A Budget for business? Certainly in the short term (23 March 2011)
Budget 2011 Preview (18 March 2011)
Equality is fine - until you follow the hard cash (1 March 2011)
Manufacturing - a comeback in the making (8 February 2011)
In “Bannatyne v. the People”, the People will always win (28 January 2011)
Snow Joke: your customers deserve more than an icy reception (22 December 2010)
It ain't what you do... (17 December 2010)
Business book recommendation of the month (13 December 2010)
Consumer trends for 2011 (7 December 2010)
Turning a hobby into a business (22 November 2010)
Yes, you can run a successful retail business in 2010 (15 November 2010)
TCB: Taking care of business, taking care of baby (8 November 2010)
Business book recommendation of the month (1 November 2010)
23 March 2011
A Budget for business? Certainly in the short term
by Nick Saalfeld
We knew that this was going to be a Budget for Business; for several reasons. Firstly, it was widely trailed in the media; but also let’s not kid ourselves – Chancellor George Osborne didn’t exactly have much wiggle room for tinkering with the system. Within seconds, he’d clarified that this Budget was going to be “fiscally neutral”, and then, with a healthy dig at Labour, “a Budget for making things, not making things up”.
It wasn’t an easy ride for Osborne – he was progressively barracked by the Opposition benches, but did manage to pull a few smart moves. The masterstroke was a reduction in Corporation Tax (see below) – but the clever move was to clarify that this would be funded entirely by increases in the Bank Levy. This allowed the Conservatives to be seen as the champions of small business and grass-roots enterprise, whilst still bashing those pesky bankers.
So, was this a Budget for business? The immediate measures, "a call to action for Britain", were certainly encouraging and in some cases innovative. And where real tax cuts couldn’t be made, he went for the next best thing: simplification and removal of overheads.In order to create “the most competitive tax regime in the G20”, the following measures were announced:
- 43 complex taxes abolished, because Britain now has “the longest tax code in the world”
- A consultation on the merging of Income Tax and National Insurance (no news on how that’s going to work, though!)
- Corporation Tax was cut by 2% for 2011; reducing by a further 1% over the next 3 years; giving us the lowest Corporation Tax in the G7. Osborne declared “Britain is open for Business”.
His next objective was to make Britain the best place to start a business. Osborne heaped scorn on our current enterprise performance, saying that “Britain has lost ground in the world's economy and needs to catch up”, dropping from fourth to twelfth in global competitiveness; and further that “Britain has to earn its way in the modern world”. Key measures include:
- Wholesale reform of the council planning regime. “Cumbersome planning regulation stands in the way of new jobs”, said Osborne, and all planning bodies will be expected to prioritise jobs and growth.
- A very generous increase in Income Tax relief as part of the Enterprise Investment Scheme; which will increase from 20% to 30% in April.
- A “Startup Britain” campaign to encourage new entrepreneurs
- The lifetime Entrepreneurs’ Relief limit doubled from £5m to £10m
- A restriction on the activities of no-win-no-fee lawyers; to prevent “ambulance-chasing” and dubious claims against businesses.
- The Rates Holiday for small businesses is being extended for another year
- Support for certain priority British industries, including Science and Life Sciences, Construction, Manufacturing, the Creative Industries and Green Energy.
- To help drive up manufacturing (which, the Chancellor was keen to point out, is now growing at a record rate with 14,000 new jobs in the past three months), there will be new assistance in the promotion of exports, nine new University Centres for Manufacturing, and most helpfully of all, increases in the Small Companies Research and Tax Credit to 200% (and indeed 225% in future)
- Also in support of manufacturers, or indeed any business with a large amount of upfront capital expenditure, the capital allowances for the tax treatment of short life assets has been extended from four years to eight.
- In order to create “prosperity across all parts of Britain”, there will be a whopping 21 new Enterprise Zones all around the country, featuring up to a 100% discount on Rates and superfast broadband. Areas to benefit will include Birmingham, Leeds, Liverpool, the Tyne, Bristol, Derby and Sheffield (and to help you get to them, specific improvements were announced to railways and £100m to deal with our rutted, pothole-ridden highways!).
- The Chancellor also promised a new strategy paper on "Tackling Tax Avoidance" which will help smaller companies compete against larger firms with offshore warehouses and other tax avoidance resources.
