Byron Kalies

First appeared in ‘Home Business’ (Australia)

Introduction

So, you’re thinking of starting a new business?

First the doom and gloom;

the statistics - Some figures suggest that 93% of craft businesses fail in their first year, and of the 7% that survive only half of those will make it past 5 years;

the money - There is every likelihood of you not having a regular salary for a few tears;

the time - There will be occasions, especially early on, when you will be exhausted having worked a 100 hour week.

On the positive side however you are your own boss. Really, you are your own boss. There’s no-one telling you what to do, when to work, when to take holidays, when to go home.

Seems a good deal to me.

So what do you need to do that could help you survive? There are a number of steps you need to go through before you start selling and recouping some of your outlay. These steps are the planning stage and are vital. A great many businesses that fail ignore these steps and jump straight into the action - the ‘doing’ stage and regret it. It’s understandable but it is a mistake – be patient. So, do the planning and thinking first, before things go wrong. There is a good deal of financial and legal help out there available to you. There are articles on business plans, cost benefit analyses, market strategies, cash flow matrices, etc. all freely available. These articles are written by far more qualified people than me. My advice would be to read them if that’s your style and try to relate them to your business on the most practical level you can. If there is something you really can’t do - the financial or legal implications of starting a business springs to mind - get the best advice you can afford.

What I’ll be looking at are the personal implications for you. Psychologically you need to be strong and determined. You need to be confident and determined. This will not always be as straightforward as it seems. There will be times when you’re tired, broke, fed up. These are the times when you really need to be sure of a few things;

Idea

Number one - You need an idea. It’s not enough to want to do ’something’. You need an idea and you really need to believe in it yourself. This will be a large part of your life for a long time so if you have any serious doubts about it early on - have a rethink. Do a little research on your idea. Find out about competitors, opportunities. Get some information on a range of aspects. Talk to people. Carry out some basic research. However, it’s important not to get too bogged down in the detail. One of the traits of successful entrepreneurs is their ability not to over-analyse. They are frequently confident enough to go for something before all the results are in. What helps a great deal though is their ability to adapt their ideas, stay flexible and keep constantly alert.

Values

This is the key to setting up your business. You need a strong set of values and beliefs. To help this you should sit down and ask yourself a few very difficult questions;

Vision - What would success look like? Where would you like to be in 3 years time? What are the values you have? What won’t you compromise on?

Why do you want to run your own business?

What are you go at?

What aren’t you good at?

What are you like when things aren’t going well?

Have you people who can help you?

Techniques

You need to be clear about exactly what business you are in and everything about your business. I was amazed recently to hear a leading figure for McDonald’s stating that McDonald were in the retail business. On further thought I realised that if people stopped buying McDonald’s meals tomorrow they would still survive. Their restaurants are all placed in extremely marketable locations.

Parker Pens had a meeting a number of years ago when they were trying to compete with cheap pens and realised they weren’t in the ‘pen business’ at all. They understood that their main competition wasn’t Bic but bracelets. Think about it. When did you last buy, or receive a Parker pen. I would guess it was some kind of gift, or present. Realising this totally transformed parker Pen’s mindset. Instead of trying to cut costs to compete withy cheap pens they spent more and added nice boxes, ribbons and marketing to help their products compete in the gift business. What business are you in?

If you know what business you’re in you should know who your customers will be shouldn’t you? Use this fun exercise with any trusted colleagues to gain some interesting insights;

Write the name of any customers, or potential customers on post-it notes. These customers can be grouped however you want to; “Mr. Smith”, “students”, “men with spare money who like football”, “ex-criminals who eat chicken” , etc.. List them in whatever way makes this real to you.

The next stage is to draw a simple 2 by 2 matrix with INTEREST (HIGH to LOW) on the Y axis and DISPOSABLE INCOME (LOW to HIGH) on the X axis.

You’ll then have 4 areas:

HIGH INTEREST / LOW DISPOSABLE INTEREST,

HIGH INTEREST / HIGH DISPOSABLE INTEREST,

LOW INTEREST / LOW DISPOSABLE INTEREST,

LOW INTEREST / HIGH DISPOSABLE INTEREST.

Now place the postits in the relevant sections. This part of the exercise, in itself often reveals some interesting insights as you discuss where certain groups of customers, or potential customers, sit.

