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Thread: Business

  1. #1
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    Business

    I want to point out 3 things ... people talk of business plans ...capital ... blah blah blah .... I am trying to figue out why I didnt shut down after 5 years as the bank manager suggested ... maybe these points should be considered.

    Point 1 - Staff ... people have thins thing that an employee s just a number and is replaceable at any point ... I have been doing this business thing for a long time deal with many companies ... watched many grow and just as many ... my advice ... when you find that employee who makes a difference in your company ... hold onto them ... we all have a bumps in our journey through life ... sometimes a little guidance and skills development will produce a great employee ... hang onto those ones.

    Point 2 - Customers ... without them there is no business ... however crappy slow paying customer will break and bankrupt you ... as we all know cash flow is king and the number 1 priority in business ... hang onto the "good" customers and make sure you look after them ... offering new customers a reduce rate or contract which looks way better than what your current customers are getting ... will backfire.

    Point 3 - have to leave will be back later to finish
    Comments are based on opinion...not always facts....that's why people use an alias.

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    Diamond Member Blurock's Avatar
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    Ian, I fully agree with you.
    Point 1 If you have an employee with the right attitude, hang on to him. Even if he makes mistakes, he can be trained. Only people who do nothing don't make mistakes.

    Point 2. The purpose of a business is to create a customer. That is where your money comes from!

    I will complete point 3 for you: Cash is king!
    Excellence is not a skill; its an attitude...

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    Diamond Member adrianh's Avatar
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    Myth - "The customer is always right"

    Rubbish - Many customers are idiots.

    Company rules:
    Rule 1. I provide quality products and services to quality customers.
    Rule 2. If I choose not to serve you then refer to rule 1.
    “Why, sometimes I've believed as many as six impossible things before breakfast.”
    ― Lewis Carroll, Alice in Wonderland

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    Silver Member Derlyn's Avatar
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    Quote Originally Posted by ians View Post
    I want to point out 3 things ... people talk of business plans ...capital ... blah blah blah .... I am trying to figue out why I didnt shut down after 5 years as the bank manager suggested ... maybe these points should be considered.

    Point 1 - Staff ... people have thins thing that an employee s just a number and is replaceable at any point ... I have been doing this business thing for a long time deal with many companies ... watched many grow and just as many ... my advice ... when you find that employee who makes a difference in your company ... hold onto them ... we all have a bumps in our journey through life ... sometimes a little guidance and skills development will produce a great employee ... hang onto those ones.

    Point 2 - Customers ... without them there is no business ... however crappy slow paying customer will break and bankrupt you ... as we all know cash flow is king and the number 1 priority in business ... hang onto the "good" customers and make sure you look after them ... offering new customers a reduce rate or contract which looks way better than what your current customers are getting ... will backfire.

    Point 3 - have to leave will be back later to finish
    My point 3 is ..... Never, but never use your own money to do the job. Only the customer's money gets used. Bigger jobs get split into 2 or 3 up front payments. Here the
    emphasis is on up front.

    Peace out ... Derek

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    Diamond Member adrianh's Avatar
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    Quote Originally Posted by Derlyn View Post
    My point 3 is ..... Never, but never use your own money to do the job. Only the customer's money gets used. Bigger jobs get split into 2 or 3 up front payments. Here the
    emphasis is on up front.

    Peace out ... Derek
    That might apply to some businesses but it does not apply to all. I would hazard that this rule actually applies to businesses where work is carried out on the customer's premises.

    1. Hi Fi Corporation does not know who its customers will be thus it has to spend its own money upfront.
    2. I make my large laser cutting customers pay for all the materials and have it delivered to my doorstep - I am not eating off-cuts on odd color materials.
    3. My largest silicone molding customer buys the material up front (They get a good discount because they buy I huge quantities. I am not a bank so I don't sponsor it. If they order too much and it goes off it is not my problem. I make my money from the services that I render i.e. product design, cad, cnc, laser cutting etc.
    4. I ask some of my customers to pay 50% deposits on a very specific task if the job is worth over R10k purely for my cash flow (those product material costs are negligible)
    5. Come to think of it - The only car mechanics that ever ask for upfront payments are backyard mechanics - I have never paid up front to have my car repaired. I get a quote, they fix the car and I pay!

    I think that if one has such terrible cashflow that you have to RELY on upfront payments to get by then you have a serious problem. Up front payments expose you financially because if the job is a total F-Up or if you get sick or whatever then you end up having return the cash.

    Up front payments to cover material costs in some cases is OK. That said, if the plumber wants to charge me so that he can go buy the geyser then I will buy the geyser myself - I am not paying him a 300% markup.

    Progress payments (completed phase payments) are fine provided that cut off points are clearly established.
    “Why, sometimes I've believed as many as six impossible things before breakfast.”
    ― Lewis Carroll, Alice in Wonderland

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    Silver Member Derlyn's Avatar
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    Granted, all businesses are not the same. One cannot compare a mechanic and an electrician. A mechanic has your car as security. You don't pay for the repairs, you don't get your car. Simple. You are then also charged for storage per day while he is waiting for money.