- And there was the promised support for hard-pressed hauliers and motorists. Vehicle Excise Duty was frozen for HGVs, and the Approved Mileage Rate (for claiming motor expenses) was increased from 40p to 45p. Finally, changes to the Fuel Escalator mean that proposed increases in the price of petrol will be mitigated (in fact delayed by 12 months at least) and assisted by a one-off immediate cut of 1p. Rather like his approach to Corporation Tax, Osborne used his “Rob Peter to pay Paul whilst remaining fiscally neutral” approach: the fuel duty cuts will be funded by equilibrium taxes on the North Sea Oil industry.
Incidentally, for the high earners, the 50p tax rate is staying for now. The Chancellor went out of his way to say that it’s “temporary”, but it won’t be going anytime soon. So far so good. But this is where the wind started to seep away from Mr Osborne’s sails. His third big priority was to create a more “educated workforce”. That’s a long term aim, and here at Yoodoo we’re particularly aware that these objectives require significant commitment. Osborne correctly pointed out that something’s gone very wrong with our education system: we have a lower skills base than Germany, the U.S. and France. But the response was unimaginative and non-committal:
- The government will fund 24 (rather than 12) vocational “Non-Technical Colleges”
- A total of 250,000 more Apprenticeships and other placements on Work Experience schemes will be created over the next four years.
All good as far as they go, but that’s it. There’s no additional support for re-training unemployed adults; nor a focus on reforming the problems in an education system which is still turning out students and graduates who are ill-equipped to take part in modern business.
So, there it is. Mr Osborne says he wants “the words ‘Made in Britain, built in Britain, designed in Britain’” stamped on every product in sight; and this was a pretty comprehensive start. But when we sit back in our rocking chairs, (having retired at a pension age which will now be defined by “independent assessment, in a more automatic way”, i.e. later than we were planning!), we’ll see that this was a Budget of good intentions. We need more of the same, across three years in which the Chancellor gets his forecasted inflation and investment figures right, before we can see a brighter light at the end of the economic tunnel.
18 March 2011
Budget 2011 Preview
by Nick Saalfeld
Britain's not used to coalition government. Our first-past-the-post voting system tends to yield strong, landslide governments with a clear mandate to govern; so what we are living through now is an anomaly: a time when compromise is the order of the day, and when manifesto promises are dropped faster than hot potatoes.
Many think that's a shame. The depths of recession are precisely the time we need strong government. It's not so much the approach (leftie Labour or rightie Tory) which matters, rather a focused commitment to it. Looking at the press, the administration's approach to, say, Libya, is best described as gauche. Lumbering, perhaps.
But the economy? That's the Tory heartland. They are the party of business, right? Surely we can expect a mighty pro-business Budget 2011 on March 23rd? Well, here are five predictions...
1) Petrol Prices
The logistics business (which underpins so many other sectors) is crying out for cheaper fuel. However, Chancellor George Osborne loves the tax money coming in from increased fuel prices, and we're also committed to a cleaner, greener economy. We'd also like to rely less on other countries for our fuel. We predict that Osborne will score a cheap hit against Gordon Brown by cancelling the planned increase in the Fuel Price Escalator; but that's it. There are rumours of a potential discount/voucher scheme for professional hauliers, but we don't expect this to happen.
2) Red Tape
David Cameron has firmly pledged to cut red tape and bureaucracy in the Budget. That makes perfect sense - it's a concession to business which plays well in the press and doesn't cost tax money. Plus, he needs to cut the number of bureaucrats in the public sector anyway. Expect, in particular, to see planning permission regimes simplified and relaxation of compliance, reporting and health and safety rules.
3) The 50p Tax Rate
The CBI would like George Osborne to get rid of the 50p tax rate for top earners. That isn’t going to happen. Not least of all because it will be seen as "playing into the hands of the bankers". Dream on.
4) Enterprise Zones
This is going to happen. Apparently, £100m has been set aside for specific Enterprise Zones, where new businesses will be encouraged through tax breaks, reduced business rates and other incentives. 10 Zones have been earmarked; expect them to be in places of high unemployment, low social mobility or where a little help could yield a lot of results; for example urban areas on the cusp of regeneration.
5) And what we want to see: Education
What we haven't heard much about from Mr Osborne is support for the next generation of British businesses. Britain's top companies are doing their best to encourage a renaissance in Apprenticeships, but there is still a woeful skills gap between the people that schools, colleges and universities are turning out, and the actual needs of business. Here at Yoodoo, we do our bit to fill the gap; but there's still a huge amount of work to be done in getting today's teenagers fit for tomorrow's boardroom.
