Tag: business

So you want to be an entrepreneur?

Do you really want to start your own business?

There’s a school of thought that starting your own business is the passport to independence from the rat race or liberation from the servitude of employment.

A lot of blogs, books and writers encourage this idea and there’s no shortage of multi level marketers telling you self employment is the pathway to wealth and status.

On his Planning Business Stories blog, Tim Berry looked at one of the other sides of self-employment, that you’ll become unemployable.

Tim’s observations are right, but there’s a few other downsides to consider before trashing your cubicle, cashing out your savings and establishing that radical startup or buying a doughnut franchise.

I don’t want to work for a boss anymore
If you think your boss is an unreasonable swine wait until you deal with customers, particularly those who don’t pay their bills. Then there’s shareholders, business partners, suppliers and the taxman.

You’re leaving the rat race
No you aren’t. As a business owner you’ll find there’s a lot more rats than you thought when you worked for The Man, as the man employs lawyers, debt collectors and HR staff to deal with the rats.

The sad thing is you’ll probably end up being even more in the rat race, it’s just that you may not realise you’re racing the other rats as you aren’t stuck in traffic with them anymore.

I want to be the boss
That’s a noble and fair aspiration. Just be aware that in your own business, you take the risks and responsibilities too.

The boss at BigCorp can often mess up and move onto bigger and better things as the organisation is usually big enough to hide the mistakes and it’s often in senior management’s interest to hide their subordinates’ mistakes from the shareholders or taxpayers. In your own enterprise, it’s your own assets at stake.

I’ll get a better share of my rate
A common gripe with skilled workers, like plumbers and lawyers, is they get ripped off by their employer who pockets 3/4 of their hourly rate.

When you start your own operation, you’ll learn the existence of overheads and soon realise why you were only paid a quarter of what you were charged out for.

The only way to get rich is to work for yourself
Kind of sort of true, except there’s a big survivor bias in that saying. The people who do really well out of building a business receive accolades and boasting rights, those who don’t get quietly on with their lives if they are lucky.

In a capitalist society we reward risk, and the biggest risk you can take is setting up your own business. If you’re successful you’ll be rewarded, but the risk of comparative failure is high which is why successful entrepreneurs get more money and accolades than successful managers or politicians.

You’ll work fewer hours
This is probably the greatest myth of all, usually perpetuated by someone selling a multi level marketing scheme. In truth, you’ll work longer hours and many of those will be unpaid as you chase up debts and fill in government paperwork.

On the rare occasions you do get to sit down and catch up on the news, you’ll learn to dread reports that the government is going to “simplify” or “reform” something. This will almost certainly mean more paperwork for you.

Keep in mind that no politician – be they Republican, Democrat, Conservative, Liberal, New Labor or Labor – is “business friendly”. At best they are sympathetic in the way a non-lethal host parasite is to a warm mammal.

You’ll never work in this town again
Tim’s article makes this point well, that if you spend any considerable time working in your own business – be it a startup, consultancy or small business – you’ll find it difficult to get a job in the corporate sector.

I personally found this after 12 years of running a moderately successful business, basically I was told all of that experience was irrelevant to a corporate management position. In big business terms, I’d have made a better career move if I had been driving a bus for those dozen years.

All of this isn’t to say you shouldn’t strike out and build your own business, for many of us it’s the course in life that suits us and what we work best at. But it isn’t the lifestyle for everyone.

We certainly shouldn’t be saying those who aren’t suited to this lifestyle are bad or inferior people; most folk simply don’t want to take the risks and demands on family, finances and nerves that running your own business entails and this is fair, sane attitude to take particularly in a time of uncertainty.

Successful entrepreneurs have certain skill sets and a focus which can be tough on families, friends and children. For many there’s an element timing and luck as well.

For the success of a capitalist society, we need to celebrate and reward the entrepreneurs and risk takers, but before anyone dives into a start up or small business it’s best to understand the risks and costs involved.

Good luck.

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Other peoples’ platforms

The risks in the privately owned web range from obscure terms of service to arbitrary payment problems. This is why you need to control as much of your business’ online presence as possible.

“We have successfully established an online business, but we have run into problems with Ebay (indefinite suspension – unfairly I might add)” wrote Ralph*, an old client.

“We are pretty desperate, as this is now our sole business and we are now without an income.”

The Privately Owned Web

Ralph’s problem is typical of thousands of businesses that rely on one Internet service. Some months back we looked at “Nipplegate”, the story of a Sydney jeweller who had her Facebook page closed down because of her anatomically correct dolls.