Having completed this focus on the right hand side of the grid. These are the people with the money. The people who are highly interested and have a high disposable income should be customers already – if they’re not then make sure they are tomorrow.

Then focus on the group with high disposable income who are not interested. What would it take to interest these people? Do they know about you? Where do they go? What do you need to do to get them to hear about your product?

On the other side of the grid take notice of these people and keep them informed – especially the group with a low disposable income – who knows they may get money soon, but don’t spend too much time and resource on them. You simply can’t afford to.

This simple, fun process should help you target your marketing. One other point – you need to repeat this process regularly – people move and new customers emerge – it’s very useful.

Conclusion

So, on the one hand it’s hard work, incredibly risky, guaranteed sleepless nights for little money – certainly in the beginning. On the other hand you haven’t got a boss. Still seems a great idea to me.

First appeared in ‘Family Business’ (U.S.A.)

As a family business owner, you’re usually pressed for time. More often than not, the problems stem from the very reason you decided to set up the business in the first place — to work with your family.

Even though you own the company, you never have time for anything you really want to do. You spend your working hours surrounded by family, but there’s no quality in it — you never seem to talk about anything significant. When you see your children, it’s only to take them somewhere or bring them back.

What can you do about this? In my view, time management training is not the solution. The books are generally dry as dust — suggestions for time logging, impractical hints for dealing with telephone calls, e-mail tips that assume you’re about 12 years old. None of them seem to work.

Instead, try this exercise. Imagine that you’re a guest at your own funeral. One by one, people you love get up and talk about you and your contribution to the world. What do they say? I can bet all the money in my pocket they won’t be wishing you’d spent more time at your desk.

Next, look at the scenario slightly differently. How would you like to be remembered? That’s your starter. Don’t worry if you haven’t got all the answers (or any of them) yet. As long as you’ve started to think about it, you’re on the right track.

The key exercise comes from Stephen Covey. Imagine a bucket. Put three or four big rocks in. Is the bucket full? “No,” you reply. Put some smaller rocks in to fill the gaps. Is it full now? “Not yet.” So add some sand, then some water. Now it’s full.

So what’s the lesson here? It has to do with the order. What would happen if you’d reversed it? Put the water in first, then the sand, then the small rocks. There would be no room for the big rocks. These big rocks are the important things in your life. You must schedule them first. Don’t try to squeeze them in after arranging the water (pointless meetings), sand (unnecessary travel) or small rocks (meetings that take three times as long as needed because no one is properly prepared). Once these things are scheduled, fit the rest of your work around them.

There are lots of hints about time logs, to-do lists, phone calls, meetings, e-mails and paperwork. Have a look at each one — then discount 80% of them. If you’ve heard of them but are still not following them, my guess is you never will. If they are new and intriguing, try them.

But never forget the big picture. Why save ten minutes handling paperwork if you’re only going to spend it trawling through useless e-mails? Remember: You can’t save time; you have only so much of it. You know that. So now, what do you want to be remembered for?

First appeared in ‘Craftsman’ (U.K.)

So, you’ve spent time and energy to craft the most beautiful product yet you still go home with most of your stock. How does that happen?

Maybe you need to start looking at how you sell, or don’t sell. This is generally not a comfortable aspect for many craft workers. It’s very rare for anyone to have a combination of the patience, highly concentrated introspection needed to craft and the extravert, extremely sociable skills that makes it easier to sell. I contend that this is fine. Selling is a technique that can be learnt. There are, of course, personalities better suited to selling, but fundamentally it’s all about three things - your product, you and the customer. The first two aspects you have total control over. The third element is, to some extent, out of your control. However if the first two elements are in place you definitely have a lot more of an influence on the third.

This is the cause of a great deal of stress amongst craft workers. I would contend that it’s not so much the selling, the product, the market - fundamentally it’s to do with control. So much stress comes from a lack of control. In formula one racing the most stressed the driver gets isn’t when they’re overtaking, taking 130 miles per hour turns, or entering a blind tunnel. In these circumstances they’re in control. The most stressful they feel is in the pits when they’re refuelling. Here they have no control.

