One of my oldest and best customers has a vehicle hire business. He started trading the same time I started and has built something imprtruly impressive. From just a few vans, he now has many hundreds, spread across five depots all over Lincolnshire. On top of all that, he’s also a really nice guy.
We do spare keys for his vans and are always impressed with how new and clean they are when customers hire them. On top of this, his staff wear uniforms, are professional and helpful. I gush about this because it’s rare, and his company stand out by a mile.
However, there’s a problem that every customer see’s, feels, experiences, that really let’s the business down.
His main depot in Lincoln has a standard UPVC door, that’s looks in good condition, but it’s been well used. It’s the original door from when he started out, used by many thousands of people. When you turn the handle, it gives way, as if broken. This sloppy, wobbly handle has been like it for two years. Every customer experiences this, it’s one of the initial contact points, even before meeting the staff.
Does a wobbly handle really matter?
Well, yes I believe it does. I noticed this because the rest is so professional. However, this wobbly handle stands out every time I visit.
We all have wobbly handles is our business, I certainly have them in mine and not just the one. Our reception has seats for customers to sit and wait. The chairs rub on the plaster board wall leaving a gouge along the wall. I see this every day and it would take nothing for me to sort this out. However, I’m blind to it. Likewise, the van has a piece if side skirting missing, the unit door needs painting, but again, I don’t see these anymore.
When you start your business, try and think what your customer will see and hear on contact with you. Will it impress them? Will it make them question whether you care at all about how they see you?
This month is for spring cleaning. I’ll be looking at wobbly handles in every part of my business, it’s the little things that people notice.
Something is happening in Lincoln, maybe around the UK. Today we had further news from the high street that another big name is in trouble. Carpetright, one of the UKs biggest carpet chains is in trouble. It’s been on the cards for a while, and now the mountain of debt has caught up with them. It also seems we have a taste for chocolate, instead of Carpets.
Lincoln is an up and coming city. In a short time, many of the leading brands are opening up here, and with good reason. Firstly there’s the massive investment in the university and the associated technology park. Next, Lincolnshire is the fastest growing county in the UK, property rich southerners are selling up and snapping up bargains throughout the county. So cash is pouring in.
So why are traditional shops such as Carpetright struggling and closing stores? A victim of our change in habits?
The BBC reported last week http://www.bbc.co.uk/news/business-43541990 that the frequency we move house has cut down by a half. We’re staying put, extending our houses instead of moving, and so I’m guessing we just need less carpet in our lives.
However, the good things in life, we still send our money on, including chocolate.
Hotel Chocolat is on it’s way. Despite the closure of Toys R us, Maplin, and now Carpetright, it seems we have spare cash for finest chocolate. This luxury brand is opening soon, and it seems our taste in Lincoln is changing. How long will it last ? Lets wait and see.
If you go it alone, there’s going to be a time, when you need business help. There’s so much to do, it can be overwhelming.
Take this week. We’re approaching my VAT quater, which means that all the invoices we’ve sent and all the bills we’ve received have to be totted up. Then we have to work out how much VAT is due.
Value Added Tax (VAT) is a levy that’s added on by the government, through HMRC. Once you get over a certain turnover, around £80,000, you have to add on tax at the current rate and at the moment that is 20% ( Nice easy maths). When it was 17.5% it was a nightmare!
So this is added on automatically with our software, but then is passed to our accountant. Now VAT and accounts is one area that has to be done correctly. This is the first area I’d recommend you get business help. The penalty for getting it wrong is much more than financial pain. For the first eight years, whenever a brown envelope dropped onto my doormat, my heart sank. I knew it was from the Her Majestys Revenue and Customs (HMRC) and it was normally a demand for unpaid money. When I reached the point where I didn’t want to open them anymore, I knew there was a problem. This is when I decided to get some business help generally.
Now, it’s going to cost money to get help, and this is one of the hardest things to learn when you’re self-employed. Paying someone to do something like book work or accounts or marketing etc, feels like a waste of money. Let’s face it, money is scarce when you start out. But if you’re starting to avoid doing something important, it’s a warning sign.