1 March 2011
Equality is fine - until you follow the hard cash
by Nick Saalfeld
Today, the European Court of Justice ruled that motor insurers can no longer charge different premiums for men than for women. Up until now, insurers had an exemption; but their trade will now be included in the wider principles of gender equality. If you are female, expect your insurance premium to rise from December 2012, when the new ruling begins to hit home.
Despite being a man, I find this all a bit perplexing. The problem is the word "equality": because this is an instance in which men and women are clearly, blatantly, transparently, unequal.
People who are too clever to just become accountants become economists; and people who are too clever to become economists become actuaries. Actuaries are the people who tot up risk assessments for insurers; and they have spent over 100 years reaching the unquestionable conclusion that women drive better than men. They have less accidents, write off fewer cars, and when they do have accidents, they do less damage. End of story.
So why should they pay the same car insurance premiums as men? They shouldn't. Furthermore, I wonder where this logically ends. Ageism is surely as bad as sexism; so does the new ruling mean that a 20-year-old should pay the same life insurance premiums as a 75-year-old? That would throw the entire life insurance industry into meltdown. (Incidentally, the EU's ruling does not work like that - but it will affect annuities; the investment you buy when your pension scheme matures).
The interesting thing in business terms, though, is that this is one of the many instances where business (and hard cash) uncovers the truth behind the agenda of political correctness and cultural obloquy. I have said this many, many times: "money follows the truth". What we say is one thing, where the cash goes is what really shows the truth of a situation.
For example:
-- As above, if you want to know the truth about who drives best, men or women, look at where the money would go, if it weren't for political interference. It's women.
-- If you want to know whether you've got a good business idea, don't just ask your friends (plenty of them will say "yes" when they mean "no"). Instead, see whether your friends will actually buy something from you.
-- We'd all like to lead greener, more environmentally friendly lives, but as the recession has taken hold, plenty of people have forsaken their free range and organic eggs to go back to battery farmed products, because they're cheaper. There's a trade-off between morality and the purse.
Of course, what I am describing here is the raw, open market, red in tooth and claw. If you want to start a business, keep your eye on money, not sentiment. Before you accuse me of being utterly ruthless, I fully appreciate that there are times when it's absolutely the job of governments to make legislation which skews markets from complete openness. I'm no fan of political correctness, but we do need to nurture and support both individuals and companies who might otherwise not achieve their goals or ambitions. It's why, for example, we have the Competition Commission; which prevents monopolies from emerging. It's also why we have an NHS which is free at the point of use, irrespective of the cost of treatment, and therefore delivered in a way which is entirely unconnected with whatever tax contributions a person has made.
But there are times when the lifestyles we choose, as societies and individuals, should allow for us to be treated differently, and this is one of them. We don't all live under a curfew just because a tiny minority of people go out and commit acts of unimaginable violence. Similarly, women shouldn't have to pay higher car insurance premiums just because they are going to be artificially designated as "the same as" men when all the facts point to the contrary.
8 February 2011
Manufacturing: a comeback in the making
by Nick Saalfeld
In the constant drip-feed of doom-mongering stories in the press, it’s easy to think that our economy is truly up the spout.
But today, we got some interesting news from leading business group, the Confederation of British Industry (CBI). Their latest quarterly small business Trends Survey reports that small manufacturing businesses are something of a shining light in the economy, with a 13% boost in output.
We can’t read too much into it – output is not the same as profit – but in a world where many companies would be very pleased indeed with a 2% increase in output, 13% is a whopping achievement. Here at Yoodoo, we’ve always said that:
· Small businesses are the engine room of the economy. They account for well over 90% of company registrations, and they’re quickest to change direction and try new things when times get tough.
· Manufacturing, so long the prodigal son of UK business, has much to offer in starting the economic recovery. In particular, we’ve spent too long creating a service-driven economy whilst buying stuff on the cheap from abroad. If we don’t start buying British – which means creating high quality British products – then we’re going to be in big trouble.
· And manufacturing’s time has come. It’s in a recession, with a weak Pound, that British firms can start once again to establish a foothold abroad.
It’s only a start, but to us, it’s big news to see small British manufacturers making their businesses stick in a global economy. I hope we see plenty more of this in the months to come.
