Time Flies (supposedly when you're having fun)...

Well, I haven't been having that much fun, but the time has certainly flown past.  I think most people I've spoken to have said the same thing about how quickly the year is passing us by.

I didn't launch the JGF Project that I mentioned in previous posts - the economic environment wasn't conducive to a new niche business (in my lay person's opinion).  I've got everything ready to launch it; marketing material, domain names, smart-phone phone numbers, yada, yada...but I'm not in a hurry to get on with it.  The work and the resulting $$ would be most welcome, of course, but I'm just not convinced I'd be doing the right thing by jumping in to it right now. 

So, the search for my groove continues.

I have a few ideas.  There's one idea that I particularly like (we'll call it the DSW Project), but it involves my total reliance, well in the beginning at least, upon my husband's qualifications, and I'm not quite sure I want that.  I think I want to get out of the construction industry.  I've grown to really hate it (the residential side of it, anyway).  And this little idea would only entrench me in the industry further.  On the plus side, however, there's the possibility that should demand be strong enough (and on my limited market testing thus far, it appears there may be), a good, systemised, structured business could be formed.  A business that could eventually be run by others with me taking a strategic role rather than a hands-on-in-the-trenches role.  The other downside to this idea, though, is that it would almost be considered to be discretionary spending, meaning that it would be hugely effected by economic factors and market confidence.

I did do some limited testing of the demand and the number of calls I received was surprising.

So, that's one thing I'm pondering.

I've explored going back in to the workforce as an employee, but I don't know how I'd cope with that.  Afterall, I've been self employed since I was 22 years old (I'm a few months from 40 right now), so that's a long time!  And, how would I manage the school drop off/pick up thing?  I struggle to comprehend how others manage it.  I find myself spending up to 4 hours (2 hours in morning, 2 in afternoon) doing the whole drop off/pick up thing, and I'm not even spending any time at the schools socialising with other parents.  That time is literally spent on the roads on Sydney.  Granted, that's in part a consequence of where I'm living in relation to the schools, however, it's still a huge chunk of time.   

I did go for an interview or two, but I shouldn't have.  They were both in the real estate industry, which is where I started my working life back when I was 17, and there's just no way I'll ever get paid a) what I need; and b) what I'm worth in the real estate game unless I'm the employer and not the employee.  And even then that's questionable.

So, this is an option that's also not really an option.

I find it really curious though, that whenever I think about going back into the employee arena I always go back to the real estate game.  I wonder why that is?

I've also started thinking about re-establishing my business that I'd sold off back in 2000 (or whenever it was).  Again, back in the real estate game (I'll call it TRS).  Last week I recalled out of the blue an article I'd read about a particular part of the industry still being a cottage industry.  I was also reminded of the dreams and ambitions I had when I initially established TRS.  Then I stumbled across another article about the largest player in this sector selling to another party enabling this purchaser to become the biggest service provider of its kind in the country.  I can't help but think either one of those 2 companies is sitting in my chair.  A few sessions of number crunching and a few (daydreaming?) thoughts about how I could run it better now that I'm older, wiser, more experienced and thoughts about re-establishing it started taking hold.  Afterall, it's definitely a business that can be run (profitably) with or with out me once it's properly systemised and procedurised.

I cast my mind back and couldn't even recall why I'd sold TRS in the first place.  I asked my mum.  She said it was because I wanted the $$ to join up with hub in the property development arena.  I distinctly remember that that's what happened.  I decided to double check with my husband and a girlfriend about what they remember of my reasons for selling.  Both of them said that I just got sick of dealing with whinging people! 

Well, that hasn't changed much in the years since I have to admit. 

Naturally, this has stopped my thoughts in their tracks.  How can I possibly get back in to TRS if I can't stand dealing with whinging people?  Would it be the same though?  Back then, I was at the coalface.  I was servicing clients on both sides of the service coin, both of whom had conflicting interests and motivations and I was a lot of the time the meat in the sandwich.  But my recollections are that I actually enjoyed it and obtained a great sense of satisfaction in closing a deal with a new client and actually delivering what I'd told them they could expect to receive.  I got a kick out of growing the business from nothing to something that I sold at a multiple that was, back then, a record; and a multiple that many struggle to achieve today.

So, that's tossing around in my head, too.