That’s where we’re up to this month. After trying out so many new things in the business over the last eight years, I realised this weekend, enough is enough. I need some business help. The warning signs were longer days and missing out on things that make me happy. These inclued my family, the pub quiz and Scouts. So if you’re not enjoying it anymore, or overwhelmed, or even scared to even look at something like tax, or accounts, maybe you need help. Go on, stop putting it off, get some help in your business.
If you love space (and I do), you have to admire Elon Musk. Despite being told it would never work, so many times, he has done what any boy dreams of. Making rockets and playing with them like toys.
Being able to strap a Tesla car, including Dummy pilot, and playing David Bowie en-route to Mars surely tells us something. He’s earnt the right to do what he wants, not needing permission or blessing from anyone.
This got me thinking about business, and how much it’s like his reusable rocket that he’s developed. The stages that a rocket goes through are very similar to your journey. Leaving the safety of Her Majesties Armed Forces and start a business on civvy street is will take you on a journey. If you’re thinking about being your own boss, you need to keep one important thing in mind.
Do you have enough rocket fuel?
Elon Musk knows about rocket fuel, having enough and what happens when things go wrong. he’s had so many failures that he acknowledges he was very close to bankruptcy. He used us all his spare cash and was bailed out by a billionaire to carry on the project. So how much rocket fuel, or in the case of business, do you need?
Let’s look at the stages
Building a Rocket
This starts as exciting, but soon becomes frustrating, simply because you just want to get going. You’re going to need money to set-up. How much depends on what you want to do. However, whatever the amount you have in mind, my advice is to double it. The bills have a habit of adding up, little things creep in, and accessories haven’t been allowed for. When I set up my car key business, I estimated I’d need to spend £15,000 on equipment. However, to trade, I needed stock, a software licence, Yellow pages, etc. So, my initial costs were in fact £25,000. Straight away, I’m £10,000 over budget! Who knows the total cost that Elon Musk invested into SpaceX?
The most exciting bit. Just like Elon’s rocket, you have all this money already tied into the launch, money you’ll never get back and the moment you do launch you are now trading. You’ll have your first ever phone call, the first ever customer (I still remember mine), and the it’s up to you and you alone to get on with it.
There’s also a tremendous amount of fuel used on the launch phase, or in the case of business, cash. It’s possible that in the first few weeks and maybe months you’ll not make any profit. This is very simply because you may not have any customers, or if you do, you may be working much slower than necessary, or you may have costs to pay back in the early stages. Unlike a SpaceX, that is in space in minutes, let’s say that you’ll be a few weeks before things settle down into a rhythm. Remember, all this time you’re burning fuel, or cash.
So, you’re off the launchpad and making some money, fantastic, you have a business. The aim now is to focus on getting into orbit. For SpaceX, the orbit will be wherever the satellite needs to be released from, and to get to this point in space, the first stage is released (more of this later). Next, there is a secondary burn and it’s the same with your business.
In fact, this is a common point that businesses fail and can be the saddest of endings for a business owner. The hard work is done, you’re up and running, but just when you can feel it’s starting to work, you’re out of fuel. When the spare cash is all used up, and you can’t find any more funding, you never reach the point at where you reap the rewards.
For you, instead of releasing a satellite, your rewards come from reaching orbit by getting regular customers and profits, and breaking even, after paying your tax bill. Now tax bills and break-even are articles on their own. Once this money has been allowed for, and you have reached the wage that you set yourself at the very start, then your business is self-propelling. Your fuel burn is over, apart from minor course corrections and if there are no emergencies, you won’t need any more cash.
Of course, you’ll still need to invest some money into the business. If you’re a painter and decorator, you’ll need consumables and hand tools. If you’re a plumber, you may need new power tools. For us, we allow at least £10,000 every year for new software and hardware. But if your business is performing correctly, it will generate this extra cash itself. It’s an amazing feeling.
Return to Earth, selling the business.
Remember the first stage rocket, the one that normally is lost into the ocean? Well as you’ll probably have seen, Elon Musk has taken it one stage further. His dream was to make space travel cheaper, by re-using the parts of the rocket that would normally be lost. His very public catalogue of failures must have made the final success even sweeter. On the 21st of December 2015, SpaceX landed its first stage, at Cape Canaveral in a perfect landing, they made history. Likewise, just four months later, they landed on an ocean barge, an amazing feat.
