Gordon Woolf's Blog

The need to make a profit

The radio caller was critical of banks, which is not unusual, but she put it in a somewhat odd way: 'I have to pay them interest, but what do they actually DO (for me?)'.

This may be partly the reason for the current Occupy movements around the world. To some youngsters it may just seem that if their parents run out of money, they just have to go to "the hole in the wall', but to those parents does it also seem that if they can buy computers, washing machines, furniture and so much more on "48 months interest free", why should the banks charge interest. After all they are only giving you money for a while, not goods permanently.

I know that doesn't make sense, but it kinda sounds logical.

The reason for the demonstrations that I have sympathy with is that it is no longer true that the rich are getting richer and the poor are getting poorer -- it is, some people have pointed out with figures and graphs, that the super-rich are getting richer, and that the rich and the poor are getting poorer.

I could claim that some of my best friends are millionaires, which is not quite true but I have known a couple well enough to visit their homes and have them visit mine. I don't envy them. Sure they make more money than I ever had but they do have to work unusual and long hours and the stress level is more than I would want, even though as a newspaper editor I once flourished on stressful work.

But we now have company directors who get pay increases by the millions and yet manage to do similar work for several companies at the same time. If their individual jobs were at the stress level of "my" millionaires, they'd have been dead long ago.

That's what I mean by things getting less fair. And therefore in general terms the Occupy movement has my moral support.

I'm not particularly blaming the chain store owner with his 48-months interest free and similar offers. The one I have in mind has said that people are stupid to accept some of the offers made in his stores as they don't suit everyone.

It is necessary for businesses to make a profit in order to reinvest but there is a big difference between making a fair profit and making the most that you can. Is the first aim of company directors to make the most profit for their shareholders or a profit which will ensure that the company continues to be viable into the future? Customers are important too, with the rest of the community needing at least a little consideration occasionally.

I don't think the unfairness claim can be made against more than a small number of the people who run companies -- it just seems like that sometimes.

A reminder of air travel as it should be

I thought that I did not like air travel. But a few weeks ago Gwen and I took a few days for a holiday trip over Lake Eyre, Australia's inland sea which is usually just salt, but which has been filled now for two years running.

I was fortunate to see an advertisement that a tiny air-travel business (four planes and a helicopter) were running a three-day two-night tour from Tooradin airfield, 20-minutes’ drive from home.

We drove in to the airfield, up to the office, carried our bag in where we were met by the pilot who took the bag, weighed it and took it out to the plane, an 8-passenger Piper Chieftain, sitting ready the other side of a fence you could have stepped over. We were introduced by his wife to the other passengers, then led back to our cars to drive to the "secure" area for them on the other side of the hanger. We ambled back across the tarmac, had a coffee and the pilot said it was time to get going.

Before we boarded the pilot ran through the usual safety preamble with the lifejacket (which still has to be done even though most of our trip was over desert, admittedly somewhat wet desert, then it was an invitation to sit where we liked and the lolly jar was handed around.

One of the "towns" we landed at, William Creek, has a permanent population of 2 and is on the Oodnadatta track, a "road" definitely more deserving of the description "track". The pilot apologised that he could no longer taxi to the back door of the pub, so we'd have to walk the last 50 yards. A sign at the sealed airstrip's parking area says to pay the $25 landing fee ($30 for ours as it had two engines) at the hotel bar.

As might be expected when you are visitng small towns in what really is the Outback, mobile phone and wireless broadband coverage was somewhat patchy (at Lyndhurst we were told you could get a connection on Telstra or Optus on a small hill a kilometre along the road) but even the most deserted pubs offer landline or satellite connections and the Lyndhurst Hotel even had an inhouse computer repair service advertised on the noticeboard).

Incidentally we can thoroughly recommend the hamburgers at William Creek which need a couple of kebab sticks to hold them together. Only about four or five aircraft landed for lunch that day but our pilot told us it is not uncommon to have 20.

So it is not air travel which is the problem, it's large airports.

What will supermarket of future be like?

Will the retail shop of the future look much like the typical retail shop of today?

