From Partnering Up to Where to Start

You are running your business. It is doing OK, but then again you could use:

• Help with administration
• More sales
• Better cash flow
• Improved profitability
• Lowered costs
• More exposure in the market place

All of the above? Some of the above?

Well, partnering up (link to last week’s article) may help you with these! If you are like more than 95% of the businesses in North America, you have a limited or non-existent web presence. Oh, your brother-in-law, cousin, friend, friend’s neighbors’ son (get the drift) may have built you a site, but you are not getting any business from it, so clearly you were right when you decided not to waste money on the Internet, and focus on your business instead! Wow! That was an earful. And, you are probably half right. It was good that you did not waste money on the Internet. But did you think of investing money in your business and leveraging your investment by using the Internet? Here are some facts:

• In 2009, 22% of magazine sales occurred on the Internet. Up from 13% in 2006, which is an increase of 69% or over 20% per annum (source: Magazine Publishing Association). And, Amazon.com forecasts more than 35% increase this year. Chapters is speculating that over 80% of book sales may be electronic, with the majority being e-books over the coming years.
• Google reported revenues of $6.82 billion for the quarter ended June 30, 2010, an increase of 24% compared to the second quarter of 2009. Annualized, we are looking at close to 28 Billion dollars for 2010. For those that like zeroes: $28,000,000,000. That number is over twice what will be spent in magazine advertising in North America. Twice!!!
• The first quarter 2010 e-commerce estimates increased by 14.3 percent compared to 2009, while total retail sales increased by 6.3 percent in the same period. That means that Internet sales are growing twice as fast as retail sales. Too late for your business? Hardly. The Internet is still in the early stages of adoption by consumers, and e-commerce sales in the first quarter of 2010 accounted for only 4.0 percent of total sales (Source: Census Bureau of the Department of Commerce.
• A Pizzeria chain did over 2 Billion Dollars of Internet sales last year (do you know which one?).

You may have seen some (or all) of these stories, but feel that you lack the resources and time to properly address this aspect of your business.

Andion feels that they can lend a hand by helping establish a “partnering” with one of our qualified Internet “experts”, to establish a winning Internet strategy for your business. So, whether a new or established business; whether doing 5, 50, or 500 thousand a month; whether selling a product or a service - we have the appropriate allies that could “partner” with you, to help you add to your bottom line, and grow your businesses presence, viability and performance.

Why do we use the word partner? Because while you would be expected to cover certain costs (and they are much lower than if you are really trying this on your own), our “experts” would do this for a percentage of your increased profits. They in turn, would pay our ongoing support and monitoring fees, so that ultimately, you could get:

• Help with administration
• More sales
• Better cash flow
• Improved profitability
• Lowered costs
• More exposure in the market place

 

Let us know what you think, leave us a comment below.

 

From the desk of Andre M.
At Andion Financial, we shape visions into reality
Copyright © Andion Financial 2010

Partnering Up

You have an idea.
They have an idea.
You think about getting together to share your ideas.

Easy. Easy come, easy go.

Or you can go see a lawyer, outline an agreement, send it to your prospective partner, have him bring it their lawyer and get their feedback, and then watch it go nowhere... perhaps.  For a greater certainty of it going nowhere, get the spouses involved, and also ask the in-laws for some advice.  Paralysis.

The partnership principle is based on sharing. Let's say you have three strengths. Your partner also has three strengths that are complementary. So then, 3 and 3 equals 9.  Yes nine.  If you doubt it, you are not ready for partnership.

You see, getting a partner is a little like getting married... You have to believe.  But before you get married, you go on a date, get to know each other, and let the relationship evolve and progress.  Can you imagine if you brought a prenuptial agreement to your second date? I am pretty sure you would not have a third date.

Yet we are advised to have our " T”s crossed and our "I"s dotted even before we know that we wish to go "steady". Perhaps we should have a "PartnersBook" similar to "Facebook" so that we can decide when we are in a relationship and let the world know (Humm... that is not a bad idea... anyone want to part on that... please send the email to "Steven Andion"
 
But more seriously, here are some things to look for:

• It is a fast way to create a product or to expand your product while sharing the risks and rewards
• Revenue sharing
• Be experts in different things so that you bring more benefit to the table
• Acknowledge that it is a relationship and that you will try to work things out

But please, do not get “married”.  Partnerships (like relationships) can come and go.  You cannot have any active business with someone currently, and still treat him like a partner out of respect and past dealings.  But when we say "partner", think "joint ventures", and not "legal partnerships.  Use corporate entities, and if you cannot write it down on a placement... well, perhaps it is not meant to be.

Time for a cold glass of Sangria!

Let us know what you think, leave us a comment below.

