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PocketWatch On February - 9 - 2011

This is the first in a series of articles that will hopefully educate readers and illuminate the process of doing business in a simple to understand, nuts-and-bolts way.

In the beginning…

Many people these days are either starting a business or are a part of a small business as a partner or original contributor.  The economy is such that many folks do it in self-defense as well as for the “traditional” reasons:  having a great idea, seeing a better way to do somethng they were doing as an employee, or creating a new service or product.

As a Business Consultant, I have worked with dozens and dozens of small and medium sized business, and they all started that way, which is not surprising.  Owners, for the most part, were ordinary folks that for many reasons either “fell into” owning a business or started one in their basement, bedroom, or garage and went from there.  And, as a consultant, I was there for one reason:  the business was in trouble.  Even the owners that were highly educated and experienced business people  – former sales directors, marketing experts, divisional VP’s – were having problems.  And every time, there was a pattern.

Why small businesses get into trouble…

The first thing to know is that there is no place I know of that actually teaches people about how to run a business on a day-to-day, week-to-week basis.  A Bachelor’s degree or an MBA is great, but these programs teach big, generic concepts.  What they don’t teach – and no one does – is how to tell if the bookkeeper is stealing, how to get the most out of your service crews, manage cash flow on a daily basis, motivate shop workers, set a pay scale, properly determine real costs, and set a price that makes sense.  And on and on and on.

These “little” things aren’t a problem when a company is really small, with 2 or 3 employees, but start to spiral out of control as an enterprise gets larger.  The owner(s) are generally there every day, working 10 or 12 hours a day and are a part of every action and decision.  They know where every dollar goes, know their customers, the market, what works and what doesn’t, and take care of it personally.  And this very thing is the core of the problem as the business expands.  It is nearly universal that this micromanagement style is how businesses start and begin to thrive, and that’s ok.  However, what works for a tiny startup definitely does not work for a company that is larger.  Why?

Owner as “The Juggler”…

As a business grows larger, all the things the owner(s) manage become more complex.  To use the juggler analogy, three balls become four, then five, then eight, then ten.  The owner works harder, works faster, hires people, buys technology, adds products or services.  All of these things require more customers, more vendors, more marketing, more expertise.  Things move faster, become more complex, require more time.  And this is where things begin to fall apart, because micromanagement doesn’t work in an environment like that.  It works for a while, and that traps owners into the idea that they are doing ok, and if they work just a little harder, spend a little more time, look at more details, dig in a little harder, tomorrow will be better.  I promise, it won’t.

Small business owners who fail to adapt their management style – and this is the hardest thing they can do because they have had the experience of success doing it one way – will eventually either fail or the business will stagnate at a level they can handle.  Now, I have no problem with an owner who wants to just maintain a certain level of trade.  I do not believe the “grow or die” paradigm that is heard so often.  Do a thing, do it locally, do it well, and stick to what you know works very well.  But even those types of businesses get into other kinds of trouble, mainly from lack of simple skills I will cover in future articles.

Asking the right questions…

In most of my consulting, after the first day or two and once I have a basic understanding of what the problems are (financial, managerial, or both), and I get to have a little rapport with the owner(s), I start to ask some unusual questions.  Before I give you a sampling, let’s go back to the beginning for a moment.

Most entrepreneurs don’t start a business to make a ton of money.  They have a dream aside from providing that perfect service or unique product.  They think about the life that a ton of money might bring, but it’s generally not about the money itself.  Some dreamt of – and still dream of – a vacation home, or a college education for their kids, or building a business that allows several vacations a year with their families, or a sailboat.  The specifics don’t matter… everyone that ever started a business has a dream like that, how they imagine their life will be once they hit some level of success.

And all of that gets buried somewhere along the way as they work harder and harder, try to do more and more.  Their lives are consumed with details and work, and as things start to slip, it gets worse.

So, for all you budding entrepreneurs and small business owners, here’s a question or two for you:

When you thought of starting this business, what did you imagine your life would be like?

What did you dream of having?

Do you have the family or fun time you thought you’d have by this time?

Are you any closer to fulfilling your dreams than when you started?

Answer those questions.  Be honest.

Then, find or make a picture of your dream.  Make it BIG.  Paste it on the wall in your office so you face it every day.  And focus on that dream.  Because that’s what you are in business for.

Not money.  Not fame.  Not respect.

That picture is your true dream.  That’s your true motivation.

Next time, we’ll start to map a path to get you much, much closer to your dream.

It won’t be easy, but it works.  I promise.

Please contact me offline at [email protected] with anycomments, suggestions or ideas for future articles that you may not want to share here.

Written by PocketWatch

I am a small town boy from northern Wisconsin, who grew up in the quintessential American family. Dad was a carpenter, mom stayed home, two brothers and a sister. Our politics, and we were political, was always Democrat. My dad always said all you had to do was to look at what each side was fighting for, and it was easy to see, even as a kid, that Republicans were all about big money and rich businessmen, whereas the Democrats were more about social solutions. I spent 6 years in the US Army in the VietNam era as an electronic instructor for NSA, worked as a Field Engineer for a computer firm based in Massachusetts, spent another few years building paper mills around the world for a firm from Washington state, drove long haul truck for a while, did 10 years of servitude in NYC for a large multinational market research company as the Business Manager, spent some more time on the road as a Business Consultant, and the last bit as the Business Manager for a manufacturing firm here north of Houston. I am trying to start up my own consulting firm using all my experience to help small and medium sized businesses stay out of trouble versus waiting until they get into trouble. No one teaches people how to properly run a business. Business schools and MBA programs really don't. There are very basic nuts and bolts that are either assumed or are ignored, and like the house built on sand, businessmen and entrepreneurs ignore these solid foundations at their peril. (Now retired and doing some substitute teaching at a couple of small K-12 schools here in northern Wisconsin. Living in a small hamlet of 340 people, quiet, peaceful, serene.)