28 January 2011
In “Bannatyne v. the People”, the People will always win
by Nick Saalfeld
One of the bigger news stories of the past couple of weeks is the fact that Dragon’s Den stalwart and gym owner / hotelier Duncan Bannatyne has got his pinstriped knickers well and truly in a twist over reviews for his hotels on TripAdvisor. In short, TripAdvisor is the most popular of a range of websites which allow anyone to post an unrestricted consumer review of any hotel at which they stay. Think of it rather like a Which? magazine without any boundaries or rigorous standards of testing.
Bannatyne is angry because one of his hotels was compared to Fawlty Towers, the shambolic hotel of TV folklore.Bannatyne has a point to a degree. There’s nothing to stop unscrupulous competitors from posting negative reviews of an establishment for their own advantage. A negatively predisposed reviewer doesn’t even have to have set foot in a hotel to review it on TripAdvisor.
And these reviews matter – margins in hospitality are notoriously low, and a bad run of reviews could be the difference between success and failure. Failure costs real people their jobs. It’s no joke. I’m afraid to say, though, that in the long run, Mr Bannatyne is miserably wrong. He’s doing the business equivalent of stomping his feet and “thcreaming and thcreaming until he’s thick”.
Yes, TripAdvisor is open to abuse. But you know what? I wouldn’t plan a holiday today without looking at TripAdvisor. Because, overall, I trust it. I know that if I ignore the very worst reviews and the very best reviews, what I am left with is a pretty realistic assessment of a hotel’s worth and value. TripAdvisor overall gives a mightily more powerful, rounded and valid impression of a destination than any guidebook, star rating, or official document. And, like so much online, it’s democratic: everyone can contribute, and everyone’s welcome.
Campaigning against TripAdvisor is campaigning against democracy, and that’s why I am so vehemently opposed to Bannatyne’s position. Sure, people as a whole get things wrong sometimes. That’s why we sometimes vote the wrong people into power. But democracy is better than anything else, and that’s why we have it. The internet – and sites like TripAdvisor – have made many choices in life wholly democratic.
If Mr Bannatyne has nothing to hide, he can relax, safe in the knowledge that plenty of good reviews will follow. If, on the other hand, he thinks he can get away with misrepresentation or second-rate service (as so many hotels sometimes do); then he’s going to learn the hard way that times are a-changing. I hope he uses this opportunity (and the publicity he’s been given) to do his best to provide a top-notch service, instead of wasting his time on campaigning against the will of the people. Ignoring the views of the people is a great way to kick a business into the dust: we would surely expect better from Duncan Bannatyne.
22 December 2010
Snow Joke: your customers deserve more than an icy reception
by Nick Saalfeld
I’m going to have to tread very carefully here (literally – we’re practically iced in…) because I want to be suitably cheery and festive, but I also want to have a good old-fashioned British moan about the snow.
First in the firing line is BAA (the British Airports Authority). I don’t often agree with Daily-Mail style headlines that Britain is becoming a Third World country, but to see thousands of travellers stranded in disgraceful conditions, there really is no excuse.
And there’s an important business lesson here. Apparently, BAA’s beleaguered Chief Executive’s argument is that the snow caught his team unawares, because it has taken longer than they thought to clear snow from underneath planes and on taxiways. This, I believe, is utter rot. Heathrow is over 80 years old: it’s ludicrous for the acreage of the site to be a complete surprise.
Instead, I think that the poor travellers (including babies queuing with their parents in sub-zero conditions) are victims of a miserable underinvestment. BAA is owned by the Spanish construction conglomerate, Ferrovial. I believe that the company has tried to get away with failing to invest in Heathrow, and is now rightly paying the price in seeing their reputation torn to tatters. Gatwick, meanwhile (not a BAA property, precisely because BAA was perceived as a monopoly and told to divest itself of Gatwick and three other airports) is performing much better- because it’s spent six times as much on snow-clearing equipment.
The lesson for businesses of all sizes is simple: by all means cut costs, but don’t be fooled that you can cut to the bone without consequences. And don’t kid yourself that you can beat God: there was always going to be bad weather at some stage.
