bizRichard

“As far as the laws of mathematics refer to reality, they are not certain, and as far as they are certain, they do not refer to reality”
Albert Einstein

Clearly I can’t let the week go by without joining in with a ‘topical’ comment of some sort!  After all, those who know me will understand, although I’m not anything of a political animal, how irresistible I find the opportunity.

In this increasingly bizarre fiscal scene, occupied (controlled) by Gordon Brown, even the numbers seem to work differently, depending on where you stand. In Prime Minister’s Question time, accused of the highest taxes in British history, GB said that the current tax take was only “around 37% of GDP”.

But the Office for National Statistics reckon it’s 39%! 

And the IMF, who have probably got it more accurate still, say it’s 42.5%.

Oh well, what’s 5% of GDP between friends.

But, as proof there’s still some justice in the world, the week ended, of course, with Labour’s most comprehensive drubbing in the local elections in forty years. Gordo, unsurprisingly, said he was “disappointed”.  Not for the few, but the many, naturally.  (Perhaps someone ought to let him into a ’secret’ and tell him that we, as an inteligent nation, are able to think and do work things out for ourselves sometimes!)

PS.  If anyone can get a copy of the week’s most notable P45, I (and a few others too) would love a copy.  It’s easy to identify - the employee’s name “K Livingstone” will be the giveaway.

Now, go out there and make some money – the SMART way – which includes minimising taxes – It’s what you keep that matters most!

Richard C

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I was reading an article in the Times today – that the job of ‘Director General NHS IT’ is to be split in two following the resignation of it’s present incumbent – but are they going to split the £275,000 salary cost in two? Of course NOT!

But it wasn’t actually the poor taxpayer ‘footing the increased cost’ that got me thinking - it was the ‘why’? Admittedly, as jobs go, this one’s a biggie; but how can you have TWO people doing ONE job?

But then this IS the civil service I suppose! And haven’t we been seeing this phenomenon evolving everywhere we look in the NHS – more and more managers, multiplying like the very viruses they are ultimately seeking to eradicate?

And it’s this curious phenomenon, which I know you too will have experienced for yourself, that I wanted to discuss today.

It’s called “Parkinson’s Law”, a humorous observation (not a scientific law) that states that “work expands to fill the time available”. The observation was first articulated by ‘Cyril Northcote Parkinson’, appearing as the first sentence of a humorous essay published in The Economist in 1955, later reprinted together with other essays in the book Parkinson’s Law: The Pursuit of Progress.

And guess what - he derived the dictum from his ‘extensive experience in the British Civil Service’.  Now isn’t that a coincidence?

So here it is – this man, Parkinson, says that it will take you as long to do a task, as you have time to do it. So basically, the amount of work you have will expand to fit the available time you have, or the available time you give it.

And here is my point – when you need to achieve something, setting yourself deadlines becomes very important.

You see, without deadlines and time pressure, you rationalise your tasks within the parameters of Parkinson’s Law.

And, short-term deadlines are far better and more tangible than long-term deadlines (or goals) - long-term goals are just too distant to be real enough to need reacting to. Not that you shouldn’t set long term goals - I do - but for effectiveness, a series of short-term goals is very likely to be just the motivation you need.

So get out there, set your deadlines, keep up the pressure, and watch your output improve.

Richard C

I don’t know about you, but I can’t stand shopping at Ikea.

I don’t particularly mind putting together flatpacks. It’s a great concept – well designed and functional furniture that people can afford. And I’d much rather have a house kitted out with Ikea products than the dreary stuff obtainable from most other DIY chains.

It’s just that I find elbowing my way around one of their warehouse is such a depressing experience. Even if you go in just one item, it still seems to take most of the day to get in and out of the place. (And heaven forbid that you have take something back for a refund or replacement – that takes even longer!)

But where am I going with all of this? Well, as much as I find their shops depressing, I have to say that an interview with the company’s president in this weekend’s Sunday telegraph stopped me in my tracks. . .

Anders Dahlvig, president of Ikea, came out of with one of the smartest business quotes I’ve read all year!

He was discussing the impact of the housing slump with interviewer James Hall. Noted, was the fact that many DIY retailers are pretending that a housing downturn is not an issue, on the basis that if they bluff it out and persuade people to stay put rather than buy new homes, they will then spend more money ‘DIY’ing up’ their existing house.