137 Responses so far.

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  1. Plutocrats really suck says:

    jdmn17

    I know exactly what you mean. I was doing consignment for a while and that went nowhere. Then I opened a kiosk in a good location and started making money. I am now trying to break into wholesale and have had some success. There is a market for handmade things, it is a revival of sorts, you just have to go to the right places so you are not competing with crap from China. Trade shows are a great place to start, lots of boutique and shop owners come looking for unique things for their customers and appreciate artists.

    • jdmn17 says:

      Consignment for me was a dark hole. I would take a piece over and they would immediately cover it with dinnerware and table cloths. Good for the dinner ware, bad for the table underneath. Plus everything I do is custom and when I sat down with the owners they wanted to up the fee to 40%. When I balked they suggested I raise the prices. I didn’t want to do that because my clientele have grown used to my price points and I didn’t see why I needed to raise prices across the board for one customer who might get me an order a month. My customer base is very specific. Mostly young people getting their first “real” piece of furniture, mostly “green” so they don’t have a ton of money. People with cabins in the woods who don’t want to pay an arm and leg for something for a second home and last and certainly not least, recently divorced, mostly women in their 40’s and 50’s who want to start over. None of them are high buck buyers. The other thing about consignment is damage (I’d worry about theft but it’s hard to shoplift a seven foot farm table). They would call me and I’d go over to see a huge scratch or scrape, pull the piece, repair it and bring it back. I last one year with a really nice couple but that was it. When I pulled out I sold the two display pieces cheap and left two couples who loved my stuff but didn’t have a ton of money very happy. Since then I’ve gotten three orders from their friends. So it does work out.

  2. MossyOak says:

    Great article PW! Nice to find you here, I always enjoyed your comments on HP. My MBA nephew did a stint processing loans at the Small Business Administration for a few years. When I started up my small green business seven years ago he told me, “The major difference between those who succeed and those who don’t is passion. If you have passion and believe what you are doing is in any way good for the world, that will carry you through the hard times.”

    Had to share that because he was right.

    • PocketWatch says:

      Hey, Mossy! Glad to see you made the boat over here.

      This is always something I wanted to do, and have not found the place, until now.

      If I help just a few people understand business a little better, and maybe get them even 1% closer to success, it will make me happy.

      I’m a teacher at heart, and always have been.

      Part 2 is up, and I warn you, there is homework!

      8)

      • Truth says:

        Hi PW, finally I made it here.

        “I’m a teacher at heart, and have always been”

        Now that’s what I felt all along -- nice that I stumbled upon this quote. But now I’m off to part 2…

  3. jdmn17 says:

    PW

    I meant to write you earlier to thank you for the effort you are putting into these great stories.

    I run a one dude shop -- man but my son is into calling me dude these days because my hair is starting to look like the Dude’s -- I hand build furniture and it’s a wild ride after thirty years of sucking on the corporate teat of bi monthly paychecks and paid health care and vacations.. Then again I’ve never felt as free and the stresses I do encounter are mostly with finding more sources for the reclaimed barn lumber I build with, getting my son to come over and help me flip a twelve foot table top or loading it into the moving van and of course the marketing business side of things. I did have thirty years of marketing experience so that wasn’t so bad but it’s hard at night when you’re pooped to remember or get motivated to go to etsy and update things there and then to my website and update there. That’s one thing for small business guys is the way google rewards your tinkering with higher placements in their search engine. I often make a simple change that takes fifteen minutes just to keep feeding the google animal.

    As for growing. I’ve looked several times at extending my toe into the water of expansion but each time I’ve taken on what seems to be a great apprentice they really can’t cut the work load, or is it just they can’t hack me? Maybe I better revisit that :-)

    Regardless, I do all hand joinery so I get a lot of people who want to learn but they tend to try it, get frustrated and I can tell they are just marking time before they can get back to their power tools. So I think I’m stuck with me, which in the end is fine enough. It means I can’t take on large jobs like the eighty table order I passed on last month because they wanted cheap and fast and hand made and rustic. They didn’t seem to get the inconsistency in their request.

    Regardless, thanks for what you are writing, there are a few people I’m going send here to read it. They think all I do all day is cut a couple of boards, sit around and admire lumber, go in the house at night and sip Merlot.

    If they only knew it is a seven day a week life -- and I don’t for one second regret it. In fact I’m secretly delighted

    • PocketWatch says:

      Thanks.

      I am the son of a master carpenter, and am the only one of three that can use a screwdriver without injury.

      Before the divorce took away my entire woodworking shop, I made all sorts of things. Now, living in an apartment, that is much curtailed, so I reverted to the old methods.

      I made my bedstead completely out of decking materials (5/4 deck lumber, square post spindles, and 4x4’s) all cedar, using a mallet and chisels for making the mortises, and wooden pegs to secure. Not a nail or screw in it.