Or, I can find something totally, completely, utterly different to do....but I don't know what.

In the meantime, I'm doing what I'm doing with hub.  We're still working that juicy little commercial job that we got just before last Christmas.  We'll be winding that up soon, and again, we have nothing to move to afterwards.  So, expect the stress levels to be ramped up a few notches.

I almost feel like it's too late for me.  I'm pushing 40.  No, 40's not old, but I can't help but think that if I want to get into a new business and grow it into something substantial that I've missed the age boat.  Don't these things normally get started when people are in the mid to late 20's to early 30's?  I feel like I don't have time on my side any more.  And that's frightening.  Almost as frightening as being almost 40 and not knowing what I want to do with my life.


Till next time...

Tax Cuts...

I have had this little story in my files for a while now, waiting for an opportune time to post it; now is probably it:

Let's put tax cuts in terms everyone can understand.

Suppose that every day, ten people go out for dinner. The bill for all ten comes to $100.

If they paid their bill the way we pay our taxes, it would go something like this -

The first four (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh $7. The eighth $12. The ninth $18. The tenth (the richest) would pay $59.

So, that's what they decided to do.

They ate dinner in the restaurant every day and seemed quite happy with the arrangement, until one day, the owner threw them a problem. "Since you are all such good customers," the owner said, "I'm going to reduce the cost of your daily meal by $20."

So, now dinner for the ten only cost $80. The group still wanted to pay their bill the way we pay our taxes. So, the first four were unaffected, they would still eat for free.

What about the other six, the paying customers? How could they divvy up the $20 windfall so that everyone would get their 'fair share'?

The six paying customers realised that $20 divided by six is $3.33. If they subtracted that from everybody's share, then the fifth and the sixth would each end up being 'PAID' to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each person's bill by roughly the same amount, and proceeded to work out the amounts each should pay.

And so -

The fifth, like the first four, now paid nothing (100% savings). The sixth now paid $2 instead of $3 (33% savings). The seventh now paid $5 instead of $7 (28% savings). The eighth now paid $9 instead of $12 (25% savings). The ninth now paid $14 instead of $18 (22% savings). The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. The first four continued to eat for free. Once outside the restaurant, they began to compare their savings.
"I only got a dollar out of the $20," declared the sixth, pointing to the tenth diner "but they got $10!"
"Yeah, that's right," exclaimed the fifth. "I only saved a dollar, too. It's unfair that they got ten times more than me!"
"That's true!!" shouted the seventh. "Why should they get $10 back when I got only $2? The wealthy get all the breaks!"
"Wait a minute," yelled the first four in unison. "We didn't get anything at all. The system exploits the poor!"
The nine surrounded and beat up the tenth diner.

The next night the tenth diner didn't show up for dinner, so the nine sat down and ate without number ten. When it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

That, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more. There are lots of good restaurants in Europe and the Caribbean.

David R. Kamerschen, Ph.D. Professor of Economics 536 Brooks Hall University of Georgia 

And there you have it.  Not so difficult to understand, is it?  Seems some people just don't get it.

Till next time...

Irony...

I love sarcasm, hypocrisy and irony....I find all 3 amusing in equal measure.

During my holiday up at Port Macquarie (which was fabulous), I discovered a walking trail right in the city, so decided to take a walk.

One part of the walk led through a wetlands.

I decided to stop and take a some pictures of the putrid state we humans leave things.

Can you spot the irony?  I just love it!!

Till next time...

Happy New Year...

As I sit hear on New Year's Day at 6.20am eating my breakfast after a long powerwalk along the Rocks here in Port Macquarie where I'm currently holidaying I start to congratulate myself silently.

I don't congratulate myself for the year gone by; it really was just a waste of a year.  

I shouldn't really say that, actually.  It was a year of steady as she goes, but little in the way of momentum.  I moved forward just a small bit, and it's better than going backwards, I guess.  

I didn't save any money or get an additional job that I very much wanted/needed (well, I did, but it doesn't count because 95% of it falls into this new year), I didn't buy a house, I didn't make any investments.

Instead, I congratulate myself on being here.  

Don't get me wrong, I never had entertained any morbid thought of self destruction...but sometimes things weigh upon my mind so much that I wonder "how on earth am I going to make it through this?" or think to myself that I simply don't have the energy or mental capacity to deal with it.