    What security has an electrician or plumber have other than a signed contract ... nothing. That"s why up front has worked for me ever since I was done in about 15 years ago.

    BTW. Neither my clients nor I consider me being a backyard electrician. It's actually because of my method of operation that I do not have a cash flow problem.

    Adrian, your geyser move wont work with me. I do not do any work if the client supplies materials. I do not take kindly to anyone denying me the markup on materials. It reminds me of someone going to the pub with a bottle of brandy or whiskey under their arm. They wont be in there for too long.

    If it's only cheap labour that the prospective new client wants, I point them to the closest traffic lights where they can find all the different " tradesmen " they may need. This happens quite often, but about 50 to 60% of the time those same people end up supporting me on my terms.

    Anyway, almost time to go fishing.
    Have a lekker weekend everyone.

    Peace out ... Derek

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    Diamond Member Justloadit's Avatar
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    In my business, where I use my time and specific design product for the client, a piece of paper signed as an official order is not worth the paper that it is written on. If the customer does not pay and collect, I have then pissed a fair amount of money against the wall.

    I have 2 or 3 established customers who have an account, and issue an order once a quotation has been raised. Everybody else, 50 to 80% up front, with no guarantee of money return if the project goes south, take it or leave it.
    I have to really really choose my next project, as there is no shortage of customers.

    Over the years I have built up a reputation, and out of all the projects, there are 2 projects that went south. In both instances the goal posts kept changing, to the point that it was not viable to continue.
    I also now remember that I mostly only develop projects for myself, because of the continuous goal post movement.
    Victor - Knowledge is a blessing or a curse, your current circumstances make you decide!
    Solar pumping, Solar Geyser & Solar Security lighting solutions - www.microsolve.co.za

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    Diamond Member adrianh's Avatar
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    Quote Originally Posted by Derlyn View Post
    Granted, all businesses are not the same. One cannot compare a mechanic and an electrician. A mechanic has your car as security. You don't pay for the repairs, you don't get your car. Simple. You are then also charged for storage per day while he is waiting for money.

    What security has an electrician or plumber have other than a signed contract ... nothing. That"s why up front has worked for me ever since I was done in about 15 years ago.

    BTW. Neither my clients nor I consider me being a backyard electrician. It's actually because of my method of operation that I do not have a cash flow problem. Derek
    This is the thing - in your line of work you require the upfront payment because the items that you install are on the customer's property which puts you at risk. In my line of work I have the property and IP so my risk is less.
    “Why, sometimes I've believed as many as six impossible things before breakfast.”
    ― Lewis Carroll, Alice in Wonderland

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    Diamond Member adrianh's Avatar
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    There is always the customer that claim they can sell hundreds and you will make lots of money. I learned the hard way that one needs to recover your costs in the beginning and not believe those claims. If they want development work then they pay for development - If they want 100 I will charge them for 90 and give them 10 for free rather than giving a discount because as soon as they get a discount they the only want 2 at the bulk discount.
    “Why, sometimes I've believed as many as six impossible things before breakfast.”
    ― Lewis Carroll, Alice in Wonderland

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    Diamond Member adrianh's Avatar
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    Quote Originally Posted by Derlyn View Post
    Adrian, your geyser move wont work with me. I do not do any work if the client supplies materials. I do not take kindly to anyone denying me the markup on materials. It reminds me of someone going to the pub with a bottle of brandy or whiskey under their arm. They wont be in there for too long.
    I can see this from your perspective under this circumstance: When I send my car to Ford for repairs they won't allow me to supply the brake pads. The service provider would say that they have to vet the quality of the products that they use and as such will only use products that are supplied to them via their own suppliers. (Ford can't risk installing my k@k Chinese pads and then having to take the blame if the brakes fail)

    The geyser is different because I purchase the geyser outright and then I pay a service provider to ONLY install the geyser. I do not expect the installer to take any responsibly for the geyser - I only expect the installer to take responsibility for the work that he carried out. If the geyser fails its my own problem. In essence if you supply the geyser and you take a fat margin then you are providing an extended warrantee on the geyser itself - If the geyser fails then you are responsible.

    This stuff all comes down to this: "Who takes the fall when stuff goes wrong" The problem is that I know from experience that the plumber would take the profit and run and take no responsibility for the geyser even though he made a lot of money out of it.

    That all said, we all have the right to conduct our businesses as we see fit - some companies require deposits, some don't, some supply parts, some don't - it comes down to finding a methodology that works for the particular business and its customers.

    To follow on with your brandy analogy - Some businesses operate like a pub and some like a "bring n braai" - horses for courses....
    “Why, sometimes I've believed as many as six impossible things before breakfast.”
    ― Lewis Carroll, Alice in Wonderland

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