I suspect that we may see as big a change as is the comparison between the present-day supermarket and the grocery shop where I worked on Saturday mornings in my pre-teens: long counter, "pre-packaging" limited to the paper bags of broken biscuits I had the job of making up from the biscuit tins bought cheaply because they might have fallen over in the van (The good biscuits were kept aside for sale at full price.)

Deliveries have changed dramatically. No longer is there a steady stream of trucks from multiple manufacturers, distributors and wholesalers. The trucks which deliver are mainly those contracted to the retail chain; the few individuals are local and usually perishable goods.

The manufacturers now make in fewer places and will, for example, deliver to a very few, very large distribution centres. Basically distribution is now handled by the supermarket chains and a product delivered to one of those may end up anywhere in the region.

The plan, by at least one major retail chain, and others seem to be following the same line, is that for all fast turnover products, the "shelves" will be stacked at the distribution centres and just moved in with hand-lift electric trolleys into place in the aisles.

I asked some time ago about the remaining product when a shelf unit section is near empty and needs replacing. It seems either there will be two identical shelf sections so the last remaining products are moved to fill spaces in that, or when the old shelf section is moved out, the remaining products are the first used to fill the new one, so a few local filling staff will still be needed.

Some smaller retail chains may use a rudimentary form of this for soft drinks, dog food, etc. but they tend to be closer to following the old half-case style of cutting open cartons, many of which are then removed when empty by customers to replace non-available plastic bags.

Not all developments are exclusive to the big chains. Our local independent supermarket is one of those using automated shelf pricing: the updated prices are sent via slight voltage variations in the fluorescent lights to the electronic price label units clipped to the shelves. I've spoken to one of the repair technicians and to the manager, and understand that while the system works fairly well, there can be some problems from the electricity supply being less consistent than it used to be. And printed price labels, especially for discounts, are still far more effective.

The automated units display the unit pricing as well as the actual price. This information is somewhat small black on green screen the size of those on an old-style mobile phone: Item description small; price large; unit pricing small. Both description and unit pricing will scroll if necessary.

I think this may have been an Australian invention but there are also advances in this field and the latest kinds (which I have not yet seen in Australia) replace the dot matrix LCD screen with an eInk format similar (but a lot smaller) to the Kindle ebook reader sold by Amazon.

Only this week the first colour eink ebook reader (no disturbing backlighting needed) was shown at the current Consumer Electronics Show in the US. So colour electronic price labels in supermarkets could come very soon.

This will also allow product icons to be shown instead of just a description. There have also been versions with a loop aerial on the ceiling above the aisle instead of using the fluorescent light circuitry.

Back in the 1930s there were attempts to completely automate the early supermarkets and I suspect that the present day attempts to encourage use of self-service checkouts will not succeed beyond their use by those having a very small number of items which they have bought previously.

Maybe a few more consumers need to learn that one of the most effective ways of making a point that you do not like certain methods is to leave the goods at the checkout if service is not what you expect and buy them again at the competitor nearby. I've heard more than the usual sense of urgency to the appeal to one of the few remaining shelf fillers to return items from a particular checkout. My guess is that they would have included some frozen items. Any retailer who has this happen as often as once in a blue moon needs to take a look at their service methods.

If we are fortunate we may see slightly less emphasis on price and discount vouchers and more on service. Could there yet be a supermarket in Australia which employs staff to help a shopper take a substantial trolley load to the car?

How to work internationally

I've been approached by a client in another country. What can I do now to prevent unnecessary complications later?

The Internet is truly international and gives the opportunity for many individuals and small businesses to work for clients around the world. So my answer to the above question was that you should do very few things differently to what you should be doing anyway.

One difference is that you should make sure that you agree what currency the payment will be in, when it will be paid and how it will be paid. And also make sure the work involved for that payment is stated very clearly.

Neither side will be happy if you find that making the payment costs as much as the payment itself. If the client is in one of the many countries where payments can be made by PayPal that would be good, and if you must accept payments by bank transfer make sure your bank knows all about the details you will need from them and what they will charge for processing while suggesting your client makes the same enquiries at their end. I've heard of transfers costing from $5 to a hundred dollars and more for quite small amounts of money (a few hundred dollars).