I congratulate myself on sticking the course when the going got tough, and tough it has been at times.  

I congratulate myself for being enthused enough to seriously establish a new business (launching mid 2013 if all goes well - we'll call it the JGF project).  I just need to move my life around a bit to try and fit it in somewhere.

I congratulate myself on standing my ground when I knew I had to and it was the right thing to do and alternatively for having the maturity and common sense of acquiescing when it also required or appropriate.

And finally, I congratulate myself on my children; that they're growing up in a stable and loving environment and not being fucked up by the events that have taken place in our lives over the last few years.  I've managed to shield them from it all and provide for them as though nothing ever happened to us.  In my mind this last one deserves the biggest pat on the back.

As for the year ahead, well, I hope it's a good one, although I do fear it will be more of the same with a crumbling world economy on the horizon.

As for new years resolutions well they're always broken so I've not really made any this year. 

Goals are different, however.  

Three weeks ago I started working out and training again and modifying my diet so I can lose 10kg (all the weight I put on after I gave up smoking 2 years ago!!).  I'm determined to complete this by end March and maintain it for the year.  I'm determined to remain cigarette free (although that will be easy because the stench of it really makes me sick these days - it's just disgusting).

Another goal I have is to launch the JGF Project before 30 June, but this is somewhat out of my hands as it really will depend on the state of the economy I think.

And my final goal is to continue to be the best mum I can be and provide a stable and happy environment for my kids to grow up in....again, this really is probably the most important of the 3 goals.

And my wish list for the year?

I wish Julia Gillard would call an election at the earliest possible opportunity.

I wish that Malcolm Turnbull would leave the Liberal Party.

I wish that Barry O'Farrell steps down and gets replaced by Gladys Berijiklian (I think she's a gun!).

I wish to win the Lotto, OzLotto or Powerball.

So, there you have it...another year in review.

Happy New Year.


Till Next Time...

Merry Christmas...

Christmas is always a bitter sweet day for me.

One the one hand I have a beautiful tradition with my sister on Christmas Eve where we get together with our families and eat till we're stuffed and exchange presents and watch the kids go crazy.

This year was at my house and it was just a mad-house; but a very fun mad-house.

I always love it.

Christmas day is also great and we usually spend it with family or very good friends.

But, for me, it's also a very sad day and inevitably I'll end up crying and sad.

My most favourite person in the whole world, my grandmother on my mum's side, my Omi passed away on Christmas Day.  Next year will mark the 20th anniversary of her passing.

Without fail each year, I light a candle for her, put on a Bing Crosby Christmas Songs CD and even if I try and stop myself the tears just fall.

I love her so much, and I miss her terribly.


Early in the morning the kids have their presents and it's always fun to watch them opening the presents.  And we always make sure that we give them a lesson on the real meaning of Christmas.  Far too much emphasis is placed on gifts and the like and not enough on the real reasons behind Christmas.  They're old enough now to go to Church and understand it, so next year we'll be doing that.

Merry Christmas!

Till next time...

Oh The Hypocrisy...

I just love it!

I was in Darling Harbour not long ago; I thought I'd take my kids for a nice day out.

I'm wondering around and stumble upon a play ground area with a flying fox, slippery dips and climbing structures.

The climbing structure was one of those new pyramid type things made of bouncy rope; and this one was huge.  Probably about 8 metres high....

Here's a few pictures I took, and I'm going to give you a moment to try and guess what it is I'm about to say next....

- cue thinking music-

Yes....You guessed it.

If that was a building site, I'd be in jail, or at the very least in the Industrial Relations Court spending countless thousands of my hard-earned defending a case against myself in a kangaroo court where they have a reverse onus of proof and the  presumption of innocence just doesn't exist.

There is no way in hell I am allowed to have my fully grown construction worker men to climb up and bounce around 8 metres up in the air on a thin little bouncy strand with no harness and no fall protection.

Yet some bright spark lets little kids do it.

Go figure!!

Till next time...

Reaping the Fruits of Labour...

As you know I've been working with Simon since about September last year and we've been doing all sorts of things with my sales processes, my marketing and my presentations, just to name a few.  

It was tedious work and really quite disheartening alot of the time.

