeah, I’m going to set up a car rental agency and undercut everyone else. I’m thinking of charging £25 a day.

- That sounds like it’d be less than cost. How the hell are you going to make money out of that?

- Well, you see, I’m going buy loads of brand new vehicles all the time and make people sign a contract with tiny print that says they’ll have to pay £500 for every scratch on the car when they return it. Then I’ll sell the cars for a bit less than I bought them for, leaving me with a fat profit.

- Nice.

Of course, this entirely fictitious conversation is in no way related to any practices going on in the vehicle renting industry in the UK and has nothing to do with the fact that you can rent a van for £30 a day whereas in Spain it costs £100. Seriously.

So, a business model is best thought of as how an organisation makes money doing what it does. It sometimes helps to think of businesses that look impossible on the surface and dig deeper for examples of clever or innovative business models. Or illegal ones. A knitting materials shop that is still in business today is clearly a front for something sinister.

Now the example I’ve given is clearly highly contrived, and in the old days, the question “How the hell are you going to make money out of that?” was easy to answer. “I’m going to sell it”, was the about the only option. Most industries ticked along nicely under the assumption they would always be able to make piles of money just selling the product or service they were making or supplying. Then the internet came along and ripped up the rule book, and the conversations now go:

- Hey Bob, I’ve got a brilliant idea.

- Oh yeah?

- You know those lovely wicker baskets I make? Well, I’ve decided to make it into a business.

- Good for you. How much are you going to sell them for?

- No, caveman, I’m going to give them away for free.

- How the hell are you going to make money out of that then?

- Well, I’m going to weave clues to websites into the fabric of the baskets and set up an online treasure hunt with prizes of holidays to Lanzarote. Then, I’m going to sell timeshare companies rights to 30 minute sales pitches to the winners once they arrive.”

- Oh.

In short, people are finding ingenious ways to make money out of virtually anything, including, in many cases, giving it away for free. Now, I don’t know this for sure, but my feeling is that if walked into Harvard Business School or a board meeting twenty or even ten years ago and propounded this as a vision of the future, they would have sent you away for treatment. Of course, this movement is causing old school businesses to rethink the way they make money as consumers change their habits and their willingness to part with cash in the same way as before. The public face of this is often the music and film industries first trying to sue everyone, and then having to adapt to the market with innovative value propositions, like iTunes or song downloads included with GSM airtime bundles. Other businesses, and their models, will just wilt and die. Blockbuster had stores all over Spain once – now they’re gone.

The point to take away from this is that you don’t need a shop to make money. Even if what you’re selling seems wholly traditional and mundane, with just a a bit of imagination and an observant look around your sector, you can probably come up with a crazy (perhaps even profitable) way of selling it. Just think outside the box a bit.

To get your creative juices flowing, I’ll let you in on an idea I had for[my own company but will almost certainly never do. A note to competitors: if you’re reading, please have a go at this and tell me how you get on.

Right, we sell speciality food, OK? How about we sell that food at cost price (we could even scan and upload purchase invoices to show that we were being honest). This essentially amounts to what creators of knowledge are doing when giving away their product for free. “How the hell are you going to make money out of that then?”, I hear you ask. Well, as standard we’ll do 3-5 day delivery and premium number telephone support. Then we’ll offer yearly ‘Preferred Customer’ subscriptions for £100 which entitle the holder to unlimited 24 hour deliveries and unlimited freephone telephone support.

Novel and 10-years-ago-lock-you-away-in-an-institution business plans are not just for porn hawkers and bloggers, they are for the whole business community – particularly Non-9-to-5′ers who feel that ‘old’ business is inaccessible. Well, here’s your invitation. Try something new. Experiment with novel business models. Then, when people ask “How the hell do you make any money out of that?”, just keep the secret to yourself and lie – tell them you don’t.