 

From the desk of Andre M.
At Andion Financial, we shape visions into reality
Copyright © Andion Financial 2010

From Customer to Guest

PFactor™ (the 80/20) rule:

Do you treat everyone the same?

Do you like to be recognized when you walk into an establishment? Do you enjoy it when you walk in and everyone knows your name – Norm (the jingle from Cheers should be playing in your head right now)?

Let’s step back.  On July 15, 1848, an Italian economist, sociologist and philosopher was born by the name of Vilfredo Pareto.  While noted for making several important contributions to economics – such as income distribution and contributions to microeconomics - we are interested in Pareto principle (PFactor™) built on observations that 80% of the land in Italy was owned by 20% of the population.  Pareto observed:

• Society was not a "social pyramid" with the proportion of rich to poor sloping gently from one class to the next. Instead it was more of a "social arrow" -- very fat on the bottom where the mass of men live, and very thin at the top where sit the wealthy elite. Nor was this effect by chance; the data did not remotely fit a bell curve, as one would expect if wealth were distributed randomly. "It is a social law," he wrote, “something in the nature of man”.

While we will not comment on the philosophy of this observation per se, we do know that we see this relationship of 80/20 in many aspects of business.  Business management consultant and thinker Joseph M. Juran suggested the principle, and named it after the Italian economist, after reading Pareto’s work and applying it to his quality control studies.  For example, 80% of a problem is brought about by 20% of the causes, which was also known as "the vital few and the trivial many". In later years, Juran preferred "the vital few and the useful many" to signal that the remaining 80% of the causes should not be totally ignored.

Here's the simple math:

THE 80/20 RULE: 80% of profits come from 20% of customers.  Of course, this can vary.  It is even possible that 80% of your Revenues can come from 20% of your customers, if you are in a business that sells consumables (Restaurants, Fruit stores, Hair salons to name but a few) and have a loyal customer base.

Why would 80% of your profits come from the 20% of your clients?

• They are recurring
• They like what you have to offer (Price value relationship)
• They are comfortable
• They enjoy the service
• They are not only looking for bargains but value.

How can you leverage from this loyal customer base to grow your business? Let’s look at a few things not to do:

• Do not annoy them by being too aggressive
• Do not deteriorate your margins by offering them discounts on what they are already purchasing (they are already loyal customers)
• Do not treat them like they are “just” another customer

Things to do:

• Personalize a greeting, whether verbal, via email or by sending a special offer for their birthday (via snail mail)
• Treat them like a “guest”
• Have special offers so that you can offer a benefit on something that they do not normally purchase from you. For instance, if you are running a breakfast restaurant, it may be an evening promotion for an event. If you normally cut and set their hair, it may be a facial or manicure promotion… be creative!
• Use them to promote your business – but softly.

If someone is a regular, why not ask them if they know someone else that would be interested in your service and offer a benefit?  An old client of mine used to offer T-shirts. He swore that people would do bizarre things to get a t-shirt.  It made them feel special, and when they wear it… voila… a walking promotional magnet.

Well known marketer Chris Cardell (an English Bloke) says that because they’re free, the typical business owner thinks that referrals are too good to be true.  He goes on to say that “in this economy, don’t be typical”.  While we agree with his thoughts, we would go a couple of steps further:

• You have worked hard to build your customer base
• Your customers are one of your most important assets
• Hence your recurring customers are not free, they have been earned with your efforts and now you have their goodwill
• Do not squander this asset, but at the same time, keeping it in the safe is not safe.
• Engage your customers and DO NOT be shy to ask them for help, and do not be shy to show your appreciation

Remember we are still in the days of summer (Link to last week’s article).  Do something nice… give a little bit and we think you will receive.  Time for a siesta!!!

Let us know what you think, leave us a comment below.

 

From the desk of Andre M.
At Andion Financial, we shape visions into reality
Copyright © Andion Financial 2010

The Days of Summer

The days of summer are upon us:  Canada Day, July 4^th, school vacations, summer vacations, assorted festivals… So, why are you feeling so stressed?

Relax.

Too often people are focused on what they “did” for their summer vacation…how about what they did not do? Have you made a cool ice tea for your spirit lately? Walking home the other day, I saw a couple of young girls rolling around in the grass in front of the local high school – playing.  It caused me to pause and think.  It seems that kids do not have time to play anymore.  They are too busy with all their structured activities, organized sports, parental sharing, and parental supervision… they need to just go out and play.

When we were kids, in my part of town, parental supervision consisted of someone’s parent making sure that we did not get too rumbustious in their section of the lane.  These lanes served as our meeting spaces, playgrounds, sporting centers and communal free space.  Ages, languages and ethnic backgrounds mixed freely.  Parents and children felt secure there.  It was an easier lifestyle.

That ease and security do not seem to exist today.