Why do we need to bother with this last stage? Well if you ever want to retire from your business, do something different, or start another business, the aim must be to sell it, and get some money back. Wouldn’t it be good to recoup all the money you invested in the initial rocket build and getting into orbit? Elon Musk certainly has now. By planning ahead, he has something that has real value should he ever want to sell it.
Of course, none of us have plans like SpaceX. However, to get repaid for all the work that it took, will hopefully be your goal, it’s certainly mine. Granted it will take some more fuel, more cash. SpaceX crashed over ten of these landing stages to get the final landing right. Now, they’ve done the hard work, they can save money every time they fly, and they are market leaders in Space Travel.
Lessons from SpaceX
Whether you have plans to build a bigger business or want to build a lifestyle business where money is less important, we can still learn a valuable lesson from Elon Musk and his SpaceX team. You must keep some cash back so that you never run out of fuel. To get so close and to fail through lack of cash would be heart-breaking and devastating financially. Imagine your gratuity money burnt completely and having nothing to show for it.
But more importantly, SpaceX shows us that failure is a part your final success. You should expect it, plan for it and with some hard work and good fortune, you’ll achieve your own orbit, whatever that may be.
At last we got to watch it. Like most families no doubt, when we all get together, we have a stack of favourite films. On top of that, favourite actors, such as Tom Hanks, Matt Damon, Leonardo Dicaprio, to name a few. So at last, I dusted off an old favourite which stars two out of three, ‘Catch me if you can’. However, the tale of two little mice had never struck me as it did tonight.
Two Little Mice
‘Two little mice fell in a bucket of cream. The first mouse quickly gave up and drowned. The second mouse, wouldn’t quit. He struggled so hard that eventually he churned that cream into butter and crawled out. Gentlemen, as of this moment, I am that second mouse’
This is a story that Frank senior tells Frank junior. It’s his account of the struggle and supposed victory against forces that want to undermine and ruin his life as a business owner. He’s clearly proud that he see’s himself as someone who’s beaten the odds. Whilst in truth, he’s clearly fooling himself, it will strike a chord with anyone who’s worked their way out of a hole, when all seemed lost.
I’m one of these two little mice, maybe you are too. Skirting along the edge of a massive overdraft, just about meeting big loan payments, how do we end up in this position? Were we stupid to end up in the bucket of cream? Did we not have the skills to spot the bucket? Is there any way we can learn to spot the common traps that await us as a business owner? Unexpected tax bills, unplanned capital expenditure and emergency replacement of anything can catch us out and drag us down to the point where, there’s simply too much cream, there is no escape.
The good news is that hard work will trump everything in business. It allows us to catch up, make up, and prepare for the days, weeks and months ahead. The ‘Hard work test’ should be the first test that any prospective business owners take. You know yourself if you’re cut out for a life without a wage. You must be honest about whether you want that struggle, that work.
As ex-forces people, how can we prepare our self for the early weeks, months and years in business? Can resettlement from the forces ever prepare us for life as a business owner?
Steve Jobs did it. Elon Musk is doing it. Deliveroo were trying it this very weekend. Are you brave enough to be making tracks in the snow?
Before venturing out, after a heavy snowfall, we’d be stupid not to check the roads first. Is it safe to drive? Are others driving on the roads? What are other people doing? Surely if they’re doing it, then we should be able to.
But are we be brave enough, or stupid enough to be first out in the snow? Are we brave enough to do something with our business that others aren’t doing?
For most of us, we’d rather follow the tracks of others, this makes perfect sense. It’s safer, we have the previous tyre tracks as a guide and we can see they’ve made it safely. There are no wrecked cars, littering the hedgerows or side streets, we’re in safe mode, there’s little risk.
But as a business start-up, we have no choice whether or to be first out. When you take your first call from a customer, when you meet them in person. When you write out your first invoice and when you agree to do the thing you simply don’t know how to do, then you’re first out in the snow. You can read about how to do it, you can plan how you’re going to do it, but eventually, to get anywhere you haven’t been, you have to just set off, making tracks in the snow.
Leaving the forces and starting a business gives us a unique chance to do this. To start something great and to make a difference with the skills we have. The question is, while you’re making plans for your future, are you going to making tracks in the snow?