All of these services are privately owned with their own terms and conditions along with their own corporate objectives. If you choose to use their product, you have to follow their rules – just like a shopping mall management can order you off their premises because they don’t like the colour of your socks.

The most glaring example of this is Wikileaks where Amazon, Paypal, Mastercard and Visa all threw the whistleblower site off their services for allegedly breaching their terms of services in various obscure ways.

The Terms of Service Trap

A business’ Terms of Service usually feature clauses wide enough to catch even the most honest and diligent business, this is by design as it gives management the excuse to throw anyone who makes their lives difficult, which is exactly what has happened with Wikileaks.

While Ralph’s problem is nothing like the scale of Julian Assange’s, all of these stories illustrate the dangers of relying on one service for your livelihood. Should that service change the way it operates, then any business that relies on that could be broke in hours, as many businesses that rely on Google search results have found.

Most of the Internet is not a public space, almost all of it is privately run along similar lines to that shopping mall or a walled estate.

Ralph and Julian Assange have shown us the limitations and risks of the privately operated web. As citizens and business owners we have to understand these corporations’ objectives are not always the same as ours and make judgements on how we live with the risk of finding ourselves in breach of a Term of Service in our business or personal lives.

We’re still in relatively early days of the net and all of us are still learning. One lesson is clear though, we can’t allow our livelihoods to be held hostage by a small number of big technology companies. Make sure you have alternatives to your online channels.

*Ralph is not his real name

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Dealing with a telco dispute

ten ways to resolve a phone company or Internet problem

Once again, Australian telcos find themselves being criticised by regulators and consumer groups for their poor performance. This time over poor service, complexity of bills and overcharging on “freecall” numbers.

The frustrating thing with all of these complaint is they are nothing new, as shown by an earlier version of this article in 2007.

So the problems with phone and Internet companies remain and many customers, both consumers and businesses, are forced to go through the time wasting dance of dealing with call centres, complex contracts and often finishing with consumer protection organisations like the Telecommunications Industry Ombudsman or other state and Federal authorities.

However there are ways of reducing the problems and improving your chances of resolving issues quickly and on your terms;

Call them

The first step when you realise you have a problem is to call them. This is the quickest and easiest way to resolve things. If you can solve the problem at this point, you will save a lot of time, money and frustration.

When dealing with any call centre, there are a few important things to remember. You must remain polite, you must never make threats and you should note everything. A lot of this can be easier said than done.

Take notes

From the first call, you must take notes. Every time you speak to the call centre you must note the date and time you have made the call, the time they answered, the name of the person you spoke to, what you discussed, what was agreed (if anything) and the time the call ended. Any important discussions should be confirmed in writing.

Be Calm and Polite

At every stage of the process you must stay cool and polite. Do not lose your temper and do not abuse people. If you find the person you are dealing with is rude or provocative, or if find your blood pressure rising, then politely finish the conversation and call back later later.

Don’t Make Threats

Making threats will hurt your argument and draw the process out. Threatening people only makes their attitude harder or locks them into a position where they cannot negotiate with you.

Suing the ISP, complaining to the TIO, going to the media or calling consumer affairs are all options you have available should everything else fail but the aim is to settle the matter quickly and amicably without going to the time and expense of complaining to other authorities.

Do it in writing

It is important to confirm everything in writing. All too often people believe a matter has been settled only to find it is still a problem months or years later. Follow up any important conversations with a letter confirming the details including the time, date and person you discussed the issue with.

This is very important if you have reached an agreement settling a billing dispute. Confirm the details and the agreement in a letter sent by registered post to the organisation, any faxes or emails should be followed up by a letter.

Any emails about the matter should be printed out. Despite the claims of a paperless world, the only thing that really matters in disputes is what is written on paper.

Make sure you keep the full story in writing and this includes printing out emails and web pages.

Follow the ISPs complaint procedure

You may need to start a formal complaint within the organisation’s internal complaints or appeals procedures, the ISP or telco support line should be able to tell you how to do this. For smaller ISPs there may not be any formal procedures. A letter to the senior management may be necessary to get the right person to respond.

Contact the ISPs management

If the ISP doesn’t have a formal dispute procedure, or if it doesn’t respond, forward your complaints with copies of all the supporting documentation to the directors and Managing Director or CEO of the company concerned.

Generally directors and senior managers hate this and will make their displeasure known to the people responsible within their organisation. Again, be polite and respectful, make no threats and express your desire to settle the matter quickly and amicably.

Pay the bill

Some ISPs have a habit of calling in the debt collectors at an early stage. This complicates the matter and can also affect your credit record. Generally, it’s a good idea to pay any disputed amounts and then continue arguing about the facts of the dispute.