      Got a couple of tables and a lamp or two handmade the same way as well, so I do understand the time it takes to do things the old-fashioned way. One of my regrets was that, when my ex made off with everything I owned, I had all my dad’s old hand tools. Among them was a 20 piece set of moulding and routing planes, circa 1880, that still worked. I used them all the time. They had to be worth $200 each just as antiques, and I know she sold it all to a bulk auctioneer for a couple of hundred bucks. :: sigh ::

      Anyway, hang in there. I’d love to see your work.

      And, I just posted Part 2. As I promised, this will be hard work, and everything will relate by the end, so happy reading, and Do Your Homework! (Yes, there are assignments!)

      8)

      • jdmn17 says:

        PW

        You can find me on a dot com listing for jeffbuildsfurniture or use the same name at etsy. The etsy site is more current pieces.

      • jdmn17 says:

        I don’t get the call much anymore but I’ve done several pieces for customers sans electricity and with no metal fasteners at all. There is something to be said for it although it takes forever. I still make M&T’s the old fashioned way although I do have some wonderful Japanese hand saws for cutting tenons and dovetails. I was talking to a guy about it at Rockler and told him I could cut a mortise with a chisel as fast as he could with a mortise bit -- naturally I was blowing smoke :-)

        I have a number of old tools I still rely on, including several old planes. The edges hold so well compared to the new steel. Same with chisels. Sad about your woodshop. Sometimes I think there is a vindictive streak in divorce and they go for things they know will hurt the most. When I split with my wife one of the things she wanted and got was a pair of hand made Adirondack chairs. I acted really put out but when I got home I went out and built two that I actually liked better -- butternut instead of cedar. They still sit in my yard and I know it irks her royally I replaced them so easily. Ditto the kitchen ware -- I was the cook and baker -- but I got lucky and found a complete replacement of even better stuff at three estate sales within two months. I don’t even, I get better than even.

        I’ll watch for the homework and am eager to see what you have for ideas.

        Thanks again, the bed sounds awesome. My avatar is a blue farm table with barn siding top turned so the inside faces up. I sell a lot of those although almost entirely outside the state of MN. Go figure that one out,

  4. Plutocrats really suck says:

    Thank you, that was illuminating. I have a very small business. I am an artist and these things frustrate the hell out of me.

    • jdmn17 says:

      Pluto, I had build furniture from reclaimed lumber so I think we have a lot in common. Art in wood, it’s fun but it’s challenging and moreover it’s hard to get people to appreciate that art has to cost something. OHOH, I might start whining.

    • PocketWatch says:

      Hang in there on this series. While I can’t give away the actual tools I use -- it is what I do for a living, after all -- I will certainly outline what people can do for themselves and the principles behind each step. There will be a lot here that you will be able to use in a practical way.

      8)

  5. funksands says:

    Great start PW. I have many many business owner clients and many many FORMER business owner clients.

    The obstacles you describe are very common among both groups.

  6. phread says:

    Bravo, well done Sir. I look forward to more informative articles.

  7. creole-girl says:

    Wonderful Article, Pocketwatch -- as the conversation it provoked illustrates. I am quite gratified that we are in a space here, were we aren’t as wed to pure ideology, and vitrol, but rather, are having a meaningful conversation and acually hearing each other.

    • PocketWatch says:

      Thanks.

      This was exactly what I was hoping for. With our politics so intimately wrapped up in business, it seemed to me that one approach is to educate people about the intricacies of business itself.

      That way, when people talk about, say, the impact of raising or lowering taxes on business, people that have this information could do the math and call bullshit if necessary.

      8)

  8. Parsifals says:

    Thanks for the article and your bio. It’s great to know who is behind a small avatar.

    • PocketWatch says:

      You’re welcome.

      I have been online in one form or another since before the interwebs even existed, and have always just been myself. It’s too much trouble to use some sort of persona or whatever.

      In the famous words of Popeye, “I yam, what I yam!”

      8)

  9. david p canada says:

    Good advice, PocketWatch.

    I really never had any goals other than to provide food and shelter for myself and my family. I just got lucky because the large amount of farmland I bought many years ago for $50-100/acre is now worth $10,000/acre.

    Every small business owner is a gambler whose fear of failure is overwhelmed by the excitement of possible success. Many successful owners have failed numerous times but just keep going back to the well.

    If you don’t like to gamble, get a union job, but don’t resent the people who gambled and won.

    And never, never fly First-class unless someone else is picking up the tab.

    • KB723 says:

      WoooHoo David P… Great Post..

      • david p canada says:

        Thanks, KB.

        I am a realist and I believe you’ve got to play with the cards you’re dealt. When playing poker, don’t envy the higher hand your opponent has, just bluff the hell out of him/her.

        Capitalism is the economic model which allows you to get in the game. But even in the cut-throat game, custom dictates if a player is tapped out, every other player tosses him a couple hundred bucks so he won’t have to beg.

        That is voluntary socialism, the best kind.

        You have much to contribute here and I’m looking forward to it.

        • SueInCa says:

          David
          I think if you look at alot of different people you are going to find they may be conservative in some areas and liberal in others. I am conservative when it comes to finance but liberal when it comes to social justice. I am conservtive when it comes to how I live but liberal towards religious beliefs. I believe that entitlement programs are needed because you cannot count on individuals in our society to be consistent in giving, but I also believe that someone recieving welfare should have to work in some capacity in order to recieve the benefits.

          I think people put too much emphasis on the actual terms rather than the person behind that label.