Meanwhile, warmest festive congratulations to the staff of the Trafford Shopping Centre in Manchester, who beat the weather thanks to an all-night effort by staff to grit every square inch of their car parks and approach roads last Saturday. It was a Herculean effort, but it certainly paid off. The Saturday before Christmas remains the most important shopping day in the retail calendar, and whilst the weather is estimated to have cost retailers the best part of a billion pounds, Trafford won’t be suffering. They were open for business in a big way. Brent Cross Shopping Centre in London, meanwhile, had to close early. Again, two perfectly parallel examples of how one company gets it right, and another gets it wrong.
It’s incredible that in 2010 a shopping centre can close on its busiest day of the year, and I certainly hope that the Centre’s tenants will be seeking some compensation for their lost profits. I can only hope also that the people at the bottom of the pile, the consumer, will get some redress for their ruined holidays at Heathrow, too.
If you run a business, or want to run a business, don’t hoodwink the customer. They won’t come back. They’ll tell their friends not to come back, too. Everyone will understand when the weather or some other disaster befalls you that it can’t be avoided. But make sure you have plans in place to deal with it; and then to exceed their expectations with a magical level of service. That’s the sort of Christmas present they won’t want to forget.
17 December 2010
It ain't what you do...
by Nick Saalfeld
The Yoodoo office is (of course) a 24/7 hotbed of activity; but, like one third of the country, we came to a complete halt last weekend to watch the X-Factor finals.
In my humble opinion, Matt Cardle was a worthy winner – because like so many great performers before him (Jimi Hendrix? Michael Jackson?), he owned the stage. It didn’t matter that he was one small bloke on a huge, glittering stage; he looked like he belonged there; he owned it.
An awful lot of people can hold a tune. At least 10% of the population can sing well enough to make much of the other 90% say “Wow”. What separates the competent from the superstar is a bundle of other skills which go well beyond the official description. X-Factor isn’t a singing show, it’s much more than that: it’s a performance show. Only a born performer will actually win.
The same is true in our work lives.
My sister, for example, is a vet. The road to being a vet is the longest academic slog in the country, at over 6 years. And yet, what makes a great vet isn’t their extraordinary ability to pin bones which are barely visible (just like singers holding a tune, all vets should be able to do that). What makes a great vet is all the stuff they don’t teach you in vet-school; like how to be empathic with a client whose furry companion of over ten years isn’t going to pull through. Or how to deal with the emotional agony of customers who refuse treatment for their pets because they can’t afford it – even though the animal is suffering.
Running a business is the same too. Whatever you officially do often isn’t what people are truly prepared to pay you for. If you’re a taxi driver, getting from A to B is the bare minimum. A clean car and some old-fashioned courtesy when taking little old ladies to the shops will turn that minimum into a successful business. If you run a hardware shop, selling hardware is the bare minimum. It’s your in-depth knowledge of DIY which will keep customers coming back. And if you open a restaurant, don’t kid yourself that it’s all about the food. The food too is the bare minimum – clients want a perfect balance of food, service, ambience and price.
Successful businesses have an X-Factor; an often indefinable commitment to going the extra mile or making the customer feel special. It’s what separates them from everyone else in the same line of trade, and it’s what turns customers into evangelists. If you haven’t got an X-Factor, start cultivating it today.
13 December 2010
Business book recommendation of the month
by Nick Saalfeld
Mike Southon, our patron and best-selling author of The Beermat Entrepreneur has been at it again; with the launch of another shiny new business book – and this time we’re right there on the front cover!
This is How Yoodoo it is a collection of Mike’s interviews with top businesspeople, entrepreneurs and business thinkers as originally printed in The Telegraph and the Financial Times.
Rather like Yoodoo, each interview is short enough to read in one sitting, features an expert at the top of their game, and uncovers bags of ideas to help you run a better business. It’s one of the quickest ways to pick up business tips from people who have “been there and done that”.
Experts featured include Sir Keith Mills, who led the successful London 2012 Olympics bid; the actor and writer Stephen Fry; Harold Goddijn, founder of satnav specialists, Tom Tom; Sir Philip Trousdell, former Commandant of Sandhurst Military College; Sir Robin Saxby, founder of chip maker ARM and Brent Hoberman, founder of Lastminute.com. And that’s to name only a few.
Buy it here.