To start at the beginning - you’ve got to get your product totally under your control. By this I mean that you’ve got to be clear about exactly what it’s worth. You will gain so much confidence from this that it’ll make the selling a lot easier. You’ll know the difference better people selling products they know and love and people selling products they’re just paid to sell. Sit down and work out exactly how much your work costs - and really how much it costs. This should include your time, rent, others’ time as well as the cost of materials. Many people don’t do this, under-price and rapidly end up frustrated, broke and out of business. You are a skilled worker and should be paid as such. So often I hear of craftspeople under-pricing themselves with a huge list of excuses. It doesn’t work at all in the long term.

There must be a note of realism here though. Some of the costs are non-negotiable to a large extent - rent, cost of material, etc. However the principle cost - your time - is very much in your control and negotiable. Be realistic about your hourly rate. You don’t work in an office, you haven’t a boss - how much is that worth to you? I know a lot of books will give you complicated formulae for calculating cost based on 2.5 times material plus hourly rate of £20 which gives a ridiculous cost. I’ve seen craft workers try to sell at these prices and fail. So, realistically ask yourself how much are you willing to work for.

Once you’ve established a fair price that you’re comfortable with that’s your minimum. Now take an objective look at each product and decide how much you would pay for it. If you can get someone else (ideally an expert) to help you, so much the better. If this figure is greater than your first figure (and 99 times out of a hundred it will be) then these are your negotiation limits. This means you can sell your product for anything between your minimum and how much you’d pay for it. I would suggest you price it at the upper limit and be prepared to negotiate to your minimum, if necessary. However, the minimum is the minimum. Unless there are overpowering reasons you don’t go below this. This is a fair price.

For the one in a hundred case where the estimate is less than the cost there is basically one good reason; your costs are too high. If your costs are too high then look for ways of lowering the costs. This could involve looking at your whole process for ways to make economies. This doesn’t mean cutting quality. Your work is unique. However what craft workers sometimes take this to mean is that each item has to be individually crafted from beginning to end, one at a time. This isn’t my understanding. If you’re making 20 items you don’t need to make each step of each item in sequence. If you can make the basics for each item in one batch then spend the time finishing each item uniquely, this to me is unique. If you can’t cut costs (and again, unless there’s an overpowering reason) you really need to stop producing it. Look for other options.

You also need to establish what your business values are. This doesn’t mean you have to write a huge list of impossible ideals and a mission statement aspiring to be the best in the world. It’s not that at all. All you need to do is to identify what you will and won’t stand for. These are the things that are important to you and your business. For instance if you have a value about environmental issues - then only use environmental friendly material - always. The trick with values is that they’re yours and you should only agree values you totally believe. If you really believe that people are good, honest, decent and you should always treat people this way, then make sure your business lives up to these values. Signs such as; “Please don’t touch the pottery”, “All breakages must be paid for”, “Only 2 school children allowed in at one time”, “Deposits needed on all items” may all have sensible business reasons but they’re not aligned to your values. I would argue that rather than save you money in breakages, lost deposits it will actually lose you money as you’ll put off a percentage of potential customers. That’s the other angle - values aren’t ’soft’. They make good business sense.

Selling

Now armed with this you’re ready to start selling. There are 1001 books on selling that are all wrong. When you sell you shouldn’t try to be someone else - you should be yourself. It’s frequently said that people don’t buy things - they buy from people. Well, actually they buy from people they like. So be yourself and (try to) relax. You are the one that knows about the product. No-one can argue with you. For once in your life you are the world’s leading expert on something. Use that knowledge. You cannot be wrong.

I have one quick tip, and one real frustration as a customer, on selling. Most people know that 80% of communication comes from body language. Yet when I’m at craft shows, stalls, shops I’m staggered with the amount of people selling who are sitting, reading, or talking to others for minutes on end, usually complaining about something, or someone. This is a job after all. It is important to be professional at all times. If you’re selling you need to get the right balance between being totally fed up and being overpowering and excited about everything. Show that you’re available if necessary, but allow people space and time to look at products carefully and quietly.

If there is one key to selling above all others it’s the ability to listen. People absolutely adore being listened to. Instead of haranguing people and telling them how wonderful your product is and how much time and effort you’ve spend crafting it relax and listen.