If you have direct debits with the ISP it may be necessary to stop these to avoid further disputed debits to your account. Do this in writing to the both the ISP and your bank with a cover letter informing them the direct debit has stopped. If you do this, make sure you are within your contract and you have a backup Internet service as the ISP will almost certainly stop your service immediately.

Complain to the TIO

If you are still unhappy, complain to the Telecommunications Industry Ombudsman. They like you fill in their web complaint form but they will accept phone calls and written complaints.

Keep in mind they will not help you unless you’ve already tried to resolve the problem with the provider, they also won’t assist if you’ve complained to other organisations which is another reason not to make threats earlier in the process.

Further complaints

Despite all of the above, it’s still possible not to have resolved the problem with an ISP. The next step is to complain to your state consumer affairs department or the ACCC. You can also seek advice from your solicitor or local community legal centre.

The aim with any dispute is to settle it quickly and amicably. The important thing is to contact your provider quickly if you have a problem. Internet providers can be difficult to deal with but with a combination of patience, persistence, good record keeping and a cool temper, you can resolve most problems on your terms.

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Why cloud computing isn’t just about savings

Looking for massive cost savings should not the sole reason for choosing a new product.

“Billions of IT savings in the Clouds” trumpeted the Australian Financial Review last week in a front page article on cloud computing that claimed moving services online could “slash technology costs by up to 80 percent”.

If nothing else, those lines lead any IT industry veteran to rise a wry eyebrow; a business that adopts a new platform, technology or vendor solely on the claim of massive cost savings is in for a world of pain, disappointment and heartbreak.

There’s no doubt that cloud computing and software as a service are the IT industry’s growth areas and there are many benefits for the businesses that adopt these technologies. Reduced costs is one of the attractions, but it isn’t the only factor a businesses should consider.

Other aspects are the flexibility of not locking yourself into specific hardware and technology platforms, reduced capital and labour commitments along with improved security, reliability and data protection.

This last point is probably the killer reason why you shouldn’t be looking for 80 percent cost savings with any product. As we discussed a while back, to go onto the cloud you have to trust your supplier has the utmost competence and integrity. A provider who offers nothing but slashed costs will struggle to provide peace of mind.

It’s likely in a few years time only the biggest of the biggest companies will have inhouse IT staff and servers as most business IT operations will run over the internet and through web browsers. Most businesses will think having IT staff on the payroll is as unusual as employing a full time plumber or electrician in the office.

Although we probably won’t get to bank those savings — as we’ve found with the roll out of IT services in the last 20 years, new industries will develop that will soak up the labour and create new cost centres. While today’s services may be 80% percent cheaper, just as today’s computers and mobile phone are 80% cheaper than those of 20 years ago, we’ll be using other services and the price of those will soak up a lot of those savings.

A bigger concern is for the cloud and software as a service industries themselves. If online services are identified as merely a cost cutting product, then these markets are going to be rapidly commoditised with a race to the bottom not dissimilar to what we’ve seen in the PC industry. Which will perversely mean security and reliability conscious businesses will keep their IT in house rather than risk it to a cheap charlie data service.

History’s shown that selling and buying cheap in technology is a mug’s game. So don’t get seduced by claims of ridiculous savings with any technology; be it cloud computing, telecoms services or any other line item. All too often that cheap price or massive saving hides some nasty traps.

Because of the compelling benefits cloud computing is the way businesses will go over the next few years but those who choose a platform simply because it appears 80% cheaper probably won’t be around to tell us about it.

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The real digital divide

We’re often told that there’s a divide between the “digital natives”, those who grown up with computers, and the “digital immigrants”, those who’ve had to learn about computers. In reality this isn’t true, the real digital divide is about being prepared to learn and explore the possibilities being opened up every day by the Internet and computers.

The real digital divide isn’t between the young and the old; it’s between those who are prepared to explore new technologies and those who hide from change.

We’re often told that there’s a divide between the “digital natives”, those who grown up with computers, and the “digital immigrants”, those who’ve had to learn about computers.

In reality this isn’t true, the real digital divide is about being prepared to learn and explore the possibilities being opened up every day by the Internet and computers.

I was reminded of this shortly before Christmas when talking to a group of forty year old business owners who dismissed Internet tools like Twitter and LinkedIn out of hand – “a waste of time” “just for kids” and “I tried and received Chinese spam” being a few of the objections.

The contrast is the Australian Seniors Computer Clubs Association who prove you’re only as young as the computers you tinker with. These seniors, some of whom were retired well before computers became commonplace, are prepared to explore and discover possibilities that change their lives and the lives those around them.