6 December 2010
Consumer trends for 2011
by Nick Saalfeld
Are you full of enthusiasm for starting your own business, but all out of good ideas? We’d like to recommend the latest briefing from Trendwatching. Instead of coming up with actual ideas for businesses (go and be a plumber or fix cars, for instance), they monitor interesting trends around the world - the sorts of trends which result in hundreds of great new business ideas. Their clients include top brands like Nestle, Google and L’Oreal; who want to know what makes consumers tick. But many of their briefings are completely free, and they have just published a new report called “11 Crucial Consumer Trends for 2011”. Which, in our book, translates to “11 up-to-the-minute ways to make money with great new ideas”.
To give you an example, here are two trends which the Trendwatching team have spotted:
Renting – or what Trendwatching calls “Ownerless”. Quite simply, the renting trend is all about uncovering things people could easily rent rather than buy. Sometimes, it’s about making life easier: Lovefilm, for example, is the easy way to rent DVDs rather than going to the video store. But plenty more renting opportunities exist where entirely new products are offered for rent. London’s bike rental scheme is going down a storm; and you can now go online and rent clothes, jewellery, cars, books and plenty more. Trendwatching say that our consumer-led, throwaway society is hungry for more “buy now, give back later” goods: it’s easy, it’s environmentally friendly, and in urban areas it’s easy to get stuff around from owner to owner.
Health products and services – or what Trendwatching calls “Wellthy”. They say that the British are reasonably well off, despite the recession; and that means we’re thinking more about health as an essential part of our happiness. The business opportunity is not for emergency healthcare (that’s what hospitals are for), but for health products which are bought by personal choice – think fitness products, vitamin supplements, health monitoring tools like pedometers and heart rate monitors, or online services like apps. Trendwatching say that many young people in particular, with busy social and work lives, are interested in looking after their health too- if you can make it easy for them to do so.
That’s just two trends from 11; and both of them should give you plenty of sparks of inspiration. Good luck!
http://trendwatching.com/briefing/
22 November 2010
Turning a hobby into a business
by Nick Saalfeld
New entrepreneurs, on the cusp of starting their own businesses, generally fall into two categories:
- People with no idea what to do, but the urge to try something new
- People with a brilliant/hare-brained idea, but no idea how to execute it
In the second category are a fabulous breed of people: the hobbyists. Turning a hobby into a business is a wonderful idea because:
- It’s something you already love doing, so you won’t get bored
- Startup costs are comparatively low (unless your hobby is something like ‘live space exploration’) because it’s something people already do for fun. You probably own lots of kit and raw materials already
- It’s something that other people are interested in too- and that means there’s probably a defined market, in fact there’s often a thriving community with its own magazine, events etc.
- If you already work, it’s the sort of business you can kick off in the evenings and in your spare time without prejudicing your work or income- and you won’t feel too knackered because you’re doing something you enjoy.
- And if you completely mess up, chances are you won’t feel like you wasted your time.
My friend Sue makes glorious intricate dolls’ houses- originally this was a hobby; now it’s something of a kitchen table business as Americans in particular love historically accurate miniatures. Renata, meanwhile, makes jewellery from beads, and now teaches her skills at monthly sessions. eBay businesses are also a classic hobby business – I recently met a lady who specialises in the import and sale of (specifically) Dutch clocks. Another friend decided that other people might like the same sort of dresses that she likes, and so has started selling them.
All these businesses are about starting small, spending very little upfront, taking low risks and seeing what happens. One of the thrills of eBay, for example, is that there’s basically very little risk at all: pop something up for sale and the world is your shop window for a few quid.
So, what are the downsides? Well,
- Banks are still cruelly resistant to kitchen-table businesses. I use the word ‘cruelly’ because I do think this is unfair. Hobby businesses generally don’t ask for big dangerous loans; in fact they’re often the model of cost-conscious entrepreneurship. I think that banks often like to class hobby business owners as ‘unreliable amateurs’ when what they really mean is ‘people who will be perfectly happy without making banks rich by buying unnecessary financial products’. In other words, hobby businesses are actually very prudent. They deserve to be taken more seriously.
- Occasionally, passion can cloud your business judgement. Hobbyists are often terrible at accounting for their own time, particularly in crafts and design businesses. If it takes you twenty hours to fashion an authentic medieval crossbow, you need to charge for those twenty hours and all the materials- even if you enjoyed every second of making it.
- And the biggest disaster of all… it can stop being fun. Once your hobby becomes a job (which is especially a risk when you become a finance director, marketing director and sales manager as well as the person making the product), it can suddenly lose its idyllic lustre. You need to keep the fun alive by sticking to your roots and expanding only at your own pace.