3 Business Tips

2011-01-01T11:00:00Z

The first half of this double post comes from a rambling, ranting conversation I had with my girlfriend in the car yesterday; the second half comes from the niggling sensation I’ve had ever since I wrote the very first post on this blog that I never quite made my intentions clear. Depending on whether you’re Gen X or Gen Y, your brain might be running out of hard drive space – mine certainly is. The more crap you read on the internet, the more secondary school French trickles out your left ear, never to be heard from again. What will you do, monsieur, when your tire bursts on the A-10 from Tours to Biarritz, eh? My solution to this problem is generally to construct never ending mental summaries which tend to spill forth when anyone is stupid enough to ask my opinion on, well, anything. As time goes by and more information comes in, I adjust these miniature world views until they are compact answers to some of the world’s trickiest questions. And so it came to pass yesterday, on the road from Leon to Burgos, after taking far too seriously what far too many people I don’t (physically) know have to say about life, the world and business, I loosely formulated my personal summary approach to world domination. These are not really my own, original ideas, but more how I understand and conceptualise what a lot of people far more intelligent than myself are currently saying about the way the world works.

First, let me clarify what I’m talking about, and that’s business – business in the widest sense of the word. I doesn’t matter whether it’s big or small, short or fat, charitable or selfish, employed or freelance, online or offline, full-time or part-time, legal or illegal. We’re talking about activities that are designed to make money – the more the better.

From the millions of words that have been written about commercial success, and the thousands I’ve read, it seems to all come down to three things (which are so intertwined that they’re really just one thing):

1. If you’re a person, find a genuine niche. If you’re are a business, find a proper Unique Selling Proposition, then…

2. Be great. Better – be the only one, then…

3. Find an innovative, honest business model which makes big company execs cry and makes you money whilst treating your customers as human beings.

That’s it. Really. I’m tempted to leave it there for maximum impact, but I’d like to expand at least a little bit on each of the above points. If you like the maximum impact idea, stop reading now and just take that little snippet away with you.

If you’re a person, find a genuine niche. If you’re a business, find a proper Unique Selling Proposition.

For the sake of simplicity, I’ll consider these concepts as one for the time being. The question to ask is “What makes me, or my company, different?”.

The more time I spend in business, the more I realise that being different isn’t reserved for Nando’s chicken restaurants where you have to order at the counter but a server brings the food to the table (?). Being different is your ticket out of 15-hour days, a prolonged cash flow struggle and eventual financial death.

It would be pointless for me to go into USP, niches and value propositions in any detail here as there is already an overwhelming amount written on those topic. The ground truth is this: if you’re considering an activity that isn’t going to make people wet themselves with excitement, even if it’s accounting, don’t bother. If you’re already running an enterprise that isn’t doing something astoundingly different from everyone else, change – or shut down.

All the bad stuff in business comes from ignoring this most fundamental piece of advice. And by ‘all the bad stuff’, I mean competition. As any small business owner will tell you, being part of an over-competitive market is no fun at all – you end up slashing margins until you’re making next to nothing and spending what you do make on advertising to get noticed. It’s a short cut to baldness, divorce and bankruptcy.

Robert Stephens of Geek Squad once said that ‘marketing is the tax you pay for being unremarkable’. Aside from semantic quibbles, it might be the single most sit-up-and-kick-you-in-the-nuts piece of advice I’ve ever heard, and it turns out to be painfully true. The newspapers, business press and internet are full of examples of clever businesspeople leveraging their uniqueness to get mammoth amounts of free, prime publicity. The television news wouldn’t look twice at another new fruit smoothie on the market, but might give you 30 seconds of coverage if your USP was that you were shooting it into your customers’ mouths from the International Space Station.

The bottom line is that real uniqueness creates its own publicity and leaves you with a viable business rather than a massive AdWords bill.

Be great. Better – be the only one

There’s a lot of people around at the moment that want a lot of pieces of lots of pies. The world has turned into a horribly competitive place. The means that even if you’ve found your niche and are crystal clear about the value you are bringing that your neighbour is not, you’ve got to do it seriously well. If the only pizza place in your town was rubbish, they might still make some money off their uniqueness. If the only pizza place in your town had been voted one of the top five in the country…

You’ve got to be the go-to-guy (or organisation) to the exclusion of everyone else. You don’t have time to be mediocre or even good – even being the best won’t cut it these days. If you nail your market positioning right, you should be the only entity worth considering for good or service x. Of course, if you nail your niche right, nobody else should be around to stop you anyway, but to be 100% successful you’ll still need to offer an outstanding service to your clients.