Dahlvig dismissed this with refreshing honesty. “Oh, they (consumers) spend less. Overall consumption is always down, especially when the housing market is down. It is not a concern, as that is the nature of business. You have good times and bad. After sunshine comes rain. We have to accommodate that.”

Now, Dahlvig is of course in the lucky position of running the market leader, said he can afford to be blunt about a recession – his rivals are likely to suffer more than he does. So there was nothing staggering in this comment. It doesn’t take an Einstein to understand that business goes through ups and downs. Economists even call it the “business cycle”. But to hear this clearly stated amidst the gibberish that most business people and politicians are currently sprouting about the ‘credit crisis’, is unfortunately rare.

You can’t eliminate the business cycle

Gordon Brown said he had eliminated boom and bust. We all knew that was rubbish, but everyone went along with it because he said it in the middle of a boom - and no one wants to believe that the boom is going to end.

And that is the trouble. You can’t eliminate the ‘business cycle’. Because to get rid of the bust, you also have to get rid of the boom. And as booms make everyone feel richer, no one wants to do that.

So we all pretend that a boom is not a boom. And we come up with increasingly ridiculous justifications to maintain this pretence. House prices rise because there is too little supply, or there’s too much demand, or there’s not enough land! And if credit does have anything to do with it, well, that’s okay, because we are now in a world of rising incomes (not inflation), permanently low risk, and permanently low interest rates.

Maybe if we all just accepted Dahlvig’s point – that ‘ups and downs’ are simply the nature of business, and life for that matter – then we wouldn’t be so terrified of booms coming to an end. Also, we would make sure we prepared ourselves for the hard times ahead while the good times are still around. (They even knew this in biblical times if you’ve read the story about Joseph.) If we accepted that good times had to end then we wouldn’t strive so desperately to keep these booms going way past their sell by date, and thereby ensuring the bust wouldn’t be quite so brutal.

Why the squeeze on small /medium sized business is bad for us all

Of course, it’s now too late for us in this business cycle. And while the Ikea’s of this world can ride out the hard times, is much tougher for your average business owner. In the first three months of 2008, profit warnings hit a seven-year high, say Ernst & Young, international accountants. Life for small businesses is particularly tough.

Late payment is one of the big issue for small businesses, says the British Chamber of Commerce. Just as the banks are tightening up, so the big corporates are also paying less promptly, thus turning the screw even more on their less fortunate suppliers. The Federation of Small Businesses reckon that 10% of business failures are caused simply by late payments resulting in severe cash flow crises, reports the Times.

But is this the real point?

Nearly 3/5 of the private sector employees work in small businesses. Anyone still predicting that the UK can ride out a credit crunch without a rise in unemployment, and the consequent decrease in consumer spending, should perhaps take these figures into account.

So, for you SME business owners, now’s the time to make sure you keep your credit control tight and your liquidity strong. Remember, “cash is king”! You can’t pay your bills with stock, debtors or promises – your suppliers will only take cash. And no cash = no supplies = nothing to sell = bust business (and probably a ‘broken’ you too).

Apologies for the morbid realities stated above, but my concern is for you – just get out there now, optimise your business, make money the smart way, sort it, and you too will not only  survive the ‘bust’ end of the business cycle but be ready to ‘make a fortune’ next time round!

Richard C

According to researchers at the University of Utah, using a larger monitor screen could save you up to 2.5 hours per day.

Specifically, the test subjects completed everyday office tasks, like editing documents and manipulating spreadsheets, 52% faster when using a 24-inch monitor than they did the same work using an 18-incher.

I’m not sure who uses 18-inch screens - 17” and 19” are more typical in this country – but if they are referring to documents and spreadsheet work, then it would seem to be a mostly scrolling-based discrepancy?

Thanks to Tim Ferriss for this one (he’s an intriguing fellow).

In my book, that’s a whopping 33% increase in productivity!  Does this signal a frantic change of IT equipment across the office world?  (If so, maybe it’s an opportunity to nip in and buy a few shares in Dell, etc)

And, what hope is there for those of us who love our laptops?

Go, make changes, and make money the smart way.

Richard C

Wishing you, one and all, a happy Easter break.

I’ve never been entirely sure where the Easter eggs or Easter bunnies fit in, but Easter is a religious festival for many (with pagan origins we are told). It’s origins however seem to matter little these days, but what it certainly does mark is the ‘new start’, from whatever aspect we view it. Significantly, in the northern hemisphere, it also marks the end of winter and the start of spring. And spring brings a new vibrancy to everything around us and in everything we do.