If you have a hobby which you would like to turn into a business, here are my simple top tips:
- Start small, stay small. Most hobby businesses fall over when they try to scale up. Unless you really do want to become MegaCorp, take some income for yourself and your family, and be happy with that!
- Keep an eagle eye on your costs. In business, money is everything. If you don’t cover the cost of your raw materials and the time you put in, you are guaranteed to make a loss.
- Use your network. You know lots of people- many of whom will be into the same hobby as you are. They are your ideal customers.
- Don’t ditch your day job unless you’re convinced you can make a go of it full-time.
- And definitely don’t ditch your day job unless you’re convinced it will still be fun in a year’s time.
15 November 2010
Yes, you can run a successful retail business in 2010
by Nick Saalfeld
Have you ever watched that extraordinary business TV show, “Mary, Queen of Shops”? In it, retail guru Mary Portas dispenses her wisdom to struggling shops around the country. I’m always impressed when TV pundits put their reputations on the line with real, sound advice; and Mary is a triumph.
But I remember one episode of her show in which a long-suffering boutique owner admitted that, sometimes, she would spend a whole day at her till without seeing a single customer. I know what retail rents are like. I know how hard it is to stock an entire store without knowing whether you’re going to sell anything. I know how much pressure independent retailers face from out-of-town retail parks, shopping centres with astronomical rents and the death of the high street. And I felt for this lady, watching her livelihood ebb away.
Which made me wonder: do you have to be mad to open any sort of shop in 2010? I’ve therefore been looking for examples of amazing independent retail businesses to see if I could find some solace. And here’s one for you now. I know that food is a rather different category to clothing; but this is quite an astonishing example.
Just round the corner from my office in London’s Soho is a remarkable Thai restaurant. I’d love to tell you what it’s called, but I have no idea as there’s no name above the entrance. Oh, and it’s tucked away in a cobbled side street. So, how come there are people already queueing up outside by midday every single day?
Well, firstly, the offer is very simple. You pick a Thai dish, and you get it with rice. And that’s it. Consumers like a simple offer. They know what they’re going to get, time after time.
Secondly, they offer excellent value. Because they only offer around eight dishes, they feed hundreds of people every lunchtime. And that means they can offer keen prices. Each Thai boxed-up lunch is a weighty lump (believe me, I know), which makes you feel like you’re getting very well fed indeed for under a fiver.
Finally, they have realised that busy city folk are short of one commodity: time. They have therefore taken their lunchtime service to the absolute limit. At the counter, one man stacks up boxes with rice in the bottom of each. The second server takes orders and puts the right topping into each box (I never said this was romantic dining…). And the third server takes the money.
I have watched this ballet of business in action and counted them consistently serve one customer every 20-30 seconds.
Let’s just hazard a guess. Let’s suppose that they only opened for two hours a day; over lunchtime, between 12.30 and 2.30. And let’s suppose that everyone had only a single box at £4.99. Serving one person every thirty seconds tots up to a very healthy £600 per hour, or £1200 for the two hours. That’s not bad work at all. I bet most of Mary Portas’ unfortunate retailers would kiss their tills if they managed to turn over £600 in a week.
This astonishing unnamed, unpublicised, backstreet shop is a goldmine and an unqualified success. People do still have money to spend – they’re just very picky about where they spend it. So:
- Keep it simple: make your offer clear and do what the Americans call “sticking to the knitting”- don’t bolt on a million extras, get the basics right.
- Exceed expectations: in the case of our Thai shop, they make sure that people can buy their lunch in under two minutes; and that means they get their lunch break back.
- Offer great value: cut costs to the bone, and exploit economies of scale. In the case of our Thai shop, that means operating the sort of production line that wouldn’t be out of place in an army field-mess. But it works just fine.
8 November 2010
TCB: Taking care of business, taking care of baby!
by Nick Saalfeld
If you only watched the news, you’d be forgiven for thinking that all is doom and gloom. Technically, the UK came out of recession in January 2010 – nine months ago – but the misery bandwagon just rumbles on.
And yet there’s so much to be upbeat about. Employment this quarter is up by over 241,000 from this time last year, exports are up, manufacturing confidence is up. There’s a lot of good news for UK plc.
That’s why we commissioned the Yoodoo Green Shoots of Recovery Report; which uses data from Companies House to paint an accurate picture of British business. Not only are more people than ever setting up shop (or delivering a service or inventing something new), but more of them are succeeding, too.