Why? Because customers talk. Not like they did back in the day when if you failed a customer, you might lose them and their immediate family, no, nowadays customers Twitter. If you’re really crap to a single influential player, you could conceivably lose 10,000 potential customers overnight. If you’re amazing, the reverse can happen. If you write something mediocre, you might have 5 or 6 friends and your Mum read it. If you write something earth-shattering and its merit takes it to the front page of Digg, 100,000 people might read it. The connected, social world of commerce is a meritocracy the likes of which has never existed before. If you don’t believe me, check out what Get Satisfaction are doing for customer service (and if you’re a business owner, don’t bill me for new pants).

Find an innovative, honest business model which makes big company execs cry and makes you money whilst treating your customers as human beings

Let’s not beat about the bush, most big business have made vast sums of money by treating consumers like dirt and generally ripping them off wherever possible. We’re so used to it we’re immune. It’s what we expect.

But anyone who spends any time on the web must have noticed that things are slowly changing for the better. Look around the trend-setters and you’ll get a good feel for what it means to treat customers as human beings: clear, honest product descriptions written in every day language, no misleading offers, no long-term contracts or tie-ins, no small print, no extortionate pricing. You might have to look hard for companies doing this sort of thing right now, but you can bet your arm that everyone will be doing it five years from now. Terms and conditions will be ditched in favour of more human agreements, like the Company-Customer pact. ‘Offer Subject to Conditions’ will be a thing of the past.

As usual, the web croud are light years ahead of everyone else on this. Bloggers have already embraced hyper-honesty. In times past, blogs were full of links which took you to places to buy stuff if you inadvertently clicked on them thinking they might give you some extra info. Nowadays, bloggers routinely include disclaimers about affiliate links, often disclosing just how much they will earn should you buy something via their site. Why do they do this? Because it turns out that deliberately but subtly misleading people to make a sale really annoys them. When confronted with a bit of good, old-fashioned honesty, they’re more like to go for the product. I came across a currency exchange company recently that proclaimed total transparency. They would show you the price they were buying the currency at for any trade you asked for and would then show you exactly how much they were making out of the deal. Madness? Of course, you might be turned off to know how much they are making out of you and run a mile. That’s probably why almost nobody is doing this yet. If they’re charging a fair price though, isn’t it more likely that you’ll appreciate their honesty and transparency and probably consider that the minimal fee they’re charging you is fair dues for a unique and excellent (remember?) service.

Being honest and transparent, means you can’t hide behind a rip-off business model which is going to make you insanely rich on the back of little work or talent. An 800% markup won’t cut it anymore.

Chasing the 4-Hour Workweek

2010-01-03T11:00:00Z

Here’s a quick exercise (actually it’s quite time consuming) that is guaranteed to turn you from a bed-jumping, babbling, raving optimist into a weeping manic depressive in as little as a single weekend.

Collect up the following:

- A stack of self-help/productivity/entrepreneurial type books. The more outlandish the claims they make, the better. More or less any will do, but ‘The 4-Hour Workweek’ by Tim Ferris is the obligatory piece-de-resistance.

- Hard liquor of choice.

- Laptop with internet Access.

Start on Friday after a hard working week by getting good and drunk and partying until it suits you. Take Saturday to sleep it off and then go for a nice long walk and take a refreshing shower. This should ensure the appropriate zen-like, the-world-is-all-good state required for the next phase. After dinner on Saturday, knock back a good few espressos, put on ‘Eye of Tiger’ and start reading. Stay up all night until you’re 100 pages from the end of ‘The 4 Hour Workweek’ and so high you can barely control the pencil you’re using to plan tomorrow’s trip to the Cayman Islands. Wake your partner/neighbours with jubilant screams proclaiming you have found the answer to all your life’s problems. So far, so good. Now sleep.

On Sunday morning, realise that the Caymans will have to wait until Monday and grab that pencil and paper again. Start work on planning how you’re going to make shit loads of money doing absolutely nothing, or at most, half an hour every other Thursday in-between luxury transatlantic voyages. You could go for an online business, probably a blog. Blogs are like the keys to the mint right? Hell, you’re a crap writer and don’t have anything to say anyway, but with the right marketing and a content-poor ebook you’ll be on your way to the big time in no time. Or maybe you could start a product-shipping business specifically designed to afford you this lifestyle. This should be easy, brainstorm a few ideas, test a few models, manufacture a product, set up a website, outsource all the work to India – you know the drill. Six figures in six minutes a day.

After lunch on Sunday, come back and read the rest of this article.

