Tuesday Three: 3 ways to improve your business

Spend like you spend, not like a corporate

  1. Stop buying refundable air fares – get the cheapest ones for 1/4 the price and throw them away when unused. It ends up being much cheaper
  2. Set your printers to print default black and white, double sided.
  3. Open up the internet – get rid of the expensive censorship tools that slow everything down and annoy everybody, and replace it with a policy that says “don’t be stupid”. Manage the person not the pipe.
Posted in NZ Business | Tagged , | 6 Comments

So you’ve got a good idea – now what?

I’ve been getting an increasing number of ideas over the transom over the last few weeks. It started before the radio interview last week, accelerated because of that, and tomorrow it seems I’m in the latest issue of Idealog.

It’s really good to receive them, and I enjoy helping out and even starting some businesses. However last week I’ve been a bit slow to reply to some of those messages – and I apologize for that. Some of them I’ve been checking out, others I’ve been thinking through and still others I have just left. I will get back to everyone eventually though.

But there is one problematic category of ideas, and it’s one where I want to give some very strong advice. The note or call I receive will go something like this:

I’ve got a great idea, I’m not going to tell you what it is (at least not without an NDA), but I am going to invest or have already invested a bunch of money into it.

I’ve seen everything from $5000 to close to half a million invested in or required for companies and products that you have never heard of or are not even described. I’m always willing to help people in these situations but they need to be more honest with themselves about the value of the idea. Holding it too close to your chest means the idea won’t be as good, the speed of execution will be much slower and the amount of money invested will be much higher.

Instead here is my take on what to do once you have that wonderful idea for the next big thing.

Before you start

  • Check the competition – If it is a great idea then it may well be done already. Get online and search for the product – and be very persistent. Check different channels to make sure it isn’t being sold already, and make sure also that there isn’t a close substitute. Be very thorough in this and, importantly, keep doing it forever.
  • Share and improve the idea – Shop it around your friends and family, talk to potential customers, experts in the field and determine that it is a good idea. Along the way you’ll hopefully find some people that you respect and that are energised by the concept. Ask them to help. Your idea may be good, but with the assistance of others you can make it great.
    Be flexible with the idea and tweak it as you learn new things. Write it down in a structured manner – and have very crisp and consistent descriptions for the product or business, why it is better and will sell and your path to develop it.
  • Estimate the size of the opportunity, and be tough. This means numbers – how many widgets will you sell, at what price and what margin. It’s important to test your projections against the real world – what does 1000 sales per day really mean per sales outlet, will people actually pay the retail price, what are the wholesale margins in the channel you are using and and so on. Track your business against these numbers.

Starting up

  • Focus on the few. What few things do you need to believe, what do you need to do and and what results do you need to see before you can truly prove that the business will succeed. Write them down. Then spend your time focusing on those things, trying to get to them in the cheapest, fastest way. If you cannot prove something then you may need a leap of faith, but if you disprove something then change tack or move to the next idea.
  • Pay with equity – have some partners and pay them with equity. It’s the best way to save on start-up costs, it means better results as people have genuine interest in seeing the business succeed and it’s a heck of a lot more fun. Stay well away from large suppliers that deal mainly with corporate customers – their fees are far too high and you are a low priority for them. If you are struggling to find the right partners that will work for equity then perhaps there is a hint there, and your idea isn’t The One. Note that you generally need to pay for actual purchases (like raw materials) but work performed in the early stages should be for equity.
  • Don’t spend anything material until you know you will get a return. Great entrepreneurship has very little financial risk, so be miserly until you know it will succeed. Put very little money down at the start, investing only in the critical raw materials or services that you need, and focus on investing your and your partners’ time. Wait for revenues – if the idea and execution is good then there will be plenty of money later.