Even better - encourage people to talk - ask questions, There’s a particularly useful technique that you can use that can help. Don’t use it exclusively - it’s a tool you can use just like any other. It can be used for good or for evil.

What this technique involves is asking a series of questions to determine the requirements of the buyer - exactly what they are looking for, how willing there are to buy from you, etc…

The S in the SPIN standing for Situation questions. Ask people about the situation they are in at the moment. If they are looking at your work it would be fair to assume that they are interested. Ask this. Ask about the type of craft they usually buy; what in particular do they like? You need to do this in a non-threatening, non-in-your-face selling way. If people are looking at your work there’s already some level of interest - you need to tease this out. Rather like a fisherman. Yet this mustn’t be in a manipulative way. If you’re sure of your values and the value of your work it’s a matter of making it as easy as possible for the customer to buy from you.

The P stands for Problem questions. ‘Problem’ here would seem a little harsh. People buy craft not because they have a problem, as they may have with a leaky tap, or broken washing machine, but rather they because would like to buy something. The problem could be the reason they want to buy something. Perhaps it’s a birthday present, something they’ve seen they quite like but can’t afford at present. Talk and listen and encourage them to open up to you. If it’s a present for someone else for instance and you realise your products aren’t right -tell them. Advice them of other places they could go. You may not get a sale today but guaranteed you’ve a lot more sales and employed a great champion to tell people about you.

I is for Implication questions. What would happen if they didn’t buy the product they’re interested in? This is where you really negotiate and reconcile differences. If they would like to buy something that’s too expensive look at the options; can they buy it later, can you produce something within their price range, etc… Be open and flexible.

The final part is the Needs questions. What is it that they need to do now? The emphasise is on them to take some action. This is far more effective that you doing something. They will take ownership, get things moving and come up with more creative solutions than you ever could.

As a customer yourself you know what turns you off; high pressure selling, no time for reflection, being forced to choose. Don’t put your customers in this position. In hard line selling there’s a technique known as “The take away close”. In this the manipulative seller waits until the buyer is deciding whether to buy or not and if they are wavering they say something like “This deal’s only available today”, or “I’ve someone else to see now who are really interested in this property”. The aim of this, of course, is to force you to decide right now. It looks obvious and cynical when written down yet works when you’re involved in a long selling negotiation. It works but the cost is too great. Once people realise they’ve been forced into a position they resent it and resent you. You may well sell one extra item but you’ll never see that customer again and they’ll tell ten others who will tell ten others, etc…

So, you deal with customers in an adult to adult discussion. If they are interested make it easier for them. They may want to go away and think about it. Fine give them the time and space to do that. The one thing guaranteed to fail is putting people under pressure to make a choice.

First appeared in ‘Craftsman’ (U.K.)

Craft Workers get to communicate a great deal and in a variety of formats. They get to communicate with customers, colleagues, suppliers, bank managers, etc. Yet I would bet all the money in my pocket that the amount of training or coaching they’ve received would be approaching zero. I guess it’s uncomfortable for most workers, who (and I know I’m making a sweeping generalisation here) like spending a fair amount of time on their own, doing what they do best, creating things. However communication is vital and it makes little difference to your bank balance or self esteem if you’ve created the best piece of origami in the world if you can’t sell it. To sell anything you need to communicate, so here’s a useful piece of advice to help;

Have you ever been in this situation? -

“Yes of course I’ll be able to do that for you,” you’ll say. Whether it’s a sale, a commission, an offer to help someone else move house, anything. Then you’ll spend the next three weeks worrying about what you’ve agreed to, how you’ll find the time to do it and ultimately how you can get out of it.

When you negotiate, discuss, or agree to do something you need to go through a strict process. It may seem hard and time consuming but trust me, when you get into the habit it’ll save you so much time and anxiety that you’ll wonder how you survived before.

The truly effective negotiators have learnt to handle this part of a conversation extremely effectively. They communicate skilfully by talking and listening and ’staying in the conversation’ until they are totally sure of the goal. This can be difficult. How often have you been introduced to someone and not caught their name? Do you ask them to repeat it? How often? A skilled communicator should ask as often as it takes to really understand. We all know the problems if we don’t do this - We spend the rest of the evening avoiding the person, or feeling embarrassed when we talk to them. This can go on for weeks. I’ve known people that didn’t catch someone’s name the first time they met them and never get to know them become time has gone on and they’ve become too embarrassed to ask them.