I’m really sorry to have to break this to you, but it’s not going to happen. Of course, I mean that in a ‘you’re not going to win the lottery’ way; so technically, it could happen, but really, it won’t.

For a start, you’re not going to make real money and work an hour a day blogging. Don’t just take my word for it, read what Darren and Penelope, two people with vastly more experience and wisdom than me, have to say on the issue. Believe me now? OK – let’s procede to the ‘why’, which takes less than 5 seconds. Economists have a concept called ‘barriers to entry’ which explains why you can’t make money doing something anyone can do. Blogging has zero barriers to entry. Almost anyone can do it and it gets easier and cheaper every day with free, idiot-proof software being developed faster than a 50MB broadband connection. That’s right, in 5 to 10 short years, blogging has gone from cash-cow to dead-in-the-water (as a form of quick and easy income). If you want to make a living from blogging now, you’ll have to develop serious expertise in online marketing and write empty, search engine and advertising driven, garbage for about 20 hours a day. Thats because 30 million people are trying to do the same thing and 29 million of them are willing to work 19 hours a day.

A Ferris-style muse won’t work either, or at least not for any protracted period of time. Firstly, really good products, the type that can support an 8x markup are like goldust, and you probably can’t think of one. Most retailers work on 2-3x. If you think you can ‘feign’ a luxury product and charge 4 times what competitors are asking for just by printing off a glossy label and adding ‘sex’ to the name of the product – think again. Noone has any money any more and that’s probably going to be the case for a good while. Plus, consumers get savvier by the minute and with a quick ‘Is x the same as y in Google?’ anyone can shatter your myth in seconds. Why is all this happening to you? Barriers to entry. What if I can find a product that works, then I’ll look stupid, won’t I? Maybe for a while, but if you uncover something that good, it won’t be long until zillions of would-be-new-rich come after you – and they’ll get you as well. Why? Barriers to entry. Let me say it again, just in case you haven’t got the idea. Barriers to entry. Like it or not, resources are scarce and there is heavy competition for them. If something is easy, requires little effort and makes enough profit to justify outsourcing the labour that goes into producing, marketing and distributing it, there will be competition, and lots. If not now, then later.

The upshot of an ‘easy’ business is that you’ll spend so much time ‘defending’ it, that you’ll be putting in 15 hour days before you can say ‘VIP lounge at Heathrow’. Aggressive marketing and competition monitoring, patent filing and enforcement, legal battles, attempted differentation of your product through advertising – whatever your defense is, it’s likely to cost enough that at some point, your ‘muse’ just doesn’t produce anymore. At that point maybe you drop it and move onto the next opportunity. If you’re smart and quick enough in the water, perhaps you can snake between profitable opportunities, jumping ship before saturation point. There’s a word for that person – ‘serial entrepreneur’. Go and find one of them and ask them if they’ve managed to set up any of their businesses to the point where they can stand back and let them run more or less autonomously in less than three years, or two years, or even one year. Thought not. Serial entrepreneurialism is not easy. Why? High barriers to entry (capital, intelligence, diligence, experience, knowledge, risk).

In the end it all comes down to this. There are easy activities which will earn you little money (low barriers to entry, e.g., blogging) and there are hard activities that will earn you (lots) more (high barriers to entry, business set up). If a low barrier to entry, high paying opportunity exists, it s a temporary imbalance in the system, a quick defiance of the laws of economics. Of course, you can make a worklife out of chasing these opportunities, but fighting the laws of economics takes more than 4-hours a week, so best come prepared.

Do you really have what it takes to start your own business?

2010-01-03T11:00:00Z

Let’s be realistic for a minute. Out of the hundreds of would-be-entrepreneurs who quit their day job each week, all but a tiny percentage will be back at the office doing 9-to-5 before a year’s out. The statistics speak for themselves – something like 90% of all small business are gone within 12 months, out of those that remain, the second year failure rate is similar, and even then, out of the remaining group, the five year failure rate is comparable.

Why on earth do so many small businesses fail so quickly? Are good business ideas really that hard to come by? In fact, viable ideas are almost certainly nothing to with the problem. Success, after all, is often in the implementation, and an average idea, bought to life by a a truly talented team, can trump even the most groundbreaking innovation where the realisation is weak. The fact is that so many small business founders are just not honest with themselves about what it takes to successfully realise their dreams. Making money from an idea is hard, but being truly brutal in your own self-assessment is even harder. Really now, who wants to admit that they probably don’t have the numerical skills to understand pricing or cash flow? Who could imagine their business failing because their marriage just couldn’t stand up to the strains of debt? So the first instinct is to just jump in, thinking “I’ll deal with whatever problems arise later”. Far better, surely, to be honest with yourself from the outset. Do you really have what it takes to start your own business?