The forty somethings all had successful businesses and they were the first to admit mobile phones, email and websites had changed the way they work. Yet nearly half of them didn’t have a website for their own business; a statistic consistent with business surveys that find almost 50% of small enterprises don’t have a website.

In many respects these businesses and their owners are reminiscent of the handloom weavers of the early 19th Century. At first technology worked in their favour and pushed wages up but as industrialisation continued they found their skills redundant and incomes falling. Eventually their trades and businesses disappeared; which is what will happen to complacent companies and industries in today’s industrial revolution.

A similar thing is happening to society and individuals. While you won’t disappear if you aren’t using the net, those who won’t will find it harder to do pay bills, communicate and simply get things done. Eventually they’ll find themselves marginalised as not being connected will make it harder for family and friends to keep in touch.

All of this is unnecessary, it’s just a matter of being prepared to try and to give something a go. The real digital divide is between those who choose to give things a go and those who don’t.

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Growing your business with Tweetups

Like most social media meetings in any big town these days, people from all walks of life gathered to meet and become more than just a Twitter handle or obscure forum name.

It’s hard to resist the offer of a free sandwich in Sydney’s Hyde Park on a beautiful spring day, so a“tweet up” offering was always going to be successful.

Like most social media meetings in any big town these days, people from all walks of life gathered to meet and become more than just a Twitter handle or obscure forum name.

Any idea that your average internet user is a pasty, overweight, underemployed 20-something is quickly dispelled as you meet all sorts of interesting people who are doing interesting things.

The hundreds of “tweet ups”, coffee mornings and social media dinners across the land are creating new networks which are changing business and society.

This is opposite of the stereotype being used to reinforce the mindset that blames the internet and social networking sites for everything from schoolyard bullying through to street riots and arrested brain development.

Over the last few days we’ve been treated to stream of stories about the views of professors and researchers detailing how the world and our minds are being destroyed by the internet.

My favourite is an English professor currently visiting Australia who claims computer game addled 20-something market traders may be responsible for the global financial crisis.

Perish the thought that good old-fashioned greed and hubris, the cause of every market crash since the Bronze Age, may have had something to do with the GFC.

The weekend press mentioned the professor applying for a study grant from an American university to prove her theory.

If that is true, it’s a shame the she didn’t take the time to check out the Twitter hashtag to join us for a sandwich in Hyde Park.

Had she done that she’d have had a nice sandwich, caught some sun and seen her theory disproved.

She would have met a far more diverse group than a bunch of stuffed shirts huddling in a cosy lunch club, desperately trying to validate their deliberate ignorance of the changing world outside.

It’s those stuffed shirts, along with their newspaper columnist friends, who are isolated. By choosing to demonise the internet and ignore the opportunities social media tools present, they are being left behind in a fast changing world.

The options for entrepreneurs and business owners are clear – you can lock yourself up with the stuffed shirts and rage about your dying business or you can use the net to help your business grow. The choice is yours.

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Lipstick myths

Is the lipstick theory of recession spending really true?

Is the lipstick theory really true? I’ve been hearing a lot about it lately and I’m not so sure.

The “lipstick theory” is people will spend money on small, modest priced luxuries in a downturn to make up for not being able to afford big luxuries.

It’s been used to justify everything from increased fast food sales to Belgain chocolates to expensive beer to, well, lipstick.

I recently heard it used by a software developer as the rationale for investing in a software as a service product.

But is it true?

The Economist isn’t so sure and shows there’s little correlation between past recessions and lipstick sales.

My suspicion is if it was true in the twenties and thirties, it was more because better manufacturing and distribution techniques meant a better, cheaper product could get to the market.

Even if the lipstick theory is true, it’s dangerous to assume your product is the same.

For a start, some lipsticks will do better than others, partly because of marketing and partly because their price points are smarter.

Should your “lipstick” product be successful, it might not make much money for you anyway. In the last recession we saw McDonalds and other fast food chains introduce $1 and $2 meals, we’re seeing a similar trend at the moment with sub $500 computers.

These “recesssion busters” may keep your market share up, but they aren’t going to be particularly profitable. Indeed, for the computer manufacturers, the sub $500 laptops may well be cannibalising what’s left of their profitable product lines.

The reality is a lot of the products that are claiming the “lipstick theory” will save them are really doomed. The vast majority of shops selling expensive chocolate, lingerie, beer and other pricey but non essential products are simply marking time until the effects of the popped bubble reach them.

It’s best to base your business plans on sound evidence rather than blind hope in an idea that may or may not be true and may or may not apply to your products.

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