• Parents stress over their little darlings too much
• Parents stress too much.
• Parents are in business.
• Parents in business stress too much

About 20 years ago a famous book by Stephen R. Covey was a bestseller (The 7 Habits of Highly Effective People).  Many people purchased this book.  Many (but less) read this book.  Again many (but again less) got to the final chapter.  That chapter told the story of a lumberjack chopping at wood.

• His hands were bloody and blistered, but he continued to work.
• It was getting dark out, but he continued to work
• He was exhausted, but he continued to work.

When asked why it was taking so long, he replied that he did not have time to speak as he had wood to cut. The poor lumberjack was to the point of exhaustion but he had set some goals and was determined to meet them.  Poor lumberjack.

How much better his time would have been spent if he had taken the time to take better care of himself:

• Physically – eating exercising and resting
• Socially – perhaps getting someone to help him with a saw
• Mentally – while is great to make goals, perhaps a plan and some knowledge about the task at hand would have made it go more smoothly, read, write, learn and teach.
• Spiritually – Did the lumberjack really need all that wood? Spending a little more time in the woods around him contemplating his and his loved ones well being though meditation, music, art, prayer or other forms of service, might have been more beneficial

It reminds me of a guy (we will call him “Thomas”) I knew who always was in a rush.  Thomas had places to be, people to see.  He often had to make the trek up the 401 to go to Toronto.  He would want to rush right through and his car almost had the range to make it.  First thing he would have to do when getting to Toronto was get gas for the car.  Way too stressful.  I used to preach:  “Thomas stop in Kingston for some gas and to stretch the legs.  It makes the 2^nd half of the drive much easier and less stressful.”

So work hard my friends. But rest your body and soul as well. Take the time to think, plan and review where you are, have been and wish to be. Read a book, watch a movie, take a walk in the park, chill…

Doing is not always enough.

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THE 7 HABITS OF HIGHLY EFFECTIVE PEOPLE (excerpt) 

Habit 7: Sharpen the Saw 

Sharpen the Saw means preserving and enhancing the greatest asset you have -- You. It means having a balanced program for self-renewal in the four areas of your life: physical, social/emotional, mental, and spiritual. Here are some examples of activities:

Physical:	Beneficial eating, exercising, and resting
Social/Emotional:	Making social and meaningful connections with others
Mental:	Learning, reading, writing, and teaching
Spiritual:	Spending time in nature, expanding spiritual self through meditation, music, art, prayer, or service

As you renew yourself in each of the four areas, you create growth and change in your life. Sharpen the Saw keeps you fresh so you can continue to practice the other six habits. You increase your capacity to produce and handle the challenges around you. Without this renewal, the body becomes weak, the mind mechanical, the emotions raw, the spirit insensitive, and the person selfish. Not a pretty picture, is it?

Feeling good doesn't just happen. Living a life in balance means taking the necessary time to renew yourself. It's all up to you. You can renew yourself through relaxation. Or you can totally burn yourself out by overdoing everything. You can pamper yourself mentally and spiritually. Or you can go through life oblivious to your well-being. You can experience vibrant energy. Or you can procrastinate and miss out on the benefits of good health and exercise. You can revitalize yourself and face a new day in peace and harmony. Or you can wake up in the morning full of apathy because your get-up-and-go has got-up-and-gone. Just remember that every day provides a new opportunity for renewal--a new opportunity to recharge yourself instead of hitting the wall. All it takes is the desire, knowledge, and skill.

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Let us know what you think, leave us a comment below.

 

From the desk of Andre M.
At Andion Financial, we shape visions into reality
Copyright © Andion Financial 2010

Help: Is a Payday Loan the Solution?

It is July 1st - Happy Canada day! You just got paid. Your paycheck is for $900 (after all the deductions) and boy did you need it. You start to think about what to prioritize on your way home from work (as your check from your ex for child support bounced, and you got a text from your bank that you will be overdrawn). You then get a call from your girlfriend, which made you blow a stop sign, and then got pulled over by a cop (but he didn’t nail you for using the cell in the car).

Wow!! What a day!

• Your car broke down on your way home from work ($250)
• Your child support check from your ex bounced ($300 gone) 
• You issued a check ($200) to your kids summer camp, dated yesterday
• You were pulled over when you did not count to three at a stop sign and got a ticket ($90)
• You new girlfriend called you up to invite you to take her to dinner, and she expects you to treat her ($45…you will get a decent bottle of wine and cook at your place)
• Your rent, car payment, and credit card payments (minimums) add up to $1100

So you need a plan.  You are short by $585 ($1100 - $1685).