This is my rundown of what I think are the key attributes needed if you really want to be a successful small business owner. Of course, by ‘small business’, I’m referring to ‘Say No! to the Office’-type small businesses – modern, flexible, possibly location-independent, possibly little to zero startup capital, innovative business model etc. For other types of business, not all of these may apply. By ‘successful’, I’m talking about getting going and just surviving, not necessarily bringing home truckloads of cash within six months. There’s a lot of luck in business, but luck favours the bold and, without a doubt, those that have the skills to bring luck onto their side.

Are you multitalented? Are you smart enough to learn, literally, anything?

For me, and for the types of businesses I have been involved in, this is the number one.

Starting and running a small business demands a range of skills so vast and varied that you cannot possibly imagine what you are getting into until you’re into it.

Some might say that the only skill you really need is the ability to find, bring into your business, and manage people with the right abilities, rather than actually having any yourself. Perhaps many even start out with that very idea. For me though, that’s the approach of someone with a limited skillset and an even more limited ability to acquire new skills. Your new idea isn’t a middle-management company, is it? At the beginning, when money is limited, or worse still, non-existent, you’re probably not going to have the resources to find people to take care of every little task that’s outside your field of expertise. Even if you do have access to that much cash, how can you expect to effectively monitor and guide what your team are doing without understanding it yourself?

The truth is, being multitalented by nature is a massive advantage in startup business. Many people, either consciously or subconsciously, bracket themselves as ‘creative’, ‘numerical’, ‘artsy’, ‘non-technical’, ‘logical’, ‘scientific’, etc., and then put up barriers to anything which falls outside the definition of what they consider themselves to be. Those are the people I have seen struggle or fail quickly. Help is either slow or expensive – if you want real success, you’re going to have to depend on yourself, and if you don’t know how to do something at first, you’re going to have to learn. Be honest with yourself – are you strongly right-brain, or left-brain dominant? Do you struggle to acquire creative, or conversely, technical skills? Or are you a polyglot, able to turn your hand to almost anything? Test yourself – how do you feel about learning 80-100% of the following?

Business and Entrepreneurial

- Banking

- Book-Keeping and Accounting

- Small Business Technical and Legal

- Business Communications – Phone/Email/Fax

- IT Systems and Solutions for Business

- Market/Competitor Research

- Business Processes/Management/Productivity

- Logistics/Warehousing

- Personnel Management

Web Design

- HTML, CSS

- Javascript, PHP

- Web Graphics, Buttons, etc.

- SEO, Website Optimisation, Google, Yahoo, Sitemaps

- WordPress, Blogger, Ebay & Other Template Based Design

Graphic Design

- Photography, Photo Editing

- Logo and Brand Graphics Design

Software, Hardware and Programming

- System Set Up and Configuration

- Email/Web/Applications Configuration

- Microsoft Office Applications

- Adobe Photoshop, Indesign, Illustrator, Acrobat

- Javascript, PHP

Online Marketing

- Ebay, Amazon, Google, Shopping Portals

- Search Engine Optimisation (SEO)

- Adwords, Pay-per-Click Advertising

- Affiliate Programs

- Website Optimization, Promotions etc.

- RSS, Blogs, Feeds

- Social Networking, Facebook, Forums

- WordPress, Blogger, Feedburner

- Google Analytics

Offline marketing and Sales

- Leaflet, Flyer, Printed Material Design

- Catalogue Design

- Sales Agents

Writing

- Web Copy

- Proof Reading

- Product Description

- Press Releases, Articles, Reports, Blog Posts

And that’s probably only scratching the surface. If you’re coming from a non-commercial background, chances are you’ll have almost none of the above knowledge to start with. That’s OK, as long as you’re able to acquire it quickly. The opportunities and resources for teaching yourself just about anything are virtually limitless these days – just hit Google or Youtube with the topic you need to learn about for an endless stream of information. Think about how you have approached learning new skills in the past. Have you been frightened off? Or have you successfully applied your intelligence to new fields?