        • KB723 says:

          David P I will be sure to keep an eye out for you… Glad you may be feeling a bit more at home…

    • jdmn17 says:

      David -- I spent almost 35 years in the medical field, as a clinician and then in the med device industry. I always had a love of antiques and restoring furniture. When I burned out on the med device field I was looking around trying to figure out my life and a friend suggested I start building furniture. The first year was horrid because I was still thinking from the 70’s as to what people liked. I stumbled onto some reclaimed lumber, made a couple of pieces that the varnish was barely dry on when they went out the door and just like that I was building from reclaimed wood. It coincided nicely with the new “green” movement so I was able to catch that wave and keep going. Like you said, I had no preconceptions. I just wanted to be home instead of constantly traveling and I love working with wood. So sometimes you do what you love. The money is not as good, or at least as predictable but in the end I don’t wake up in some strange bed in a strange city and have to orient myself to where I am and what I’m going to do that day. Instead I walk out to my shop and pick up where I left off the day before. And I never fly first class, actually I never fly anymore. I have become MN centered, nationally expanded (to include Canada of course so I can honor my family roots) for travel and purchasing materials. It’s not a huge contribution but I feel it’s important to support North American made products where I can.

      • BigDogMom says:

        jdmn you sound like my husband and I, we both run our own small businesses, we do it out of love and to have time to live….the money that comes is not much, we’re not millionaires, but we are happy and content with what we do.

        I think too many people are scared to go into their own business, because it really is easier to work for someone and have that paycheck and health benifits, with out all the small hassels that owning your own business can have.

        Then there are others who never should go into business for themselves….

        • jdmn17 says:

          I was talking to someone the other day I knew from my other life. They were asking me how I could stand the uncertainty of the income stream (hard to say it’s not scary, esp with the economy being what’s it’s been lately -- things are improving though) and I tried to explain the economics of not having dry cleaning bills and fancy clothes and expenses that never get reimbursed so we moved on and for the next half hour all she did was complain about politics and all that stuff from corporate America, when she left I gave her a long hug, I am sure she had no idea it was a sympathetic hug for her and still being stuck in the grind.

          Money can’t buy you love. It can by a lot of things but not a welcome stress reduced plop onto the pillow every night when you go to bed

          • BigDogMom says:

            Funny that you mention dry cleaning and fancy clothes…came from the Corporate world myself, I think the last time I had anything dry cleaned, was my husbands suit last year, cleaned and pressed for a wedding we were going to!

            I just gave away the last pair of my “Pumps”, held on to them “just in case” I would need them.

            Good Lord did I have a shoe and suit colection…now it’s strictly jeans/casual pants!

            • jdmn17 says:

              Thanks for the tips. It’s so weird to write off things like that since I often end up in them at the grocery looking like Pig Pen from Peanuts with sawdust clinging to me. I do keep track of them but I still can’t shake the guilt, if that’s what to call it. Same thing with phone, internet etc. I put a 2 1/2 car garage workshop out back and that killed me to write off the cost. Guess I’m more conservative than I thought.

            • BigDogMom says:

              @jdmn, did you know that you can write off your jeans, boots and work shirts, whatever you wear to perform your job at you business, as uniforms.

              I don’t do it for myself, but I do write off my husbands workclothes as uniforms since the life expectancy of them is 3 mos…he has a marine fiberglass and paint repair shop…his sneakers last one month…we buy them by the 1/2 dozen.

              Pay for them out of your business checking, just keep the reciepts and charge it to the line item “Uniforms”, all perfectly legal and tax deductable…just don’t go overboard with the writing off in order not to send up a red flag with the IRS.

            • jdmn17 says:

              I sat down and did the math on how much it cost me to have a suit job. I was appalled. Now I have about six pair of jeans, two work, two “nice” and two flannel lined (for MN winters). When the “nice ones get stained -- inevitable, I put them into the work and toss out one of them. Shoes are even better. I just tossed out a half dozen froo froo loafers and bought some new hiking boots. I also tossed out (to the homeless shelter along with the shoes) a couple of large trash bags of dress shirts and ties and about twenty sport coats and suits. Dry cleaning? I can’t remember when I was there last. I should probably look at the one suit I have left since we have moths up here. That would be funny to get ready to wear and have it fall off the hanger

    • Abbyrose86 says:

      David, I think I like you better on this forum! :)

      • david p canada says:

        Backatcha.

        I may have Conservative opinions but I have a sense of social justice.

        For example, I believe capitalism has it’s warts, but with proper regulation it’s the best economic model on Earth.

        But if you guys don’t get single-payer health-care soon…well, there’s trouble a-comin’.

        • phread says:

          proper regulation, which is desperately needed now…

          • jdmn17 says:

            Yeah, I’m in MN and of course ethanol is back in the news here. More subsidies coming. Coupled with the farm subsidies the farmers around here are still happily flying off to Hawaii for two weeks on their government checks while they bitch about entitlement programs. Very tough not to grind my teeth at night

        • Abbyrose86 says:

          I have no problem with conservative opinions. Truly I don’t. What I have a problem is when the conversation turns into a pissing match…You know what I mean? And that what usually gets my goat.

          I actually like the REAL exchange of ideas especially where economics is concerned, that don’t ignore the problems inherent in the system or that don’t pretend that those problems are easily wiped away, with platitudes.

          I like much of what I see being done in Canada. Is it perfect? No, but Canada does seem to have a better understanding of how the mix of socialist ideas and capitalist ones need to work.

          For example, the health care system, as you mentioned.

          I’ve had lots of dealing with Canadian business people over the years. 21 years to be exact. At least 75% of my clients were Canadian businesses. I also have many Canadian colleagues and we have discussed at length the differences in our systems and what we like about each system and what we don’t like.

