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.

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?

Worst-case scenario: plan for it

In your business or even in life in general, have you worked out a worst-case scenario? It should be essential but I suspect too many people are unwilling to face the prospect of things going wrong.

Insurance salespeople will encourage you to consider what might happen if you had a fire, but few take it further than that, and the effects are often not those you can insure against.

Several recent reactions to changes in government policies, changes in the dollar exchange rate and surveys showing changes in consumer buying habits lead me to wonder yet again whether many business people ever work out what they'll do if things start to go wrong.

Those good at selling often overestimate their ability to sell -- but worst case is not always a lack of sales. As in the example I gave in the book Success in Store, it is also possible for a worst case to be caused by sales being too good. (Do you have access to funds to buy what you have sold, or, in a manufacturing business, the cash and/or credit to buy the raw materials?)

A lot of this is done with a spreadsheet. Just take the figures a bit further to the extremes. Yes sales in the convenience store we bought were poor, and even our own mishandling of customers might have been unable to make them worse, but what if road works started in the street outside and took way longer than were planned? I've seen that happen to others, and after putting off the staff and allowing for the lack of a need to buy stock, the overheads were still at a level which drew on all resources. (In the case I'm thinking of, the local authority was prepared to make a substantial contribution to promoting the strip shopping area when the work was done, but the businesses still had to get through to that point.)

The advertisement rate calculator included with my book How to Start and Produce a Magazine or Newsletter makes it easy to work out what would happen to income if a periodical publisher found all orders coming in for full pages instead of a mix of small and medium ads. But that is the kind of calculation which should be done with any business. I'm sure you've heard the joke about the business owner who admits that they are losing a dollar on every sale "but we make up for it in volume".

Retailers in Australia are currently trumpeting the benefits of a high dollar in lowering prices on imported goods, especially electronics. But have they worked out what they'd do if, over say a three or six month period, the dollar conversion rate dropped to half its present level -- which was where it was only a few years ago.

Computer retailers used to stock computers. Now few do outside of the demo stock on the floor. Not only did they learn to cope with price fluctuations but also with continuing upgrades in specifications. But a lot of stores went broke or closed because it was just too hard to cope.

In another field I went through some basic costings with a couple planning a restaurant. If successful it would have been a goldmine, but the most likely scenario was that they would be working their butts off for less than a living wage. Then I discovered that none of their forecasts included the cost of borrowing the admittedly fairly small sum they would have needed to get started. So, unless they started with queues outside their door on the first days they would have been going backwards slowly but certainly.

So think now of what could go wrong, and what effect it will have. If you cannot cope with that, you will be unlikely to cope with success.

Where is the best publicity?

Whatever you produce or sell -- books, magazines, or most other products -- you'll feel a need to get publicity for either your product or your business?

Do you aim for the top, the major newspapers or magazines and the bigname TV shows, or for something a little lower down the chain?

I'm not saying "Don't aim high", but you can do just as well from some very minor players. Publicity in specialist club, trade and craft journals can add up to a lot of sales. And those media are a lot more forgiving in the quality of what you submit.

You could try for years without getting on to Oprah, but be missing the sales of two, ten or more that come from a mention in those many publications which circulate to 200 members.

At the same time don't underestimate those readers. They know their subject. What they will want is hard edged details of why your book or product is better or has the answers to a need they can see.

I was prompted in this by seeing an ad for what is essentially a local restaurant in a national magazine. The restaurant is good, but not one that will persuade people to drive for an hour or two to get there. Even the local newspaper which circulates in several towns may be spreading the net too wide.

The book "Success in Store" which I co-authored, tells of a pizza store which "always" distributed 10,000 menus in order to get to the end of the next suburb. But the result of several thousand of those was a few price-taking delivery orders who'd go elsewhere the minute someone else made an offer. And each took half an hour to deliver.

By spending the same on fewer menus, he produced something which stood out, kept his deliveries within easy reach, so he could guarantee them being faster, and his profit went up.

Flyers you can deliver on a morning run (to keep fit) may not suit your market, but some trial promotion in those specialist publications, maybe for some businesses even on specialist web sites, could be the better answer.

Oh no! Not the 'Under New Management' Sign

In my book Success in Store both I and my co-author separately berated anyone who'd even consider a sign stating Under New Management.

If the business was good then you do not want to make a point of saying that the old owner has gone; customers, even those who are not actually dissatisfied, may take it as an opportunity to just drop off, to try that other shop they've been thinking of going to.

If the business was bad, then if a sign with those words is all you can do to make it appear that things have changed, then you may appear to be doing the same old things in the same old way.

But this sign is a play on the theme. It's big, on a busy road where it stood out even to people like me who had not noticed the business as it was. But it makes a strong point and it is in a field where many such businesses in Australia were taken over by huge groups who seemed to have money to burn but then burned out. It can therefore be a good idea to promote the benefit that the "new" owners are in fact the old owners who knew what they were doing.

We hope it helps. 

Does punctuation matter?

"Let's eat, Dad" or "Let's eat Dad". A comma can make a big difference.

Is punctuation more important than spelling?

I think it is. After all, most spelling is not so far off that you can't work out what the writer means - and this country and the UK understands what Americans write despite substantial spelling differences.

But an error in punctuation can cause mayhem. And while spelling checkers can at least offer some options, there has been little success with grammar checkers and even less success with the aspect of those which check punctuation.

Of course there will be arguments about where many commas should be put. They were a source of more disagreement with my co-author, Geoffrey Heard, on our book Success in Store than any other subject. I use more commas than he does, but we also tend to use them in different places. However, we did agree on those where they could influence the meaning, and that is important.

Lawyers tend not to use commas and one explained that they need to make it clear that when a comma is included in a contract they have considered its placement and have decided it is necessary.