Luckily, most people will never be able to take advantage of this torrent of learning. We are educated to be specialists, not generalists. If you are truly multitalented, that works to your advantage. Those are the barriers to entry that you will overcome and others will not.

Are you persistent? Will you survive ‘the dip’?

I’ve referred to ‘the dip’ before. If you don’t know what I’m talking about, pick up a copy of the book and read it now.

It’s unlikely your business will work straight away. In fact, it’s probably going to take a number of years before you really start seeing the fruit of your labour. At some point into its growth and development, you’re going to hit a dip – a point in time where the initial motivation that kept you up all night designing logos is a fading, distant memory, yet the shining light of success, profit and perhaps even fame are so far in the distance that you can’t even imagine them yet, let alone see them.

Luckily, at this point most people quit.

Will you? That’s what you need to establish before you even start. Getting into the dip mindset is almost impossible – that’s why so many people start out blindly on a journey they were never, ever going to finish. You can’t feel those feelings of despair and distress until you are up to your eyeballs in workload, bogged down in cashflow issues or debt, and facing one customer complaint after another. That’s the nature of the beast. You tell yourself that you’ll never be in that situation. But you will. You’ll tell yourself that even if you do get into that situation, you will be strong enough to pull through. Be realistic. Will you? Most people don’t. Getting through the dip takes more motivation, self-control and patience than most people can ever muster. That’s another barrier to entry that stops the market getting flooded. Not everyone is cut out for this. So, you can fool yourself into thinking you’ve got the staying power – but wouldn’t it be better to consider whether you really do before wasting your time. Look back at your past endeavours. Have you done anything to suggest you won’t drop out at the first sign of trouble? Have you achieved something that took extraordinary commitment in the face of strong pressure to quit?

The worst case scenario is that you waste a load of time, effort and money getting to the dip, only to quit when you get there. Save yourself a lot of pain by only starting projects you are sure you can persist at, no matter what.

Are you patient?

Even if you don’t hit a strong dip, it may take a lot longer than you think to produce the kind of results you want. If you plan for the business to be fully functional, perhaps even paying you a wage, within a year, what will you do if it takes two, three or even five years?

Even some of the best businesses, with outstanding implementation, still need time to find their niche in the marketplace, develop a strong customer base, and to gain the sort of momentum that propels them forward without the constant grind typically needed to push a startup along. Perhaps yours is the type of business that gathers pace quickly, but in my experience, most startups are relatively slow-burners and thus their success is mainly limited by the owner’s patience.

When you find that your business is plodding along at a much slower pace than you expected, how will you react? Are you impatient by nature? Will you soon be looking for other avenues to explore rather than consolidating what you have?

Are you resilient?

I have never encountered the quantity and degree of obstacles, barriers and problems as I have whilst growing my small-business. Sometimes I have felt like there was no solution, sometimes I have felt like I was banging my head against a brick wall and a lot of the time I have felt like throwing the towel in.

In the second year of trading with my food import company, we had outgrown the small storage unit from which we were trading and desperately needed more space. We weren’t able to hold the levels of stock we needed to, which meant we were constantly letting customers down and more often than not, losing customers due to our inability to consistently provide what they needed. We were, however, still small and not yet profitable, and really needed to find somewhere on a shoestring budget. I have never encountered such a large obstacle to progress in my life. We searched for months on end. We almost quit. When we finally found somewhere, it took 9 months to get the contracts sorted and move in. It almost killed the business. I can’t even begin to describe how close we were to losing it all. But for some crazy reason we held on.

Business, for me, has often been like that. I have encountered problems to which I had come to the conclusion that there was no solution, only to find that with time, luck and hard work, one does eventually come along. At first, I was knocked back by each and every problem we encountered. It seemed so impossible to progress. It seemed what we were trying to do just couldn’t be done. But as time has gone by, I have grown better at standing up to problems, at finding solutions, at being more resilient.

How resilient are you? Do you have a defeatist personality? Is the first, fifth, or hundredth problem or barrier likely to kill your business? Or can you turn a problem on its head, find a solution and move on?

Is your life flexible enough to adapt to your new business for an unpredictable length of time?

It’s not only your patience that’s going to be tested as your business takes time to grow and develop – your life, too, will feel the strain. Relationships, kids, personal finances and social life are all likely to influence whether your business will succeed or flop.