Let’s look at a situation you could well be in and apply these principles. For instance a customer wants to commission a fantastic statue of themselves, but are they prepared to wait for it? Or, more importantly, pay for it? There needs to be a great deal of skilful communication to tease this out. You need to be absolutely clear exactly what their requirements are, and their willingness to wait and pay. Start with lots of open questions;

“Describe to me what you want?”

“Could you tell me a little more?”

“I think I’ve got it. Would you just run through it one more time?”

“What is your budget?”

“What timeframe are we talking?”

Ask questions and listen to the replies. Invariably what the person thinks they want doesn’t match with what they can have. It may be better, or it may be worse, but inevitably it will be different. Make them aware of this in a positive way. They will be having a unique product. You need to see what they want clearly and they need to see what you can supply equally as clearly. Spend time doing this thoroughly. It will save so much unhappiness in the future it’s got to be worthwhile.

The key to this is asking effective questions. And how do you ask effective questions, you ask? You ask effective questions when you listen effectively. You listen to the person, what they say, what they don’t say, how they say it. Listen to that little voice inside you. If something doesn’t feel right it usually isn’t. Do it now rather than in a few weeks time having spent a small fortune producing a minor work of art that’s too big for their lounge.

If you aren’t sure then ask. This needn’t be a big deal. Just tell the truth;

“Well, you say there’s no problems about how long you’ll wait, but I find that after a few weeks people get cooler. Are you sure you are willing to wait six weeks?”

Stay in that conversation until you have no doubts at all and are completely sure what’s expected of you. This may seem incredibly strange to begin with but trust me it will save you so much stress in the long term.

The next part of the discussion is about your willingness and ability to meet their requirements. You need to honestly ask yourself whether you are willing and able to meet the request. Have you the necessary skills, knowledge, finances, to make it work. If you haven’t, then say so and try to work out a way to still help - suggest others, look at different approaches, but again ’stay in the conversation’. Don’t stop and walk away before you’re absolutely 100% sure you know what’s expected of you. You know from experience that this won’t work, don’t you? The ‘problem solving fairy’ doesn’t miraculously appear and sort things out when you ignore them. Problems just stay there and grow and grow. It’s a bit like the washing up you meant to do yesterday, or the day before - it won’t sort itself out. It’ll just get a little harder to deal with each day.

This works in all negotiations. With your customers, suppliers, bank managers, anyone, and once you start using it, it’ll seem like second nature to you.

So, deal with these problems as they arise. Stay there until you’re happy and the other is happy. The good thing though is that it does get easier. In time people may come to regard you differently, “You’re a lucky so and so, “they’ll say, “You never seem to be left with work you can’t sell.”.

You can always come back with the classic Arnold Palmer reply, “The more I practice the luckier I seem to get.”

If there’s one general trait I’ve noticed in craft workers around the world it’s their passion and commitment and willingness to work long hours. I’ve also noticed that often that isn’t enough. Craft workers tend to be creative which doesn’t always lend itself to being business-focused. Not that this cannot, or does not, happen - it obviously does. However creative people tend to find it harder dealing with practical day-to-day business issues.

Here are a few hints and tips that will hopefully help. ‘Practical business tips for creative people’ if you like;

Firstly, and I would argue, absolutely critically, you must determine your mission, vision and values (stop groaning at the back). I know this has had a bad press. I would estimate 90% of these statements are awful. They tend to be decided by a committee of senior managers then handed down to the staff in a similar manner to Moses’ set of ten value statements a long time ago. Go into any large Organisation and ask staff what the mission statement is and the reply you tend to get is along the lines of; “I don’t know the words but the tune goes “da da da da da da da da, da da da da de” and there’s something in there about being the best, oh and teamwork”.

The joy for small companies is that it’s yours. You own it and it must be meaningful and drive your business. So, write a mission statement, a set of values, a credo, a code of ethics, a vision, a set of principles to guide … call it whatever you like, but do it and do it properly. Don’t get hung up about it being a mission, a vision, a set of principles - just use whatever terms work for you. There are some truly great mission, vision statements. The best mission statement with split infinitive? - “To boldly go where no man has gone before…”. Now that’s a mission statement you would come in to work early for, I guess?

