Starting a business

[adrianh]

Adrian I like the way you think. I agree with all your points.

Just like no. 21 to your list.

When you find something wrong on a site or an item a customers brings you especially if it was built or installed by some else, don't make a fuss about, no matter how f$&)( up it is rather just keep quite and offer a solution with a quote. Chances are you will get to fix it, but if you go on about what kak the other person did you might find yourself without work, as you mentioned word gets around.

I agree. I make a point of not shooting the opposition down. I always just say that we serve different markets and that those markets sometimes overlap. I had a interesting one a couple of days ago. I manufacture a kit that will basically change the body of a particular model. The kit is fine but the underlying model is total rubbish and I've had endless trouble with them. There is a product available on the market that is extremely nicely built and really very good quality and is exactly the same product as we build the kit for. I had a customer that really wanted our kit. Given the amount of $h1t that I've had from customers due to the chassis I said to the guy that he would better off buying the other product because it is really good and that my product can't match the quality of the other. We went back and forth about the reason I said that for a bit and he then decided to buy the other one. He came back after having placed the order for the other one and was very taken by the fact that I advised him to rather spend his money elsewhere. I said that I would rather have him buy a good quality product than my product per se.

Maybe this is why I am not filthy rich, I am simply unable to knowingly sell crap to people, even if the crap is something that I make. The product has been removed fro the catalogue so hopefully I won't have to go through the same exercise again.

[Citizen X]

Maybe this is why I am not filthy rich, I am simply unable to knowingly sell crap to people, even if the crap is something that I make. The product has been removed fro the catalogue so hopefully I won't have to go through the same exercise again.

Adrian, you have integrity! Integrity and a good reputation is priceless....

[HR Solutions]

Adrian I lagree with you - We will also not lower our standards for anything ! We have a certain standard and stick to that.

[ians]

Just want to make another point and keep it short because i am not focusing on contracting (something i have done all my life) in this thread more my hobbies/new ventures which are manufacturing.

Talking about big companies or main contractors, you need to be very careful when dealing with them if you are small or a sub contractor. I have heard the phrase " we will see you right on the next project" or "We didnt make any money on this one, but next time" 10 years done the line, their wives are all driving the latest SUV, living in multi million rand houses, kids all in private schools and all us sub contractor suckers are still battling along with the same old scrap bakkie ,being promised the world. You need to make a price and stick to it, when the big company start offering to cover your live out allowance by offering you a place to stay and food etc or transportation to and from site and then the last but biggest chunk, they offer to supply the materials and consumables, you might as well pack up and work for the company because all they are doing is shafting you out of pension, medical aid, end of year bounses, leave pay etc etc.

The lesson to be learnt is if you are self employed, you need to make sure you charge your hourly rate and all the other things that come with it, otherwise you need to increase your rate so that it covers your overheads.

[ians]

Back to business...

Taxes we will eventually get to that, personally i would say get someone in the know to advise you. It may cost a few bob but int he long run, much like using a shopfitter to do all your electrics chances are you gona end coming short.

What are your thoughts about using a credit card to operate the small business?

The fees are minimal - a yearly fee. I never draw cash from the credit card only use it to pay suppliers by card (cost nothing) and get customer to pay directly into the credit card. This is something i am going to inquire about on Saturday.

I have done this with my contracting business, closed all the account and pay by credit card for purchases, this way i make sure the price is right at the time of purchase and not the end of the contract when i do the job card. I lost a lot of money on a fair size project last year because of this. Prices quoted where not invoiced and when i went back to fight with the supplier there were a hundred and one excuses.

[Houses4Rent]

Adrian, you have integrity! Integrity and a good reputation is priceless....

I also managed to built up a good reputation which is the best (and free) marketing ever. If I feel that a prospect's needs can be satisfied by others for less (normal agents) I tell him so rather than pay more for our specialised services. So some then go elsewhere. Fine with me, but its fairly common that they come back to me after they have burnt their fingers elsewhere and then stay with me.

[adrianh]

The lyrics of a song by Toby Keith (strangely enough) has also become a business motto of mine "There is no right way to do the wrong thing" I catch myself often perfecting something that is essentially a waste of time. The most difficult thing for me is to know which is the right thing to spend my time on. The problem I think with being hyper creative is that one tries to design and perfect everything rather than creating and perfecting the correct things for the business and expending the rest of the creativity on other pursuits.

With regard to what JustLoadIt said about working out your required hourly income. I did the exercise and went through the products and I find it striking how easily we could attain those figures if were to set out a very simple plan and stuck to it. I have been told this many times but it never sunk in. My stupid brain needs to work through the process itself to reach the required (obvious) conclusion (that I was told over and over again) This is exactly what I mean about trying to find the right way to do the wrong thing, I have, and keep on designing many many products that don't get sold because there is no plan the cover the basic costs.

So, ians, just like you said, it takes somebody to make a comment that stirs a thought process in your mind to change the way one sees things.

[Justloadit]

Knowing the actual hourly running cost of your company really makes you look at things differently, a meeting here, a phone call there, and all of a sudden you start thinking that this is now being unproductive, whilst I was on the phone with this customer who will never buy from me, just cost me X Rands. You start evaluating every action, to see if what you are about to do is going to cover that cost. Once you get this right, you will see basic improvements on your profit line, off course you must make sure about the collection of your money.

It also fine tunes the way you do business, it makes you sell more aggressively too, and many times takes out the emotional urge to give a discount because the customer asked.

[Houses4Rent]

Yes and no. Whilst I agree one has to watch to stay productive and efficient one can often never predict that a certain action will yield or not yield. E.g. a call to someone who is perceived to never to buy anything might have a friend who might buy a lot. If it would not be for this informative phone call the friend might never have found out about your products. And then same person who never bought might buy one day too when his own circumstances changed.

[Justloadit]

Yes and no. Whilst I agree one has to watch to stay productive and efficient one can often never predict that a certain action will yield or not yield. E.g. a call to someone who is perceived to never to buy anything might have a friend who might buy a lot. If it would not be for this informative phone call the friend might never have found out about your products. And then same person who never bought might buy one day too when his own circumstances changed.

You are now referring to marketing. Completely different to manufacturing work. Many times the client wants to talk to the foreman, and not the sales person.

Marketing is another department, which you allocate a budget. This then also apples how you go about marketing.
Sales is another division, and is easy to measure, sales amount versus cost of selling.