And in business too, it seems, shaking off the winter bleakness brings out a freshness of ideas, new plans, enthusiasm, renewed vigour and energy. So, this weekend, take a little time off for yourself, sit down in a quiet place, and think about those activities (both in your business and in your life) that might become the ‘geese’ that will lay your golden eggs this Easter.

Now go have a ’smart’ moment or two this Easter.
(and if you don’t know what the acronym ‘SMART’ stands for, tune in again later this month when we shall be exploring planning and ‘goal setting’).

Richard C

Following the previous article on ‘Debt Freedom’ day, it’s timely now to mention ‘Tax Freedom day’ (possibly 2nd June) - as today is 12th March and it’s budget day here in the UK.

Again a hypothetical date in the calendar year, ‘Tax Freedom Day’ in the UK, as calculated by the Adam Smith Institute, it shows just how long we spend working for the Government Treasury, rather than working for ourselves.

Tax Freedom Day is calculated on the income tax, national insurance, council tax and indirect taxes (such as fuel duty or VAT) paid by someone on average income, as a proportion of that income. The boffins work it out by comparing government tax take with national income. They then convert that proportion into days of the year.

The preferences for stealth taxes in the past few years has meant that it’s becoming harder for people to understand how much they really are paying.

Currently in the UK, 41% of average income goes to feed the government tax monster, which translates to 153 days spent working for the Government and 212 days for ourselves, putting ‘Tax Freedom’ day as either 1st or 2nd June.

5 months of ‘slavery’ every year
(200 years after Wilberforce)

This means that if you are the average UK resident you will have to work a full five months of the year solely to pay your various tax bills. Last year, that meant working from 1st January to 1st June – just to pay your taxes! The March 2007 budget did nothing to improve that, and I suspect that today’s 2008 budget won’t either.

that leaves only 4.5 months to fend for ourselves

So, add that on to the 70 days ‘Mr Average’ works to pay just the interest on his borrowings (excluding mortgages), mentioned in ‘part 1′ two days ago, and the average working Briton still doesn’t earn a penny for themselves until 12th August, leaving just four and a half months to earn all the money needed for our food, clothing, etc, etc!! Any wonder then that personal debt continues to escalate annually?

Question for Gordon - maybe if he reduced the tax burden (the excessivenss of which he’s been warned about by his international peers on many occasions) perhaps Mr Average wouldn’t have to borrow so much, thereby making for a healthier and stronger UK economy?

Are we in a perilous state? I’ll leave you to work that one out!

Now get out there, beat the average, and earn money the smart way.

Richard C

PS.  Register on BurnsWaring.com now to receive a copy of the budget facts later today

I’m reliably informed that today(March 10th), in Britain, is ‘Debt Freedom day’.

But don’t get too excited – ‘debt freedom day’ is just the hypothetical point in the calendar year when the average worker has earned enough to merely service their debts - and it has fallen more than a month later than last year.

70 days

The average Briton now spends 70 days of the year working just to clear their interest on credit card and loan debt (excluding mortgages), according to Unbiased.co.uk’s annual survey.

That is 39 days later than last year, when ‘debt freedom day’ fell on 1st February.

Personal debt levels have increased by over 10 percent in the past year, and average levels of interest payable on this debt have increased by over 6 percent.

In the current economic climate, it has never been more important for people to realise just how much it costs to service their debts and to ensure they have adequate funds available to do so.

Interestingly, the number of rejected mortgage applications surged by almost 60% in the six months to 31st October, according to MoneyExpert.com, as five increases in the base rate since August 2006 started to bite and borrowers came up against tougher lending rules.

Sometimes in business we need to borrow - it helps grease the wheels of industry - and borrowing to produce a greater return makes financial sense. Beware, however, borrowing for consumption - buying things that do not generate a return - that becomes expensive and has to be paid for out of earned income.

I hate posting blogs that hit you with the facts - they never make comfortable reading during poor economic times. But my advice - times is getting tougher - THINK BEFORE YOU BORROW.

Now go make some money the smart way

Richard C

PS. I’ll tell you about ‘Tax Freedom day’ in two days time - on Wednesday 12th March as it is budget day in the UK - and what indeed further damage will that do to us poor citizens?