Sadly, I had to let Simon go about 8 weeks ago because I just wasn't getting any results (I am an instant results type of girl!) and we were fast running out of work (and cash!) so I just couldn't afford him any longer - despite the fact that his services weren't all that expensive to start with.

Anyway, I did it.  Well, we did it.

Thanks to all the work that I did do with Simon, all the rejections, all the schmoozing, my new refined sales process, my new refined tendering system, my new refined presentation system, I won a job.

An architect who actually refused every one of my requests to meet with him referred me to this client and the client called me.  So, all my persistence did actually pay off despite the repeated rejections.

And, it's an awesome job that's right up my alley!  It's a juicy commercial job in the suburbs.  It's in the price range we want, it's the size we want, it's the type of architect we want, but most importantly it's the type of client we want.  

BUT, best of all...it has excellent margins in it AND admin fees too!

Now, this is a first for us....We've always been too scared to add the cost of admin into our tenders because we were always worried that that would push our prices far over everyone else's that the clients get tenders from.  Afterall, we know we're already at the higher end of mid to the lower end of high on the price scale as it is.  So, as a result we've left admin out and then when we've won the job been treated as quasi-project managers....unpaid.  Any cost of admin has come out of our margins on the job.

Now, I've got an awesome lawyer and an awesome insurance broker and over the last 4 months they've both been singing off the same song sheet; "Ms TTW, you must charge admin.  Your margins are your profit and profit is profit.  Admin is a cost of the job and as such must be included in your tender price as a cost, not taken out of your profits."

I knew they were right, but I have been too scared till now....

But, I read a book and there was a message in it that hit me like a tonne of bricks.  The message was "you are not selling a product at a price, you are selling the way you do business."

That made a lot of sense to me.  So, I created a formula to include admin in our tender price.

And I used it in this juicy little commercial  job.

I still had to negotiate, but the point is I included it, the clients accepted it and I won the job.  I didn't win the job on price, I won it on all that stuff that goes along with the job; the way we communicate, the way we plan, the way we invoice, the way we're detailed and the way we related to the client.

It was also a live test drive of my new qualifying systems I've implemented so we have a higher chance of winning the right jobs offered by the right clients.  

So, this was a major win for us on many levels, and hopefully the start of what is a major turnaround for our business.  If I can do 2 or 3 of these types of jobs per year I'll be a very happy woman.


Till next time...

Pricing Goods and Services...

On my travels today I've stumbled across this timely article; my husband and I have been having discussions about our pricing strategies lately in an effort to find the "right" way...

Why the price is rarely right for start-ups

By Nina Hendy
Monday, 23 July 2012

 Deciding what to charge can be a huge decision for a new business. Over-charge and you risk alienating potential customers. Under-charge and you may not be able to meet demand.

On top of this dilemma is the knowledge that your choice will be scrutinised – and not necessarily just by customers.

When calculating what to charge, consider a recent warning from the Australian Competition and Consumer Commission, which will investigate businesses misleadingly claiming that price hikes are the result of the carbon price.

The warning was prompted by the discovery that a solar panel business was blaming jacked-up prices on the impact of the carbon price.

Dr Michael Schaper, acting chairman at the ACCC, says price rise claims must be truthful and have a reasonable basis.

“Businesses must be careful in relying on unverified statements by third parties, including those made in newspaper articles and advertisements about the impact of the carbon price, as a basis for their claims,” Schaper says.

The common approach

But when it comes to price-setting, the majority of Australian businesses use extremely crude strategies.

In fact, 75% of companies use ‘cost plus mark-up pricing’, a method which often results in under-charging and missing margins, or overcharging and missing the sale, according to the experts.

Ron Wood, director of Pricing Insight, a firm which specialises in price optimisation strategies, says that less than 20% of Australian companies have a dedicated pricing management function to drive margin improvement across their business.

“And yet if companies implement a more strategic approach to pricing, it would generate on average between 15% and 100% improvements on profit,” Wood says.

PricingProphets founder and managing director Jon Manning agrees that most companies set their price by calculating their costs, add on a desired profit margin and cross their fingers and hope for the best.

Some also check the price of a competitor’s product (which may not, in fact, be identical to their own product) and charge what the competitor charges.

Or they may just charge what they think the customer will bear, he says.