Growing

  • Be prepared to stop, and stop fast if at any stage it is clear the business will not succeed. You are passionate about your idea, but you also need to be dispassionate enough to exit before you waste too much money. An informal or formal board can help a lot here. If you have already sunk money into a business that isn’t proven, then treat it as such – sunk money that is gone forever. Don’t fool yourself into thinking your new venture is valued at the amount of total investment – look instead at what the profits are and will be.
  • Go full time – a full time CEO is the only way to really drive a business forward. Once you know the idea has legs then quit your other pursuits and focus on growing this business. Or perhaps you are not the right person to be the CEO, so find someone who is and cut them in. Don’t be distracted by the next business idea – that’s pointless until you’ve either made this one work or killed it.
  • Spend as little as possible – don’t pay your self (or anybody for that matter) any more than you need to live – and live frugally. Wait until the business is sustainably making money and then start increasing the salaries of the contributors, eventually to market rates.
Posted in Internet Business, Investing, NZ Business | Tagged , | 10 Comments

Better culture, better people, better economy

It’s the most commented article on The Economist right now, and it’s a fractious topic.

Indian students have recently taken to the streets in protest against some of the worst ethnic-based attacks Australia has seen

The violence sprang to public notice when two Indian men were attacked with screwdrivers in Melbourne last month. One was robbed. Both ended up in hospital.

I don’t want to get into the wheres and wherefores of the topic, but do want to draw comparison between New Zealand and Australia.

Australian society has a pretty strong racist streak compared with New Zealand. It’s a combination of a number of things, but I let’s  it down to the following three.

  • Horrific indigenous population conditions and policies
  • Lack of exposure to non-white cultures – e.g. Aboriginal Australians make up 2.6% of the population
  • Lack of non White Australian (and male) leaders

In New Zealand we are continuously addressing these issues and as a result are far less inclined to have racially oriented violence. That’s not to say we don’t have it, nor that we don’t have racists, but it’s on a scale far below that of Australia. Even PM Kevin Rudd was in denial about the reasons behind the attacks as he:

..dismissed race as a motive, and called the violence “just a regrettable fact of urban life”

For a former diplomat Rudd has really miss-stepped. India is a growing market and power, and Australia isn’t doing their chances of a closer relationship any good:

It has also become a diplomatic embarrassment for Australia, at a time when it has been seeking to boost relations with India to what Stephen Smith, Australia’s foreign minister, calls “the front rank of our international partnerships”. Kumari Selja, India’s tourism minister, has cancelled a planned visit to Australia in July. And Manmohan Singh, the prime minister, has said he is “appalled” at the violence, calling some of it racially motivated.

New Zealand has steadily and deliberately moved over past 25 years to become a fairer, integrated multi-ethnic multi-cultural society. We’ve worked hard –  from the Te Reo programs, to treaty settlements, Maori seats in parliament, Maori broadcasting and so forth. Meanwhile we’ve experienced increased immigration from the Pacific, Africa and several countries in Asia.

As a result we, as a people, are better able to quickly understand, respect and work with foreign cultures. That helps make us even better global travelers and, along with our honest approach, good people to do business with.

Indeed a decent diplomatic corps may market a country as one thing, but just like a branded product, if there is a disconnect between rhetoric and reality then the reality will eventually shine through. New Zealand has always punched above our weight in global politics, and one reason is because our well-raised people are scattered throughout the world demonstrating every day what it is we stand for.

This helps our export driven economy. We are ever-increasing our reach into new markets, especially to the near 2 billion population inside countries that we have or are negotiating Free Trade agreements with. We are thus set up well to successfully do business within these very different societies and cultures.

Australia, in reality, is not that far behind, and this isn’t a win-lose game, but we’ll take any advantage we can get over the West Island.

Posted in Australia Business, NZ Business | Tagged , , , | 5 Comments

Snow job in Greenland

Whitewash

“A West Coast man has lost his feet and a hand to frostbite after surviving three days in an Arctic whiteout.”