I went on an ‘educational’ course the other day, as I sometimes do, usually for the benefit of my clients. On this occasion it was to do with property investment and development.

Maybe not the most appropriate timing in view of the world’s worsening economies and credit difficulties, but I have a number of clients who have become heavily involved in property investment and development and I felt I really did need to get to understand a bit more about what was driving them forward. I understood what they did in broad terms, but not in detail, and clearly I was in need of some deeper knowledge so that I could help my clients as and when necessary.

The two hour introductory ‘freebie’ was held at a local hotel, which I attended, knowing full well that it was the funnel to the ‘actual course’ itself, to be sold at some stage during the evening. When finally revealed, the ‘property investment course wasn’t too expensive and, willingly, I allowed myself to be signed up.

I had a mission - to discover more

So the day arrived, the start of a three-day course into property investment - I was actually looking forward to this. The morning trickled along with lots of interesting facts and information, and then there was a period, just prior to lunch, on ways of extracting maximum benefit from the use of credit cards. The speaker, using Lucy as a metaphor for the call centre operatives, suggested that Lucy would be only ‘too willing’ to accommodate any request we might put to her – she would advance us additional credit, zero the annual fees, and reduce the interest rate, etc – all for the asking. After all, no one likes upsetting their customer do they? It sounded all too easy. And this was our task for the lunch break.

I can’t say that I had time to try the exercise during the lunch break (too busy talking to others), but a show of hands following lunch indicated that many of the participants (in total 100 attendees) had diligently made their phone calls, and of those approximately 10% had achieved varying degrees of success with Lucy. Good on them, and much applause.

The afternoon continued with some exceedingly good content and the evening homework was set - part of which was to

persevere with Lucy

The morning of day two commenced with a discussion about who had scored any success with Lucy. The results were varied and fairly mediocre in that being a Friday night many of the call centres had minimised operational staff, and certainly those with any level of responsibility had understandably gone home for the weekend.

There were several cursory references during the rest of the day’s proceedings about follow-on courses. And yes, I thought they might well try to ‘up-sell’ allied material or courses. However, what I was not prepared for was the speaker’s revelations and insistence that to achieve success in our property investment we needed more than this course on which we now sat. In other words, our current three-day course was not, contrary to what I’d been led to believe, sufficient to educate us in art of property investing – we would need additional tuition!

The final hours of the day concentrated on the six or seven add-on courses definitely needed to secure our success

and guess what

you had to attend the ‘university’ course before you could continue with the next ‘property specialisation’ course. Each 3 day course, at its “heavily discounted price provided you bought it during this course” cost in excess of £4,000 – i.e. a minimum of £8,000 - with the sky as the limit (as there were lots more ‘new’ courses coming over from America during the year they told us excitedly)!

Suddenly, it dawned on me!

Why had there been so much emphasis on wooing young Lucy? The additional facilities on our credit cards was not for the ‘seed capital’ to our future property ventures as had been heavily inferred many many times during the course, but to cover the cost of booking these additional courses.

How deceptively clever!

And there was considerable pressure to sign up. The main speaker, clearly a master of NLP, used huge swings of emotion, from joyous rescues ‘from the brink of disaster’ to even stooping to shed crocodile tears on several occasions, and all endorsed by a parade of ‘successful’ past attendees of these courses. Unfortunately (maybe) many fell into the trap, some parting with nigh on £30,000 (that possibly they couldn’t afford) - but I wish them well and hope they manage to recover their ‘investment’ over time.

Now I fully understand ‘up-selling’ – lots of organisations do it, some better than others – but I’m not sure how you feel about this one. To me, these guys seem to have crossed the boarder into the ‘unethical’. And I don’t like, or tolerate, unethical selling (hence this blog post).

You know, as well as I, the best way to build loyal customers

be honest and up front – always

Your customers then know precisely what they have to gain or otherwise; they feel informed and in control. And that is when they begin to trust you and will buy more from you.

In this instance, perhaps the initial course should have been sold as an ‘introductory’ course. The fact participants would be ‘encouraged’ to follow on with further ‘specialised’ courses should, I believe, have been disclosed right at the start, together with the content and costs of these additional courses. That way the customer can make an educated and informed decision about what and how far they wish to, and can afford to, go. Being bullied (otherwise ‘doomed to failure’) into parting with precious funds (to ‘ensure success’) during a charged and emotional appeal is, in my book, absolutely not ethical.