If you have a good feeling after a few initial email exchanges then it is likely all will go well. I have only had one client refuse to pay and that was a US company well known for its charitable work. On the other hand many many years ago when a firm in a country which ends in ...stan owed me a small sum they eventually got a US client of theirs to hand me a small brown envelope of dollars when I was on a business trip to the USA after the original client's government had made overseas payments almost impossible.

Most clients want the association to go well but it is still a good idea to do some internet searches on business and individual names and locations.

Then, as I have already said, do what you would do for any other new client. Ask for an advance and make sure that if a job will take a substantial amount of time that you get progress payments. And do not accept excuses for delayed payments. If the money stops, you stop your work.

 

Make sure you get paid - redux

Getting paid is the final stage of any kind of freelance work -- or of running a small business of any kind -- but seems to be a particular problem in publishing.

I have already written on the subject in a blog item you'll find here, but it is well worth revisitng

There are several necessary steps, and many of those go back to the first ones when you are in the first stage of getting and accepting a job.

Such steps include checking the details of who you will be working for. Do you really know who they are? Try a search on the Internet: do they have a web site, does it give their actual address and is there information on how long they have been in business?

But I'm getting carried away giving my own interpretation of what to do when there is a good guide by a longtime copyeditor, Katharine O'Moore-Klopf, who has been successfully overcoming the problem of "How to avoid getting stiffed by clients" for many years.

Read it before you take on your next client.

Make sure you get paid on time

Being successful in a small business is not just reliant on making a profit on whatever you sell, whether it is goods or services. It relies also, and perhaps more importantly on getting paid for those goods or services.

I was surprised yet again this month to come across a small business owner, in this case a freelance designer, who had not thought to set out clearly just when he expected to get paid and ensuring that was understood by his clients.

He wondered whether he should offer a discount for payment at 10 days or 30 days. That, I suggested, would just mean he would be giving a discount to his current prompt payers and encouraging others by suggesting he was prepared to finance their debts to the extent of 30 days which could be attractive compared to bank overdraft costs. He also needed to make sure that he got invoices out immediately a job was done, and certainly not wait until the end of the month (and sometimes into the next month) as he had been doing.

Long ago I established a simple system with my clients: no job would be started until the previous one had been paid for. I did have a couple of exceptions for weekly jobs but on those there was a date for payment each month which I had got from the client and no future job would be started if that date went past without payment.

When you have your own debts it may seem hard to seemingly pass up the chance of more work, but if you are offering fair value in what you do you will find that clients will keep to agreed terms when it is in their interest. Those who do not may not be worth working for; it is no good doing work for which you will never be paid, or paid so slowly that extra costs in chasing payment eat away at all the profit and do not return your own expenses in doing the job.

Part payment should be normal in advance on first orders. In my experience as a publisher, most book printers now work on half payment in advance and the rest before the finished job is despatched. One large printer told me recently that is what saved them in the recent global difficulties.

Faced with such payment terms from printers I can understand that some publishers will be trying to delay payments to other suppliers ... will you be one of those?

Magalog or catazine - good idea but not a new one

There's nothing new under the sun. That was my reaction when I read a US Postal Service blog suggesting the latest trend was the "Magalog" or the "Catazine", a hybrid of catalog and magazine. My reaction was thus because this is how one major category of magazines, the trade magazine or trade journal, started a couple of hundred years ago.

The Morgan brothers, who ran a business which combined the categories of druggists and hardware sellers, decided back then that they'd get more readers and more committed readers for their catalogs and thus more customers if they included news and information. And that meant news etc that was not just puffery for their products.

In the 1960s I worked in London for the firm of publishers which had been, a century earlier, that firm of chemists. Those catalogs became the world's first trade magazines, The Chemist and Druggist and The Ironmonger. As they became successful in their own right, they split from the chemicals company (which became Morgan Crucible) and the one which became Morgan Brothers Publishers (and subsequently the Morgan-Grampian Group, now part of Fleet Holdings).