• Your parents are out of town.
• Your brother owes you $40 when he was broke last week, and unless he won the lotto, that did not change.
• Your sister is not speaking to you (she did not like the birthday present you gave for her son, your nephew)
• You could ask your ex-sister-in-law, she always had some money lying around… but you could already hear her telling you to go jump in a lake
• You could try to sweet talk your bank, but since you were laid off last year for a while (and then your wife left you and the kids), and when you actually needed to use your line of credit, they have been treating you like a bad guy (well bad enough that they won’t extend you any more credit).
• You don’t know the neighbors.
• You are new at your new place of employment
• And your friends – well, you want to keep them friends.

So what does a grown man have to do?

Okay, so not everyone likes country songs, but stuff like the above does happen. And in today’s society, where moving is common and families are scattered, people often need a hand and are not sure where to turn.

We are not talking about charity either.  But a short-term loan is what is needed above (without a Tony Soprano type making the loan either). 

We are not talking about:

• Someone who does not take their responsibilities as serious matters
• Someone who is spending their money on gambling, drugs or other vices
• Someone who is unemployed _________ (fill in the nasty stereotype)

We are talking about an honest, hard working guy with a job trying to make ends meet.

In America, when there is demand, there is supply to be found.  And instead of the back alleys, an industry emerges on Main Street.  You have seen their locations – they started as check cashing storefronts for people that could not or would not deal with banks.  But these people sometimes needed short-term credit, and the businesses started lending against your next paycheck.

The fees are “too high” screamed the politicians and lobbyists to the big established entities.  We will call these entities the “Banks”. “You must charge them less”; annual Percentage Rates (APR) run as high as 150%... except that most advances are paid back quickly, and therefore are a fraction of the APR.  In fact, it might be less than the charges associated with the ripple effect of a single bounced check that you deposited into your account, if it causes you to have a series of bounced checks.

Also, not as high as not paying your traffic ticket on time, and thereby getting nailed with the “administrative fees”.

Also, it is a lot more cost effective to have the cash to repair your car, so that you can get to work in 20 to 30 minutes instead of having to take public transportation to work (from your kids summer camp) for 1.5 hours a day – each way!!!

So, what exactly is a Payday Loan?

• Short-term advances against a future paycheck. 
• A payday lender generally advances a customer $100-$500 per loan
• The borrower leaves a postdated check with the lender for the loan principal plus fees, and the lender deposits the check after two weeks. 
• The loan fee, which one can view as an interest charge, is typically about $15 per $100 advanced
• Despite much lower nominal loan APRs, credit union payday loans often have total fee/interest charges that are quite close to (or even higher than) standard payday loan fees.
• Further, credit union payday loans have tighter credit requirements than Payday advances
• It is uncollateralized
• Requirements for approval are minimal
• Payday lenders monitor payday-specific defaults using databases that are not used by other lenders 
• Are generally independent of the rest of a borrower’s credit report 
• Generate convenience and flexibility for borrowers 
• Keep much longer business hours than do banks
• Privacy conferred by dealing with "non-banks"

But Payday loans are not prefect.  The downside of less restrictive approval requirements is more frequent default.  Therefore, you can get the money but you will pay a premium for it.  The premium becomes “steep” if you do not pay the money back in a short time frame.  Remember, they are supposed to be short-term advances against a future paycheck – do not abuse them.

Are payday loans popular?

• The scale of a payday outlet can be quite small and startup costs are minimal compared to those of a bank, meaning that payday lenders quickly saturate attractive markets.
• There are currently more than 24,000 physical payday outlets; that figure is roughly 50% greater than the total number of banks and credit unions in the country (24,000 versus 16,000).

The Banks are starting to feel threatened by the upstarts in this industry, and certain states have legislated limitations on the industry, which have effectively killed the industry in those states.  Yes, the law-abiding companies closed up show. 

Now, the Payday Loan industry is caught up in negotiations between America’s House and Senate last week, on reconciling their competing financial-reform bills.   The new bill includes a new consumer-protection bureau, within the Federal Reserve, with powers to write rules for — and ban — financial products. Payday loans were not the cause of the financial meltdown in the USA, but they are a relatively easy way for the Government to help the Banking lobby while claiming to protect the people that need payday loans – the working middle class. 

Oh there is a while slew of other things that the financial reform will allow, and not all of it is bad, but much of it is unrealistic:

• It gives the government the power to break up any failing financial firm, not just banks
• Pushes more of the clean-up costs onto surviving competitors, rather than the taxpayer.
• Those who securitize assets will have to retain more of the risk.
• Credit-rating agencies will be more exposed to legal challenge for their mistakes,
• Banks will face limits on their proprietary trading and investment in hedge funds and private equity 
• Derivative markets will no longer be left to do their own thing.

We are sure there is good in much of what is intended.  But we think that the regulators should get back to servicing their clients and stop “gaming” the system.  But alas, that is a topic for another day.

Let us know what you think, leave us a comment below.

 

From the desk of Andre M.
At Andion Financial, we shape visions into reality
Copyright © Andion Financial 2010