          It really is interesting to really compare the differences, especially from a business perspective.

          • jdmn17 says:

            Canadians managed to survive the effort of the people of Quebec to separate from the Union. And I suppose bi-lingual is a real hassle out in the western Provinces but all in all that was a crisis and they managed to come together and I give them credit for it. They seemed to get what was at stake. Down here it feels like the US is getting closer and closer to another fragmentation as several states continue to challenge the role of the Federal government. I suppose we’ll have our day of reckoning soon enough

        • jdmn17 says:

          David, Single payer health care is my biggest pet peeve. Why people who have lousy or no health care continue to scream socialism and reject something in their own best interest is beyond me entirely. Like the old folks, of which I am rapidly approaching -- yikes, screaming about cutting government spending and how they hate socialism when they go home to make sure their SS checks are in the mailbox and then go to the clinic on Medicare. How they can whine about stuff and use the services is beyond me.

          • BigDogMom says:

            It’s because those are the ones who have no clue on how the system works, how government works and or how the Corporate Insurance business works…and when you try to explain it to them, they stick their head in the sand. It is all too much for them to understand…there are people out there who truly have no idea how things work in this world.

            I have a brother-in-law who swears that SS, Medicare and Medicaid need to be done away with. Then I ask him how would he like to have his 88 yr. old parents living with him and having to pay for their medical costs and RX’s? Because they ain’t living with me!

            Or his sister, my sister-in-law, who relies on Medicaid to pay for the nursing home she is in and her thrice weekly dialysis…take her off dialysis and she is dead in a matter of 10 days…that woke him up.

            • Abbyrose86 says:

              BigDogMOm, it is amazing how many don’t understand all this.

              I had an argument a few months back with the SO’s sister about business and how everything interrelates, she would have NONE of it..she wouldn’t even listen.

              It all started with a conversation about Walmart….and global trade and how what walmart did affects MORE than just the prices you pay at their store…

              Now mind you, she knows what I do for a living. She works as a customer service rep at a large insurance co. and has a BA degree in English. It’s not that she isn’t intelligent, but she has 0 training or education in anything related to big business.

              I was like, WHY argue with me? Especially because my argument wasn’t just mine, but came from ideas espoused by both Joseph Stiglitz and Paul Krugman?

              As I told her…she was like, WHO? Then I told her who they were and she still insisted on arguing (they are elitists) in her mind!

              Whatever!

              :)

        • jdmn17 says:

          David, I was raised an Eisenhower republican and became a democrat during the Viet Nam war when Nixon told us he was going to make peace and tried to bomb Viet Nam back to the Stone Age. Now I know Ike sort of gave us Joe McCarthy but all in all I think Ike was right about so many things (like beware the MIC, when the top ranking General of the Army tells you to watch out for them I think he was on to something).

          Today he would be tossed to the left. Probably Nixon too (shudder as I say that) and even the grand old icon Ronnie would be way too centrist for most republicans today. The social justice comment you referenced got me a lot of negative responses from some posters on HP because I believe you can be conservative and care about the human condition. But I think you have to dig pretty deep these days for that in the US. Canada has always had a strong conservative movement not founded on religious ideology. Maybe that’s the difference here now, it’s all about catering to the evangelicals. Regardless, looking forward to your perspective.

          • zootliberal says:

            jdmn17 -- a little off topic but when you have a few minutes take a look at this still montage of Vietnam war pics I put together a few years ago. I was working on a project that had access to scores of high quality pics from the National Archives and I couldn’t let the opportunity pass without marrying some of them to one of my favorite Dire Straits songs.

            [vimeo 7117538]

            • jdmn17 says:

              Very cool, brought back some memories of course. We really had bad looking uniforms back then :-)

              And I remember how heavy the equipment was and got by the end of the day.

              Ah gees, going back down the road again. Haven’t been there in a while. Took my son to the Wall two years ago, it still breaks my heart but it was cool because he so saw and felt the things I felt there. He called it a window of energy into another time. Talked about how once you walked in you were sucked in further and further until you got to the corner. Very powerful and he talked to several of the Veterans who were helping people find names. I think he got it though (he was 17 at the time)

          • zootliberal says:

            jdmin, my political arc mirrors yours. I too was raised in a Republican household -- but when I returned from Vietnam I marched right over to the Vietnam Vets Against the War and have not looked back. I know exactly what you mean about Nixon, as I used to rail against him, but nowadays would welcome him as a member of the “loyal opposition.” I think the two parties in general and the Republican party in particular has forgotten the mean of that term: “loyal opposition.” In my naive mind it means we can agree to disagree while at the same time working toward the common goal of making this a better country (and world) for all, and not just the elite.
            BTW, Bush 1 was the last Republican my father voted for, he choose Clinton in 1992, and Gore in 2000, Kerry in 2004 and would hav voted for Obama had he lived to 2008. He too lamented the same.

            • jdmn17 says:

              Zoot, I think a lot of us changed political parties in the late 60’s. We did follow a remarkably similar path. I got back from USMC and was appalled at the antipathy of people back here. On the one hand I suspected a lot of anti-war dudes were getting close to graduation and had drawn a low lottery number and it was a good place to meet women. On the other there were some very sincere people out there. The low lottery numbers seemed to have gravitated to the right where I think they came from originally. It’s one thing to be anti-war when your own ass might be on the line, it’s another to have gotten there either because you lived inside the MIC in the jungle or were raised that war is wrong. I am amazed at how many people our age claim to have been at Woodstock while they hold their TP signs at a rally. For the most part our generation has been a huge disappointment in matters of social justice

          • Silentdances says:

            This is something I agree with. A conservative has a responsibility to their neighbors and community (this also includes ones society).