When I started work for the descendants of the Morgan Brothers (Sir Charles Morgan Hudson was the chairman) I worked on The Ironmonger and they were approaching their centenary year as publishers. They set a high standard with an editorial staff of around ten on that magazine alone, a supplements department with two or three (I worked for that section for a while and wrote a 64-page guide to glues and adhesives - exciting stuff!) and an inquiry department with 5 people fulltime answering phone and mail questions from subscribers.

It was definitely profitable and as a young reporter I was sent UK-wide reporting on the meetings of hardware retailers and ironmongers. When John Betjeman (later appointed Poet Laureate by Queen Elizabeth II and following on previous appointees to that position such as Tennyson, Wordsworth and John Masefield) called for some information in order to write his speech to open an exhibition of Opercula (perhaps better known as "coal hole covers" those often ornate cast iron plates set in footpaths in front of houses above the coal cellars) I was told to find the booklet on that subject we had published long before, try to find some updated information and arrange to meet him before the event and then report on the opening. It took many hours and resulted in about a 6-inch story.

But that was the way things were in those profitable days. Maybe some of the "new" catalogues with news will do as well. As long as they follow the basic rule that the Morgan Brothers followed, that there must be no puffery. Readers had to be respected.

I'd suggest that a good start might be not to call the new publication a "Magalog" or the "Catazine".

The biggest nuisance: a customer

You’ve got a big event scheduled for the business, maybe a visiting dignitary to the town who has been cajoled into visiting your new premises, and, just as the car is scheduled to pull up in front, an ordinary customer arrives and wants to talk about a possible order. What do you do? It’s such an obviously likely event, at least in my mind, but it seems the possibility had not struck the minds of the local branch of a major service provider when my wife and myself drove into their car park recently. They just seemed not to know what to do. As their minds creaked, we become uncomfortable and decided we just wanted to leave -- which we did. Admittedly it was not your everyday purchase, but it was one we had been thinking about for a long time: prepaid funerals. The first place we called at, in the middle of a weekday afternoon, was deserted; not only deserted but with a heavy iron grill across the entrance. Inside we could see the office door and there was a notice stuck on it but we’d have needed considerably stronger lenses in our prescription spectacles to read it. Next place at least had signs of life with a single car out front and a tall thin man standing on the verandah. “We’d like to talk to someone about prepaid funerals,” I said. His mouth opened but it was a while before any words came out: “We’re about to conduct a funeral”. I waited for some suggestion. Three considerably better built men appeared in the doorway. I can’t be sure now but they seemed to be rubbing their hands together, though whether in the manner of Dickens’ Uriah Heap or of characters from a mobster movie I’m not sure. I definitely did not hear any knuckles crack. “Can we help you?” the leader said. I repeated our request. “He’d been told we’re about to conduct a funeral” said a voice behind (presumably the thin man) stating what was true, though that had been no more than two seconds earlier. I began to feel a retreat was necessary. I half heard a comment about the room they’d use being in use, which might have made sense to them, but by now we were heading for the car. In my haste to exit I forgot that to open all doors on our car you have to press the keypad twice, so as what was presumably the first attendees for the funeral arrived, I realised my wife was still holding the door handle. By the time I reacted the incoming car had parked and as we started to reverse I realized we had to wait for an elderly lady on a walking frame to  be helped across to the parlour. By now it all seemed to be in agonizingly slow motion but eventually we were on our way. I had learned my lesson. Unlike the funeral directors I used to know where, as a cub reporter I’d call in and be handed a coffee by the undertaker’s wife while I learned who had died and who would and would not appreciate being asked questions by the media, today’s deaths are initially planned entirely by phone. Should a would-be customer actually call in, it seemed you will not be welcome. Am I alone in feeling there should be some more personal service as a first contact? However, since then I’ve realised that an increasing number of service businesses expect the phone to ring, to the extent that the walk-in customer is not really wanted, and must at least stand aside and wait if the phone rings. Business owners in the service area in general might do well to stand in their own reception area and see just how the walk-in client is received. More info on dealing with customers in the book written jointly by Geoffrey Heard and myself: Success in Store