I believed, stupidly as it transpires, that the company involved (Rich Dad Education Ltd), working under what I thought was the reputable brand name (I read all the books several years back - they are good, and highly acclaimed), might have been above this sort of deceptive behaviour. But it seems not. Perhaps greed (do the calculations) has taken over.

Shame on you Robert Kiyosaki for ‘lending’ your name to these people.

Now go, be smart, make money, but be ethical - always

Richard C

As you will know from reading my articles I am very keen on sharing and giving – I like to think I cultivate an ‘abundance mentality’ within and around those I come into contact with. Importantly, it’s a genuine wish to improve the circumstances of anyone wishing to take advantage of the opportunities offered.

Contrast that with the ‘empty’ giving because you feel under some ‘obligation’ to do so. There’s absolutely no benefit, to either party, in doing that.

Focussing on ‘physical’ giving for the moment, the futility of ‘obligatory’ giving is revealed in a recent survey from Citi – extract summarised below.

• Britons are set to recycle 73 million unwanted gifts this Christmas, passing on presents worth an estimated £264 million.
• Some 53% of people receive an average of three unwanted Christmas gifts, and almost half of these are given to someone else.
• Women are the most prolific recyclers, with nearly half admitting to giving second-hand gifts compared to only two-fifths of men.
• But 37% of the 1,000 people polled have discerning taste — saying they only pass on “nice” presents.

“A great number of us are missing the mark when it comes to buying the perfect Christmas gift,” says Alison Wright, chief marketing officer at Citi UK.

“But it is important to remember who gave each gift to ensure you do not commit the ultimate Christmas faux pas — and give somebody their unwanted gift back by mistake.”

The above just confirms my message – don’t ‘give’ (whether it’s physical, emotional, or intellectual) unless you really feel you can offer something special that can be appreciated and ‘add value’ (interpret in the widest sense) for the recipient in some way. Only then can the ‘bond’ (again interpret in the widest sense) be meaningful and fulfilling to both parties.

Wishing you a beneficial break during the festive season and – importantly – a successful and prosperous (again interpret liberally as ’success’ and ‘prosperity’ both means different things to different people) new year.

Richard C

I was browsing through an article the other day, which got me thinking about what are some of the key drivers in business. And, whilst there may be hundreds of these at different levels, basically there are only a handful that are fundamental.

For some people, the sole purpose of going into business is to make a maximum profit in as short a time as possible - full stop (or as our American friends say “period”). Now you know, and I know, that really is not the way to develop a business.

First and foremost, always, is the service we provide.

And by ‘service’ I mean the provision and delivery of the ‘benefit’ (whether that be goods, professional services or whatever) to our customer, client or patient. It must exceed their expectations, and be at a price where the perception of value is optimised. ie your wouldn’t want to give your partner (and I’m being politically correct now) a ‘cheap’ diamond as a present, would you?

Profit, clearly, is ‘a consequence’ of what the business does – it is not an activity in its own right.

Provide an outstanding and dazzling service (the activity), and the profit (the consequence) will swell your coffers – do it badly or allow your standards drop (the activity) and your customers will quickly desert you and leave you to die (the consequence).

But that doesn’t mean you must sacrifice your profit, because, without profit your business will also die.

Profit is critical to the very survival of any and every business. It is the investors’ return on capital, it is the lifeblood of re-investment and it is the working capital needed for sustained growth. Without it, the business will not survive.

Therein lies the role of the ‘decision maker’

An entrepreneur is a person who organises, operates, and assumes the risk for a business venture.

But ‘being an entrepreneur’ is not, of its own right, a qualification for success.

The well known business guru, Peter Drücker once said “Whenever you see a successful business, someone once made a courageous decision.”

And therein, perhaps is THE key driver – not just in business, but in life too. This is why so few people actually achieve and succeed – because there needs to be a courageous decision . . . . that they didn’t make. And the courage part of the decision is not what the decision is about, but the ‘action’ and ‘consequences’ of making the decision.

Where are you right now?

If you are NOT where you want to be, in your life or your business, then the chances are that you haven’t made enough (or any) of the necessary courageous decisions. And I underline the word ‘YOU’ because, if that is the case, then all the strategies and theories in the world won’t help you – because only YOU . . . . and YOU alone . . . . can change your future.

Now, go make some courageous decisions - the smart way!

Richard C