            • jdmn17 says:

              My mom said (85 and in the antique business since 1950) said the only difference between conservatives and liberals was the conservative would try to get you down to a fair price and a liberal would look but couldn’t afford it. She also said conservatives always wore plain color button down shirts or “Arrow” off the shelf, liberals wore checked dress shirts or flannels. She’s pretty funny about her own generation. I suspect she was real Rosie the riveter type.

        • PocketWatch says:

          What people will find, if they follow these articles all the way through (that’s gonna take some patience, friends), that my not-so-super-secret agenda is to create businesses that have a conscience. A socialistic business model, if you will.

          As far-fetched as that sounds, what I have found out over time and experience, is that businesses that follow this model actually make MORE profits than if they don’t.

          Turns out that a socially responsible business is profitable, and sometimes wildly so!

          Who knew?

          8)

        • BigDogMom says:

          David p canada are you DavidPenner over there? The one who I so respectfully call Mr. Penner?

          The true Northeastern conservatives that I have known in my lifetime, my dear late father being one of them, have always been for social justice and equal rights. They believed that it was not governments place to dictate what a person could and could not do in the privacy of their own homes.

          They were also truly fiscally conservative, they were the Eisenhower Republicans, there was a role for business, but believe business should not be the end all, be all…they wanted a fair playing field.

        • escribacat says:

          I echo what abby said, David. You’re much different! And I agree with your statements. I can’t remember who said this: “Capitalism is the worst system on the planet, except for all the others.”

          • david p canada says:

            This is the real me.

            Over at HP I would spend so much time responding to fanatics, I often sounded like one of them.

            Hey, I like throwing the occasional dart, but if I offend anyone personally, tell me.

            Or throw a dart back, either way it’s OK.

            • Abbyrose86 says:

              I reiterate…I like you better here. :)

            • KB723 says:

              This place is indeed a far stretch from HP Dave… Here you can actually think and take your time posting a comment… It’s not like there are going to be another hundred comments when they finally allow them, and your comment that had meaning, that you wanted folks to read and reply to was now ten pages back.

            • bito says:

              We don’t throw barbs at other posters. Disagree and discuss, but no barbs or darts.
              http://planetpov.com/faq/terms-of-use/

    • Caru says:

      Luck favours the prepared.

      • david p canada says:

        Very true!

        Luck is basically an undeserved reward. And people who are “prepared” seem to be on the receiving end of good fortune more often than not.

        • BigDogMom says:

          My father always said to us growing up, “You make your own luck”…which means you are aware, prepared and ready when the opportunity knocks.

    • PocketWatch says:

      Hi David!

      Wasn’t it Edison who said he learned 10,000 ways NOT to make a lightbulb?

      At any rate, my goal is to offer people an insight on how things really work, and the nuts and bolts of really running a business, not the vague stuff that you get in books and seminars.

      I do this for a living. I have no problem sharing this information. It’s not a secret, but I have never seen anyone, anywhere put it together for public consumption, which frankly pisses me off. Instead they want to sell you this stuff, often to businesses that are already in dire straights.

      I have tools and techniques that I use, and those I need to keep proprietary, but the stuff I intend to talk about in this series, everyone should know, if for no other reason than to recognize BS when they see it out in the world.

      8)

      • david p canada says:

        And I love Wisconsin!

        Many family vacations in and around Wisconsin Dells. Not to mention attending numerous Brewers games where they have the coldest beer and the hottest fans, if you know what I mean (my wife is harumphing, but it’s cool, she’s a Liberal).

        Kudos for engaging small business with your knowledge and insight.

  10. PocketWatch says:

    From Abby:

    “An international business is much more complicated than a domestic one and that failure to understand often hurts those that could really benefit from it, but they don’t want to spend the money to get the accurate help setting themselves up for global commerce.”

    No kidding… and don’t get me started on the tax situation of a company that has offices or permanent sites in other countries. A total nightmare.

    • Abbyrose86 says:

      I so WISH more would come to people like ME, BEFORE they have problems…it’s so much easier to help them get started on the right foot, than it is to fix the messes they create for themselves AFTER the fact!

      I actually make more money off of their screw ups, but it’s such a headache!

      There are so many variables they don’t consider when they embark on a global strategy; culture, taxes, different ways of doing business (what is acceptable in one country is not exactly the same in another!). AND the cost differences, don’t get me started. They often try to use what is standard HERE as costs to measure costs there, and it is not always the same, there are different things to be considered.

      Apples and oranges. TO do an accurate comparison we have to actually analyze ALL the costs involved! Urgh! :)

      • PocketWatch says:

        This is the concept I am trying to sell with my consulting.

        I’d MUCH rather teach a startup how to do it right from the beginning and watch them succeed, than going into a company that has swirled around the drain for a couple of years and now needs drastic action. Thay can’t all be saved.

        When I get into more about the why of being in business and the ethics surrounding that, I will talk some about the responsibility that every business owner should feel and why ‘doing it right’ fulfills that responsibility.

        Tha’s my socialist showing…, and yet it’s sooooo profitable.