Mums are a big part of this surge in entrepreneurship. Becoming a Mum is the sort of big life change which gives us pause for thought. It’s a chance to re-evaluate priorities; perhaps leave the rat race or a previous career and try something new.
Being a Mum also creates new life pressures which often generate exciting new businesses. Suddenly you can’t go to the office or shop for a nine-to-five, and you need to keep busy for specific hours of the day. Thousands of home businesses and online businesses are born this way.
Finally, many Mums use their enforced career break to brew up a storming good business idea. In between the howling and the school run, there’s plenty of thinking time to turn the germ of an idea into a rough diamond and then the full, polished gem.
If necessity is the mother of invention, Britain’s downturn has spawned entrepreneurship on a grand scale- and Mums are in the front line.
Our research shows that these businesses are surviving in greater numbers than before; and this is partly down to hard work, but also partly because so-called tough times are in fact ideal times to start a new business. Competitors with big budgets are suffering and cutting back, so it’s the ideal time for hungry new upstarts to evolve. Prices are forced down, because suppliers are looking to mop up every deal they can; and that means cheaper premises and raw materials. Finally, living in cost-conscious times forces owners of new businesses to focus on the pennies. That’s the sort of discipline at the very start which produces successful companies down the line- and it’s also the sort of discipline which Mums seem to have in abundance.
Don’t think for one moment that customers aren’t buying, either. Whilst consumers may be tightening their belts, there’s still plenty of demand for new ideas, time-saving gadgets, luxury goods, entertainment and many more. If you can save people or companies money with your business idea, even better!
If all that has got you excited about running your own business, you’re not alone. Research consistently suggests that no less than 17m people – well over half of the UK’s active workforce – would like the freedom and excitement of starting up for themselves.
Yet less than one in thirty ever get round to it. Usually, that’s because, in Britain, we’re afraid of failure, haven’t got the time, or we’re just not rich enough to get started. Well, there’s never a “right amount of money you need” to have a baby; and every parent is petrified of messing up their parental duties, too – yet you took the plunge into Mum-ness without a hitch. Apply the same open-mindedness to business and you’ll find the same reserves of talent and resourcefulness in abundance.
It would still be nice to get off on the right foot, though; so here’s some simple advice from the team at Yoodoo. Before you spend anything, get your first customer. If you want to become a landscape gardener:
- beg and borrow the tools to get started
- ask all your friends and neighbours if you can do up their gardens
- If they say yes, then find out what they’re prepared to pay
If they both want the service and are happy to pay for it, you’ve got yourself a workable business. It really is that simple. If you really can’t find a customer, perhaps you need a different idea, so it’s back to the drawing board!
There’s never been a better time to start a small business. It will be hard work and there will be long hours- but as a Mum, you’re more than used to that! Not only will you be the master of your own destiny, you’ll find it an enormously fun and satisfying experience, and you might even get alarmingly rich. Good luck!
1 November 2010
Business book recommendation of the month
by Nick Saalfeld
Some of you will know that one of the great ‘friends of Yoodoo’ is Mike Southon, author of legendary business book, The Beermat Entrepreneur. In fact, you’ll see Mike in a couple of Yoodoo Episodes.
We’ve always loved The Beermat Entrepreneur because, unlike so many business books which are full of jargon, stuff you’ll never get to put into action, and pointless posturing from businesspeople who really just got lucky, Beermat is jam-packed with great business advice in plain English. The sort of stuff that anyone can do, without any airs and graces. It’s just what we believe in here at Yoodoo.
So, it’s not surprising that we don’t often recommend business books. But every now and then, one does come along which is worth mentioning. We heartily recommend you check out Rework by Jason Fried and David Heinemeier Hansson. Like Beermat, it’s slim, simple, and written for human beings. You can breeze through each chapter in ten minutes or so.
But it’s still full of excellent advice; particularly if you want to start a service business (maybe graphic design or hairdressing, accountancy or software development). And Rework doesn’t expect you to have thousands of pounds to blow on your business – in fact it’s ideal if you’re getting started on a shoestring. These guys did, and they’re now worth millions (Fried’s company makes project management software, and Yoodoo is one of their many happy clients).
Do we think Rework could change your chances of business success? Yup. And that’s why it gets a big thumbs up from the Yoodoo team. Buy it here.