It’s hard to imagine what a drain on your resources setting up a new business can be. You are likely going to devote a huge portion of your available time, money, effort and love to your new project, and these are resources that won’t be available elsewhere and for others.

If there are others in your circle that depend on you – a partner, children, relations, friends – they are going to lose a large part of you for an unspecified period of time. Do you think they can cope with that? Or is it likely to cause tensions so strong that they threaten the development of the business?

Think practically – are your finances in a good state? Can you afford to live for perhaps three years without a solid source of income? Do you have another source of income? Is your partner’s income large enough to support your family until the business is ready to pay its way. You could bet on your business paying within a certain time frame, but what if that time comes and the business is not profitable yet, or not profitable enough. Being forced by personal circumstances to leach money out of a business that is not yet ready to pay a salary is a sure recipe for cash flow trouble.

Personal circumstances can do more that put financial pressure on a budding business. If both your life and business demand a greater amount of time than the sum total you have available, at least one, if not both, are going to suffer. Make sure you are realistic about the personal resources you have available to devote to your project. Don’t underestimate the investment that you are going to have to make, only to find six months down the line that your life doesn’t, in fact, permit you as much flexibility as you thought.

Stability and comfort is also a key factor. I have seen friends really struggle with early stage businesses because of instability in their personal circumstances, such as:

- Unstable, volatile relationship with partner.

- Unstable finances. No reliable source of income. Constant unexpected expenses. No backup funds.

- Nowhere stable to live. Constantly moving from flat to flat.

- Nowhere comfortable to work.

- Insufficient physical resources. E.g., no car, no computer.

None of these are limiting factors. Of course you can start a business without a car. But with all the difficulties you are likely to face anyway, wouldn’t it be easier if you could rely on yourself to get from meeting to meeting, rather than having to wait for the bus? Of course you can start a business without a stable place to live and work. But you’re going to be putting in mammoth work sessions at the beginning, and aren’t you going to be more comfortable and motivated to continue if you have a suitable, dedicated workspace?

As my own personal life has become more comfortable and stable throughout the development of my business, I have found it easier and easier to leverage my environment to produce better, more professional results.

Do you have what it takes to start your own business? Ask yourself the following questions and, above all, be realistic with yourself. Wasting a load of resources and time on a project that’s never going to go anywhere is worse than not starting at all.

Do I posses a wide range of skills? Am I able to learn new skills relatively easily and quickly?
Am I a quitter? Do I have the staying power to work through the dip when times seem rough?
Do I have the patience to see the project through, even if it takes much longer than expected?
Do I have a strong, resilient personality? Enough to deal with the extreme difficulties business will throw at me?
Can my life, my loved ones and my personal circumstances deal with the investment?

Entrepreneurship for Polymaths

2010-01-03T11:00:00Z

Contrary to popular imagination, starting a new small business does not always involve waltzing around in a sharp pin-stripe talking to venture capitalists about start-up funding.

Instead, it quite often involves long evenings hunched over books and magazines, or topping up on facial radiation in front of your computer screen, learning about topics which may have seemed unimaginable, even unpronounceable to your former self. Not many of us understood double-entry bookkeeping, tax law, health and safety regulation or search engine optimisation before starting our businesses, but we sure as hell had to learn them. Sure, there’s a subset of entrepreneurs who are happy to farm out as much as possible to the specialists, but as I’ve argued before, even if you can afford it, you’ll be a much more effective manager if you can understand what the specialists are actually doing.

Kebab Economics

2010-01-01T11:00:00Z

Having trouble understanding global economics and the crisis of capitalism? Here's one way of visualising it.

In the first place, a group of kebab issuing countries commence a stealth invasion of the fast-food system of another country, with the ultimate aim of securing full kebab dependency. Kabab dominance is ensured via a careful devaluation of the host county's native gastronomic culture. The indigenous population will lose their taste for 'home classics' and eventually become completely incompetent at preparing or cooking any type of food for themselves. The final stage of the attack is a biological inability of the host nation's population to digest any non-kebab food and a chemical reliance on chili sauce.

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Are you persistent? Will you survive ‘the dip’?

Are you patient?

Are you resilient?

Is your life flexible enough to adapt to your new business for an unpredictable length of time?

Entrepreneurship for Polymaths

Kebab Economics