        • Abbyrose86 says:

          That was my idea too, when I started my consulting biz…I wanted to get to businesses BEFORE they embarked on a global strategy and help them navigate the social, legal and technical requirements BEFORE they made a mess of things.

          Sadly that isn’t how it has worked. Most of the time, they don’t call until they have a problem and then I have to work with their service providers to fix things…so much more work.

  11. BigDogMom says:

    PW it was great posting with you, not every day I get to talk shop with someone who knows what I am talking about…other than the CPA’s I work with!

    I’m off to one of my clients, one of the many who hired the wrong person for the job @ $10 per hour….need to catch up four months of entries and bank recs.

    I believe having you here at the Planet will be quite inspirational to all of us… :smile:

  12. escribacat says:

    Thanks for the illuminating article, PW. I look forward to reading more. I have been toying with the idea of starting up a small business but what I dread are those long hours and spending my time running the business instead of spending my time making the products that I would be selling. This quandary is why I haven’t made any moves. I have someone else to sell my “products” right now but I am making almost nothing. Arrg!

    • PocketWatch says:

      Hang in there.

      I envision one article a week, maybe two.

      I intend to cover all the bases. However, reading this stuff and implementation are two very different things. I have had clients that I spent 10 weeks with going over everything, and was told two YEARS after the fact, that they FINALLY got what I was trying to say on one subject or another.

      Some of this is very deep chit, and not always apparently important.

      8)

  13. Thefoxislaur says:

    Bravo PW…..your first at bat and you hit a home run. Great article, this site is tailor made for you. I’m enjoying the back and forth between you, Abby and Big Dog, and learning more in the process. Kudos to Maggie for inspiring you:-)

    On the mend here, will be in touch later. Playing catch-up right now, I had to nurse my hard drive yesterday as well.

    • PocketWatch says:

      Sounds like the fun it always is :roll:

      Thanks…

      Looking forward to it. I plan on sticking on this all day to respond to comments.

      8)

      • Thefoxislaur says:

        BigDogMom says:
        02/09/2011 at 8:01 AM

        PW if you were closer in area, I would highly recommend you to one of my newer clients, trying to teach them the basics of business management is making me fall further and further behind in their bookkeeping…they have a great product and it has become very successful since being featured on the Oprah show. They just can’t keep up with the demand, I feel as if I go two steps forward and 5 back with them.

        I know this isn’t a jobs board for solicitation, but your website and CD idea sounds like something that could work. The off site networking from here has real possibilities, that much I can tell. I see some very promising things as a result of your articles and educating us.

        • PocketWatch says:

          I spoke with the “powers that be” here the first day I got here and proposed this series. I dicussed this possibility, and as long as the series isn’t just a commercial for my business, they said ok, and I am trying my best to make it that way.

          my email is [email protected]

          • Thefoxislaur says:

            IMO, you succeeded, you are upfront from the get go, and networking outside of here is a win win for all involved.

            • PocketWatch says:

              I really need to ask someone how to put that email into a tag or whatever at the bottom of every article… that was mentioned when I discussed this with the leaders of the pack here, but I don’t know how. Still learning the ropes

              8)

            • bito says:

              PW, on the faq page there is the html code to link words.

              ADDING LINKS IN COMMENTS – Our site automatically turns any URL you type or paste in a comment into a link so there’s nothing you have to do. If you would like to use a word or phrase in your comment as a link instead of showing the URL, here is an example:

              This is a link that you can click.

              Appears in a comment like this:

              This is a link that you can click.

              The URL that this link will send people to is “http”//planetpov.com”. Whatever is typed after the URL ( in this case, “This is a link”) will be the words that are the link and the “/a” ends the link so whatever words appear after it will appear as normal text.

        • BigDogMom says:

          Thanx Fox, PW contact Adlib and he will give you my e-mail address or you could Facebook me, you will recognize my av on the Planet’s page, gotta run now, will keep in touch.

  14. PocketWatch says:

    2garden says:

    They could not afford to hire another person Abby.

    ——--

    I’m bringing this up to the top because it’s important.

    Let’s say we are dealing with a 3 man shop of some kind, an owner and 2 employees, and the owner is handling all critical aspects of the business, the employees are just workers, assembling stuff or providing the service.

    Let’s assume that sales are $1m a year.

    Question: What is the owner’s time worth per hour?

    Answer: Divide $1m by 2080 (the number of hours in a year at 40 hours a week), or 4160, an 80 hour week.

    It comes out to $480 an hour, or $240 an hour.

    What is a $480 an hour “employee” doing? Should they be doing paperwork? Or should they be going out and promoting the business?

    • Abbyrose86 says:

      I agree PW.

      I don’t think many really think through the amount of money that not hiring the proper people really costs them in the long run.

      Take my example for instance of having a $10 an hour receptionist handling import/export paperwork, who doesn’t prepare the paperwork properly; say the company is shipping from Hamilton Ont. Canada, to Detroit MI….

      First the driver is held up at customs (The trucking company charges a per hour rate for delays)SO NOW there is an additional cost for the freight handling. NEXT there will be an additional charge from the customs broker for handling the problem (above their normal service) Another added cost. NEXT Customs will ding their compliance rate for the error, which will cause delays in future shipments. NEXT Customs issue a fine for the mistake, (this can be up to a year later) Which WILL lead to more delays on future shipments. NEXT the consignee will be angry because the freight was late…possibly taking their business elsewhere.

      The costs sometimes are not as easy to recognize, but are there.