Despite that, there have been problems with contracts where vast sums have depended on the interpretation of meaning based on a comma.

We can point to some sites where problems caused by this humblest of punctuation marks is discussed:

The University of Hawaii's Hohonu, a journal of academic writing has a nice piece online by Andy Gramlich: Commas, the biggest little quirks in the English language http://www.uhh.hawaii.edu/academics/hohonu/writing.php?id=82

Commas have saved a life. lost a million dollars or been blasphemous according to stories at http://clipmarks.com/clipmark/A2E17AAC-4E28-4EA7-B1FC-D5064B155006/

National Punctuation Day was a not massively successful promotion in the USA but sadly it seems to have disappeared. Last year (2008) it was on September 24, but that's not far off as I write and the site is still all about last year, though some are still useful like the piece at http://www.nationalpunctuationday.com/meaning.html .

My co-author (and now publisher) is probably right. I use too many commas. You can probably delete most in this article, but a few are needed, including, I hope, the very first one.

Planning for success

Any would be publisher is usually exhorted on the various discussion lists to "do a business plan".

I've sometimes joined that exhortation but when I was writing Success in Store: How to Start or Buy a Retail Business, Enjoy Running It and Make Money, I told my co-author that I've never had a business plan.

He then took me through how I'd started a couple of businesses, and justified his own "always have a business plan" position. He claimed I'd had quite a detailed plan in each instance -- it was just that I had not written it down! So, as a writer, the one thing I've never written down, is my plan for success. However, more of those businesses have gone according to plan than those which have not.

You will need a formal plan if you are going to borrow money. However, even then a business plan can be drawn up on the back of an envelope.

A nice restaurant I used to go to had paper tablecloths and marker pens in a glass on every table because the owner said her original business plan was drawn up over a meal in another restaurant and she had to appeal to the manager of that restaurant for some paper to write it down.

It also helps to include, in advance, what you will consider to be failure. ("I will have failed if I do not publish two books in the first six months, sell 1000 copies or not be within a few hundred dollars of breaking even in the second six months").

Too many people struggle on because they attempt to justify the changed cicumstances.

There's no reason why a "business" plan can't be that within 12 months "I will have published Uncle Joe's memoir, sold 20 copies and he'd added me to his will".

You could probably carry that one in your head.

Email: the world will know

One of this country's senior politicians has just found that emails may not be what they seem. In particular a forwarded email may be changed easily before it is forwarded. That should be a warning to everyone who uses email.

To start from the basics: There's a simple Law of Email, which states "Never send anything that you wouldn't want the whole world to know".

They are easy to copy, easy to change, easy to get out of even secure offices since the introduction of USB sticks, which has led some companies to disable the USB ports on their computers, a method which causes more problems than it solves.

Encryption should be used if you are sending confidential information by email, but encryption does not assure security since it has to be decrypted at some stage ("Decryption" rather than the unencryption which I've seen many times). Emails may be decrypted on the main mail server which offers little security within an office.

There are better ways, one of the simplest being to create a PDF of a document, encrypt that and sign it digitally. Warning: simply requiring a password to open a PDF is not securing it; a Google search will reveal programs that will ger around that (which I've needed to do to get an ad into a magazine that was secured by a foolish designer).

If you have this kind of material then you'll need to study the Acrobat help files. There are also some examples of commercial software programs that will make it a simpler task.

On the other hand, there are authors and others who are so scared of someone stealing a single copy of their ebook that they make access difficult for the people who have paid for the file. I would quote from my own experience when running a milk bar/convenience store. If you put a box of lollies on the counter they will sell, but a proportion will be stolen -- move them to the back or anywhere where the customer cannot easily pick them up and they stop selling. There will be a point at which theft is too great but it will always be worth losing a few.

It can also reflect on the trust between a business owner and his customers. In my book Success in Store there are two examples of the relationship between my wife and some local high school students who came regularly for fish and chips. In the first, they left wrappers and cans by the seats on the footpath until one of them saw my wife go out to clean up their mess as they left. "Do you have to do that?" one asked. No one else will do it, she said, and from that day there was no more mess; everything went in the bins.

Similarly, a sheepish youngster returned to hold out a confectionary packet, saying he'd forgotten to pay. Next day one of the other students asked if he'd returned to pay. "He told us on the way back to school and we said 'you don't do that there'."

Fair dealing will do a lot to reduce problems of theft but that does not help with the general continued availability of email and its likelihood to spread far beyond its original intended use.

A recent search for my name in Google, and going far beyond the first two or three pages where most of us stop searching, came up with an email I wrote in 1996 which is 13 years ago, long before the Internet was anything like it is today, and in the earliest days of the web when many exagerated claims were being made about "hits" on web sites. If you are interested, that email is at http://open4success.net/Olnews/mbox2/282.html

That was not the start of email for me as I'd already been using it for the best part of a decade; at that time the problem was that there were not many people you could send emails to but I did use an email-to-telex service to submit articles to some publishers.

In all that time, there have been regular warnings that normal email is the least secure communications system of all. At least with phone recordings you can be fairly sure that what is heard is what you said, and there are legal safeguards on what can be used. With email, forgery is simple, and preservation and distribution is even more simple.
 

How to make great ads

First I must declare an interest. The new ebook How to make great ads for (sm)all business grew out of my book  Success in Store, with co-author Geoffrey Heard, but this is entirely Geoff’s work. It consists mainly of short tips with examples from real life of what to do (and a few of what not to do). Most of the examples are of ads for small businesses and it is intended to be digested in small bites – taken a spoonful at a time, which suits ebooks, rather than read in a continuous session. You can download a free extract – a 30-page selection – and that should give you enough ideas to pay for the book several times over, because the full book as a download costs you only US$5.95 See details at worsleypress.com