There is the story of a man walking around a large building and asking everyone their vision statement. They could all quote it. They all owned it. They could all see how the effort they put into their job helped to achieve their vision, from the higher paid technicians to the toilet cleaners. The man was John Kennedy and the vision, or challenge, was “To put a man on the moon by the end of the decade.”

So how do you do it? Take some time and space (no pun intended). In terms of the mission statement ask, “What is the purpose of my business? What business am I in?”

This isn’t always as straightforward as it seems. In the sixties Parker pens had a crisis. They were losing money as biros came along and started taking their customers. They had a high level meeting to try to rectify the situation. The initial thoughts were to cut costs and compete with the disposable pens. This was a non-starter. They quickly abandoned this idea. Then they went back to basics and asked themselves what business they were in? If you own a Parker pen I will bet you received it as a present. The vast majority of people did, still do. So Parker pens decided they weren’t in the ‘compete with Bic’ business at all, but in the gift business. This transformed the business strategy. Instead of trying to cut costs they actually made their pens more expensive - better packaging, up market advertising and it worked.

So back to you - what business are you really in? “We make pencils” - superb start. Next question - “Lots of people make pencils. What’s so great about your pencils?”.”Our pencils are better than anyone else’s pencils in Cardiff…., no in Wales…., no in Europe…., no in the World….” - OK now we’re getting somewhere. Spend time on this. Find the best ways of describing it.

Are they the best pencils in the World? If not then maybe they should be, or maybe they aren’t but they’re the cheapest, or the most expensive, or the sexiest, or something. Once that’s agreed, totally, in your own mind you can look at the vision. Think of your business in ten years time. Draw it - if you need to. Yes draw how they see the future. Not a literal drawing of the finest pencil being produced but try to identify your feelings, your ambition, something real that they can identify;

“We want one of our dresses to be worn at the Oscars” would work. “To sell to Harrods” was Johanna Sheen’s vision in the 70s when she began making pictures from pressed flowers. By 1981 she had achieved it. If you can identify something as concrete as this then all you need to do is work out what you need to do to achieve that. Talk about it. Get excited. Set a target, a date, something to aim for. Ask yourself how will you know when you’ve really succeeded?

“Edward will shut up.” “Edward?” “He’s the pain in the arse customer who’s never satisfied.” What an incredibly powerful vision “To shut Edward up”. Priceless. Next you need to work out what business values will help you achieve that. Again make them real. “Great customer care” is nonsense. “Rectifying any mistakes within 24 hours” is better. When mistakes happen, and they will unless you’re not human, you can use these values to address the problems. Make a list - display them, use them, live them. One of the best one I’ve come across recently was “To what are we committed? Looking good or getting the job done.” - If you’re committed to getting the job done you’ll make mistakes, you’ll try different approaches, but you’ll be in business for a long time. If you’re only committed to looking good, people will soon see through it. You may benefit in the short term, but there’s no future in it.

A key value is time. Your time is vital. Try this exercise from Stephen Covey. It’s known as ‘Stephen Covey’s Big Rocks’. Imagine a bucket. Put three or four big rocks in. “Is the bucket full?” “No” you reply. “Of course not” I say and put some smaller rocks in it to fill in the gaps. “Full now? “, “No”. I put in some sand, then some water. It’s full. So, what’s the learning here? It’s to do with the order. What would happen if you’d reversed the order? Put the water in first, then the sand, the small rocks. There would be no room for the big rocks. These big rocks are the important things in your life. You need to schedule them first, not try to squeeze them in after arranging the water (writing pointless expense sheets), sand (unnecessary travel) or small rocks (meetings with the bank manager, supplier that takes three times as long as you because no-one is properly prepared). What are the big rocks in your life?

For many it’s things like family, time to watch the children grow up, time to remember why you started this business in the first place, really enjoy your work. You decide. You identify three or four things you believe are important. The three or four things that will make a difference to your life. When you’ve decided what they are then schedule them. Once these times are scheduled fit the rest of your work around them. Try some of these exercises. They won’t all work, but hopefully they’ll get you into the right fame of mind for running your business. You run your business remember. It doesn’t run you.