It’s taken me 30 years in business to learn these 12 tips, most of them the hard way! You certainly don’t have to agree with all of them, but I hope that at least some of them help you.
Because this article is so long, I’ll be running it in four parts, one per weekly newsletter, with three tips in each. What follows below is part two, with tips four to six…
As I have announced that I will soon be finishing in my role as Editor of Bicycling Trade, I thought I should try to leave you with something of value that’s quite personal. Usually I try not to ‘editorialise’ in any article other than my Editorial column. That is, I try to simply report the facts and to keep my personal opinions to myself, but this article is different.
None of the tips below are completely original. We’re all an amalgam of our life’s experiences. We learn from our parents, school mates, teachers, our business and life partners and many other sources along the way.
No two people have identical life experiences, so it’s unlikely anyone will fully agree with all of my tips in this article! Please feel free to give your feedback. I’ll still be in the hot seat until Friday 30th June 2017.
One final caveat before we get started. I am not a qualified financial advisor. Please do not follow any of the advice that I give in this article without seeking independent advice from an appropriately qualified professional.
- Tip Four: Understand What’s an Asset… and What Isn’t
Here’s a simple definition of an asset that you won’t find in too many economics textbooks: ‘An asset is anything that puts money in your pocket.’
By that definition a lot of things you write in the ‘Assets’ section of a typical bank loan application form don’t qualify as assets, such as your car and even your house.
I can hear some of you asking, ‘But don’t they always say that your house is the most valuable asset you’ll ever own?’
Yes they do say that, but how much money has your house put into your pocket lately? It’s more usually a flood in the opposite direction.
I’m not saying that home ownership is a bad thing. We strongly encouraged and assisted our daughters to buy their first homes upon turning 18. Now more than a decade on, both are glad they did and still own those properties.
Houses are a good store of wealth and attract some very nice tax concessions. People who spend their lives trading up to ever-larger homes with ever-larger mortgages might look very wealthy in their double storey McMansion and two new European cars parked in the driveway. But often it just means they’ve got a lot of debt.
A better test of financial wealth would be to ask yourself, ‘If my wage stopped tomorrow, how long would it be until I’m feeling the pinch?’
For many Australians with their credit cards maxed out, car loans and other forms of ‘bad debt’, the answer would be ‘Two or three weeks.’ If you’re running a business, that answer equals major stress and risk of failure at every drought, flood, election or whatever other potential business disruption you’d care to name.
Your goal should be to truthfully be able to answer, ‘If my wage stopped tomorrow, with no prior warning, my family and I would be fine for the rest of our lives.’
To do that you need a diverse portfolio of assets that pass my definition – things that put money into your pocket.
This could include cashflow positive rental properties (don’t start me on negative gearing!), dividend paying shares and of course your own bike business. Or ‘businesses’ – there’s no law that says you have to stop at one business, just make sure they’re all profitable!
- Tip Five: Your Brand is Much More than Your Logo
Customers will pay more for an item if they value that brand. Just look at Mercedes and BMW. Why do so many customers pay such huge premiums for these brands?
A customer’s perceived brand value is based upon far more than the logo.
Your branding includes everything from your staff’s product knowledge through to the quality of your mechanical servicing, your willingness to warranty your products and services, the ways that you make it easy for your customers to purchase including payment methods, perhaps a home delivery option, the presentation of your showroom, and so the list goes on.
If you want to build ‘brand equity’ then you can’t take shortcuts. Have you seen any shabby looking Mercedes or BMW showrooms lately?
One final point on branding; by becoming a dealer for one or more a strong global bike brands, you’re standing on the shoulders of years of brand building, but whose brand do you really want to build?
As we have seen in recent years, some of the multinational brands won’t hesitate to close a dealer’s account for a variety of reasons, some of which may be beyond your control.
When it comes time to sell your business, you need to have built value into your own company brand. That’s what’s going to boost your sale price the most, not just the brands of the products that you stock.
- Tip Six: Marketing is Much More than Just Advertising
Over 20 years ago a business savvy bicycle wholesaler, who was also a major advertising client of Bicycling Australia at the time, sat me down and drew a pie chart.
As he drew, he explained that advertising is just one wedge shaped slice of the pie. He then drew names on the other slices including public relations, product pricing, customer support, staff sales training, community involvement (think shop rides, working with your local school etc), rider or team sponsorship, market research, shop cycling kit, signage, free first bike service, plus a few others. Today you would add social media and perhaps a few more items that didn’t exist back then.
Where does marketing fit in? Marketing is the whole pie.
You should think of marketing as everything that you do in your business that enhances the exchange between you, your customers and your potential customers.
I highly recommend that you read books on all aspects of business management. One of the best books I’ve ever read about marketing is called The 22 Immutable Laws of Marketing by Al Ries and Jack Trout. Sure, it may have been published way back in 1994, but at its core, marketing is all about people and emotions, so the fundamentals have not changed at all.
I’d highly recommend you read this book because it’s written by a couple of battle hardened marketing strategists who have little time for ‘conventional wisdom’. But just in case you don’t take my advice, I’ll finish this section with three of their 22 laws.
- Marketing is not a battle of products, it’s a battle of perception.
- Unless you write your competitor’s plans, you can’t predict the future.
- Failure is to be expected and accepted.
This is then end of part two of my 12 Tips to Help You Succeed series. Look out for part three next week.