Let’s look at the facts here. He had

  1. No EPIRB to locate him if all failed
  2. No Food
  3. No GPS
  4. Not enough fuel
  5. No tent
  6. No other survivial gear

Karamea’s Joseph Gibbons is a lucky man to survive three days near the highest point in Greenland during a storm. He lost some bits of his limbs in the process, but is eager to get back to work in the extreme cold.

Only luck prevented this from becoming a fatal accident. The real question is how the heck did he get into this situation, and more importantly, how the hell did his employer let him get into his situation?

“I went out for what I thought would be a 20 to 30-minute excursion, so I didn’t have any survival gear per se.”

One of the first lessons in extreme conditions is surely never to go out without the right gear. So why wasn’t the gear on the snowmobiles at all times? Why was Joe allowed off base without the minimum equipment? How can you be a contractor to do this sort of work if these basics are not part of the way you operate? Who are these shonky people? Who employed them?

Turns out his employer was an unnamed contractor working for the US Government, and the work was, amazingly,  “researching how camps could be put together to better survive the harsh conditions.”

That mission just makes it even worse. What the hell were the US Government thinking? I sincerely hope that this contractor has been stood down until the reasons behind this debacle are cleared up.

Joseph may be able to claim some compensation from his contractor employer, and by extension, the US Government. He can probably do this regardless of whether he broke the rules or not.

However if he did break the rules for his excursion, then he should never be employed in a safety environment again – and certainly not by that employer (unless he reforms and teaches HSE.)

So whether this was something only he did (his fault) or was systemic (contractor’s fault) or wasn’t against the rules at all (Government fault) it should never happen again. All parties need to do some soul searching here – Joe for going out without the right kit, the contractor for providing a working environment that allowed him to do so and the US Government for employing contractors that allow this sort of thing to happen.

Shame on all of them, and you are a lucky man Joseph Gibbons.

Posted in Business | 1 Comment

Tuesday Three: 3 ways to improve your business

<I pulled this post after posting as I wanted to expand it, but it was already commented on externally – so here it is again.>

Get out there

  1. Use OpenOffice.org as the default office application. Give Microsoft Office only to those that really need extra bells, whistles and TLC.
  2. Meet your customers every day – stand in the supermarket, visit their factory, man the telemarketing lines, blog and tweet with them online.
  3. Keep it safe – take responsibility for the safety of yourself and everyone around you  and work to continuously improve it. Give each other the right to stop work if you see a potentially unsafe act. Accidents can kill people. They can also destroy your business and put you behind bars.
Posted in NZ Business | Tagged , | 1 Comment

Radio NZ interview – How to survive and prosper this recession

I’m just back from an entertaining interview with Kathryn Ryan on the Nine to Noon program.

You can listen to it at Radio NZ: How Businesses Can Survive The Recession (and more)

Links to some things we talked about:

Social Innovation Camp NZ

Electricity microgeneration

  • Refit educating New Zealanders about Feed-in Tariffs (FITs)
  • Micro Generation – Wikipedia entry on what it is all about
  • Powershop – buy your power online now

Gardening
Great opinion piece from influential NYTimes columnist Nicholas Kristoff

Posted in Business, NZ Business | 2 Comments

5 Recent posts that I like – and a new page

I’ll be on Kathryn Ryan’s Nine to Noon program on Radio NZ at about 9:20am Monday 22nd.

There are a few potential topics to cover – including why NZ is a good place to be right now, what businesses can do to manage through the recession and the Social Innovation camp next steps. We’ll see what happens on the day.

For new and newer readers I’ve just put up a page of posts that I like from the last couple of years.

Posts I like.

Here are some good recent ones

Blame directors for failure, CEOs for success

2 shots were fired Self restraint is good

Let’s stop MPs drinking and lawmaking Seriously

Two McKinsey pieces on education – do read them

Well done Green cabs – now how about that website Great comments

Brass Monkey 2009 – a photolog The annual winter bike rally

Posted in Business, Internet Business, Life, NZ Business, Politics