      SO paying someone who doesn’t know what they are doing, $10 to do the paperwork, could end up costing a minimum of $500 or MUCH more. So wouldn’t it make more sense to hire a professional to begin with? AND if you are too small and REALLY can’t afford someone to do that for you, then perhaps that should not be part of your business yet.

      • PocketWatch says:

        Another basic priciple that goes with this concept is proper costing.

        I will cover this in detail, but I need to say here that most businesses have absolutely no idea what things really cost. We are touching on that, but costs, and therefore pricing is something that needs to be dealt with very carefully.

        Many companies, even big ones, like to bury “downstream” costs like what we are talking about in Overhead rather than the actual Costs of Goods. A very bad idea.

        • Abbyrose86 says:

          OH my gosh…YES…I couldn’t agree more, they bury the real cost.

        • BigDogMom says:

          A lot of my clients don’t even understand what “Overhead” means, let alone COG’s…

          PW if you were closer in area, I would highly recommend you to one of my newer clients, trying to teach them the basics of business management is making me fall further and further behind in their bookkeeping…they have a great product and it has become very successful since being featured on the Oprah show. They just can’t keep up with the demand, I feel as if I go two steps forward and 5 back with them.

          • PocketWatch says:

            I spoke with AdLib (I think) when I first proposed this series, and discussed this possibility. They were ok with it.

            I am very reasonable compared to large consulting firms. All expenses (travel, motels, per diem) and $100 an hour, minimum one day, paid by company check at the end of every week.

            Email me at [email protected] if you think they would be interested.

      • BigDogMom says:

        See my post below to 2garden, in the same vein as your post Abby, sometime it’s cheaper, with less agrevation, in the long run to hire an expert in the field.

        Right now, three out of the five clients I have, I’m cleaning up from the “so-called” bookkeeper that they hired at $10 per hour. Now it is costing them more for me to spend many hours untangling what this person has done or not done.

        • Abbyrose86 says:

          I’ve seen that happen myself. “It is a pennywise pound foolish” thing that many small companies fall victim too.

          I for one, AM a huge believer in hiring CPA’s. It’s just not worth it to not have competent accounting help, in the long run!

        • PocketWatch says:

          My solution, as you will see, is to establish a careful and rational Chart of Accounts, then lock it down (QuickBooks and Peachtree have this feature). No one but the Owner gets to add or delete accounts, and careful looks once a week or twice a month at the outside makes for an easy time of it by the CPA.

          If you do that, you CAN get by with a $10 bookkeeper as long as the CPA does an audit every quarter.

          Internal controls…

          • BigDogMom says:

            Many of these $10 an hour bookkeepers have not been taught Accounting Theory, there is a reason we do what we do. We understand the consequences of why we make the entries the way we do.

            Many of them just do without knowing why they do it, they push paper. They have no clue that making one entry wrong will cause a cascading effect of errors that take a while to untangle.

            Most $10 hr Bookkeepers can work within QB, but Peachtree is too advanced for them since you cannot go back and change entries, Peachtree has realtime posting, you need to correct things with a journal entry.

            What really throws them are the balance sheet accounts such as Sales Tax Payable, Undeposited Funds, A/P and P/R Taxes Payable.

            • PocketWatch says:

              I agree. I recommend QuickBooks used the way I describe, but am willing and do not mind telling people they can actually use Quicken or pencil and paper to keep accounts.

              Most small businesses don’t really need the Balance Sheet if they have a CPA that will make those entries in a timely fashion and do the payments for them.

              In reality, making sure to accurately track Sales, Costs of Goods, and Overhead (G&A) are good enough to manage things day to day or month to month.

              You don’t really need double-entry bookkeeping to do that, assuming you have someone making sure that all the laws and regulations are taken care of by someone that knows what to do.

              I also always recommend a payroll service. It’s generally cheap and easy, and they guarantee the calculations and make the payments.

      • PocketWatch says:

        Or, as I understand it (not an expert and will defer to your expertise), they could hire a freight forwarder to handle things any time there is a shipment that crosses international borders.

        Yes?

        • Abbyrose86 says:

          Not really, that’s the thinking that gets them in trouble.

          The importer of record, is the responsible party REGARDLESS of who handles the paperwork for them. The importer of record is the one who holds the bond for the shipment…no reputable forwarder will take that responsibility, the fines are too great.

          Compliance and due diligence is the name of the game. If an importer/exporter is not doing that, it doesn’t matter who they hire. It’s all part of that policing themselves thing…BUT the anti terrorism initiatives added TEETH to self policing.

          Most freight forwarders are no better in that they have the paperwork filled out by low level clerks.

          The only freight forwarders that are good for international are those who have a customs brokerage arm.

          • PocketWatch says:

            Good to know. Maybe I was thinking of customs brokers. Again, haven’t had to deal much with that.

            • Abbyrose86 says:

              Probably. Most Brokers won’t use their bond either anymore. Liability is too great.

              It’s interesting because with globalization, our services are more important than over in the global supply chain and those of us in the ‘trade’ have really seen our value rise. We are one of the few industries to have made out due to globalization.

              Sadly though, too many small companies, think it’s easier than it is to go global and get in trouble before they get to reap any rewards.

              An effective global business strategy is ESSENTIAL to have in place BEFORE attempting to go global, that is often lacking in many small businesses.

              They get mislead by UPS ads and media hype.

              An international business is much more complicated than a domestic one and that failure to understand often hurts those that could really benefit from it, but they don’t want to spend the money to get the accurate help setting themselves up for global commerce.


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