“Both of these approaches are, in effect, outsourcing pricing to their competitors or customers, leave money on the table and ignore demand and value,” Manning says.

And more often than not, the pricing strategies deployed by start-ups aren’t going to work, according to Julia Bickerstaff, founder of Sydney’s The Business Bakery, which works with SMEs on price-setting strategies.

“Start-ups often start selling their goods or services cheaply, with a plan to increase the price incrementally, but this is a bad approach,” she says.

“You’re far better off setting a fair price up front so you’re not turning people off who have heard about you from friends and wonder why they’re being asked to pay so much more than their friends had to.”

Never set out to be the cheapest in the market, because then you’ve always got to be the cheapest, which can be impossible given the costs involved in running a small business, Bickerstaff advises.

The best approach

A pricing methodology known as ‘value pricing’ is the best approach to price setting, according to Wood.

To implement value-based pricing, consider what the real economic benefits are of your offering to the target market.

This can involve analysing how the product or service will be used by both the immediate buyer and final end user, he says.

In many cases, business people charged with setting prices limit their profit opportunities by being anchored to the cost of production, which serve to drive prices much lower than would otherwise be the case.

Businesses should also create their own pricing tools that enable quick and accurate calculation of quotes, discounts and rebates, Wood says.

“Many businesses take too long to get back to customers, by which stage the customer has already purchased from a competitor, possibly at a much higher price than might have otherwise been the case,” he says.

“Buyers who have an urgent need for a price are often the most price-insensitive as they need it now”.

Dr Greg Chapman, author of a book on pricing called Price: How you can charge more without losing sales, says he has seen countless examples of businesses with unprofitable operations caused by poor calculations made during the price-setting process.

“So many businesses argue that they can’t put up their prices because they will lose money, but in many cases, they’re losing money now,” he says.

“Once a business overcomes the psychological barriers, it can earn significantly more.”

A solid marketing strategy must be in place when prices are being increased, he says.

“You need to be able to clearly communicate your point of difference in your marketing. You need to communicate whether your product saves customers time, lasts longer or is better quality so the market can see why you’re charging the prices that you are.”

“And you need to communicate those messages to the part of the market to which these differences matter.”

Retaining your value

Start-ups should also bear in mind the importance that price has on the value of their brand.

Manning suggests businesses align price and value, charging a high price for high value, medium price for medium value and a low price for low value.

Misaligning price and value equates to overcharging, with a high price and medium value often seen as a rip-off, while something of high price and low value viewed as a false economy, he says.

Companies should also remember that prices that end in zeros are typically associated with quality, while prices ending in nines are often associated with cheapness, Manning says.

Also, pick your distribution channels carefully. “You don’t look for Louis Vuitton suitcases in the Reject Shop,” Manning says.

“And be sure to provide excellent customer service. Service is an experience that is hard to replicate and commoditise.”

“Cheap products are often associated with little or no service, premium products with exceptional customer service,” he says.

When costs rise

If you’re pricing on the basis of value, rising costs shouldn’t concern you that much because innovation and value-adding are the key driver of price increases, says Manning.

However, because most companies use the cost-plus pricing approach that the experts frown upon, rising costs is an issue, he says.

Manning praised the approach taken by both an airline and a chemical manufacturer when passing on costs.

Both businesses developed fuel or raw material price indices, published them on their website and told their customers that when this indicator breached a certain threshold, they would no longer be able to absorb the cost increases and would be forced to pass them on to customers.

“This is a really great, transparent approach that I would recommend,” Manning says.

• The ACCC has issued an updated carbon price claims guide for business, which provides guidance to assist business in understanding their rights and obligations when making claims about the impact of the carbon price. For more information, visit the ACCC website.

Seven top tips on setting your price

• Work out the benefits of the product/service to the target audience, your incurred costs and what your target audience is willing to pay.
  
• Pick distribution channels with caution.
  
• Consider not advertising your prices so you can sell the product/service rather than the price.
  
• Provide exceptional service
  
• Be up-front with your customers about any price rises and the reasons they are being passed on.
  
• Create your own pricing tool to enable quick and accurate calculation of quotes, discounts and rebates.
  
• Consider hiring a pricing expert to help set your price.

Source: http://www.startupsmart.com.au/sales/why-the-price-is-rarely-right-for-start-ups/201207236997.html

Till next time...