Kaspars Journal

Backward entrepreneurship (observations from Latvia)

One year has nearly elapsed once again. For me it has also been a year since I visited Latvia. Technically speaking Latvia is merely a destination whenever I visit my relatives as this country is bizarre at so many levels that events such as Christmas can only convince me to come here. Obviously good reasons can outweight the bad ones :)

During my holidays I was on the hunt for some shoes I specifically needed for one occasion so didn’t want to spend much money for them and had a chance to visit handful of shops. One of the scapegoats was actually a small food shop so maybe the problem is widespread everywhere. I noticed that all shops were overstaffed and staff were standing around, talking with each other and were so busy doing so that they didn’t look too approachable in case if customer needed something. You would probably disturb them LOL. The first shop selling clothes was probably in the size of two typical living rooms (by the way located in flat converted to commercial premises) and had two ladies working on the floor. Both were having some non-work related chat and body language was clearly telling that you are not welcome in their circle. Now I’m even wondering what is their purpose at all and what kind of idiot owns this shop. Picking clothes can be done on self-serving basis, you don’t need two people watching over you all the time and what questions you might ask them (they don’t even have warehouse somewhere at the back which would store different size apparel which would require shop assistant to fetch it from there). Everything they have is up there on shop-floor. Upon exiting the shop one of the ladies even tried to pull a nice marketing stunt on me by shouting “70% off!!”. Thank you for taking time off your chat and telling me that! Maybe they should just get speakers and play the same on repeat. Second shop was even worse. Size probably the same but with three ladies! Two again having a busy conversation, third one was standing at the till but was dormant as well. Case with food shop was that they had 4 shop assistants probably a few meters apart from each other and obviously didn’t have enough customers to keep busy. Shop was terribly planed out because merchandise was barred from customers with very long counter so you had to ask them to give you what you wanted. Can anyone tell what was in shop owner’s mind when he made this up? In my opinion there should be one employee instead of these four ones - cashier! And even that one would have to clean floors up when there is nothing to do otherwise they all look like dumbstruck idiots when seeing one customer every 10 minutes. It brings me to conclusions of why this country can’t get rid of poverty. In real terms Latvia hasn’t upped median income a lot during last years. Money was spent and masses improved their conditions (enjoyed until inflation caught up) however it was owned by somebody else and things are returning to where they actually belong now as without external loans this country has slipped back to some 2004 levels when we just joined EU. And this is happening while we have one of the worst economic depressions in the world. Instead of making people redundant and looking for ways to get remaining ones to do more, majority chooses to cut salaries and this will leave a major impact on how much people will earn in the future as fundamentally no changes are introduced in the way how government and private establishments are doing their work. Unless Latvians are attracted to poverty permanently as sadists are to pain this looks like a pattern of stupid person who once again does the same thing with expectation to achieve different result.

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Some tips for selling on eBay

ebayEbay is getting more and more complicated than it used to be. Sellers are affected by new introductions few times a year and you just can’t anymore simply list your item and relax in order to do a serious business on eBay. Quite opposite is happening to buyers and I’m happy with that. It is easy to pay and eBay policies are designed for sellers to provide best possible experience for shoppers. There is no reason to be upset because after all you just need to make buyers happy, as the saying goes, treat others as you wanna be treated. So I personally welcome all new challenges because it is opportunity for me to gain that market share what bad sellers have lost.

I have been professionally selling on eBay for just 3 months now but I learned a lot during this time and would like to share some wisdom I learned with the rest of the world.

1. Look after your profit margins. eBay fees, PayPal fees and postage add up!

It is very easy to get excited about new items you could sell but I have learned that numbers always will tell you the truth. Fees I mentioned simply will cut in your margins without a doubt leaving you with nothing after all expenses will be deducted. Don’t neglect expenses which may seem little from a first glance. Take a good hard look at numbers. Not only take into account actual postage you need to pay but also packaging . It is very important if you sell items of small value but if you sell items with big value consider that you will either need also to insure your parcels or factor in losses due to damaged/lost post or fraud.

2. Your time is important!

After you have worked out how much profit can be made you have to assess how much time you will need to sell 1 unit. I’m not talking here about listing your item but all the work you need to do from getting stock, packing it and getting it to customer. There is no joy to sell item for 5£ even if you make a profit of 2.50£ (that’s 50% margin), when time involved is 2 hours for 1 unit. Don’t force yourself to work for pennies!

3. Be realistic with your sales goals!

When I first prepared my plans to sell on eBay I thought it will be easy to sell 10 iPods a day at my desired price which was average price of that item. Wrong! If you plan to sell in auction and flood market with item which has got a small number of daily transactions you will drive the price down because people will have a big selection of items to choose from. So you will sell but heavily under priced. But if you wish to sell at fixed price you need to do market research to see how often you might sell 1 unit. It is hard to tell how often you in particular will sell but you can research other sellers to make a rough guess. It is better to underestimate than overestimate because your cash will be tied up in stock even for months and if you are on tight budget this can be the end of story for some. But you can always buy more later.

4. Provide exceptional customer service!

eBay is place where buyers and sellers communicate much more than in other shopping venues. You need to write detailed descriptions, you will face questions from buyers as seller and customers will communicate back with feedback comments and detailed seller ratings. You have to pay attention to relationships with buyers. This is important characteristic of eBay.

More tips to follow as I learn :)

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How to treat failure

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Can you believe that there is a near 300 page book written for simplest device ever made?

ipod_book I came across one eBay listing today where someone was selling this book. So I looked it up on amazon out of curiosity to know what’s in it. Knowing iPods very well I can tell that these are most straight-forward devices ever made (unless they fail in which case it can be puzzling to work out what’s up with them) and even Apple only include a few page user manual in a box because of simplicity of navigation, menus and intuitive controls.  Book is basically the same user manual with some extra instructions how to use your iPod as external hard drive for example but mostly you get what you already know. In nearly 300 pages! Who needs to buy a book to know how to turn your iPod on? I’m sorry but it is aimed at daft people and is waste of paper, money, time and resources.

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Excerpts from Richard Branson’s book “Business Stripped Bare”. Part 6.

Another chapter completed. In bath. I enjoy reading books in bath for some odd reason. I think it might be because I have very little time left for reading books so I found an opportunity to multitask :) Let’s cut to the chase!

“Keep a cool head. You’re in business to deliver change, and if you suceed, the chances that no one will get hurt are virtually zero. This is the rough and tumble of business. Be sportsmanlike, play to win, and stay friends with people wherever possible. If you do fall out with someone, ring them a year later and take them out to dinner. Befriend your enemies.

Engage your emotions at work. Your instincts and emotions are there to help you. They are there to make things easier. For me, business is a gut feeling, and if it ever ceased to be so, I think I would give up tomorrow. By gut feeling, I mean that I believe I’ve developed a natural aptitude, tempered by huge amounts of experience, that tends to point me in the right direction rather than the wrong one. As a result, it also gives me the confidence to make better decisions.

My plans acquire detail as I test them against questions that on the face of it are really quite simple - and more to do with emotions than figures. If we create the best health club in town, will existing gym users go to all the bother of transferring their memberships to us? If the answer is yes, then we will give it a go and see if it works.

This is the point where being a well-funded company puts you at a tremendous advantage. Big business can afford to do this sort of thing. The good news for small businesses is that the big ones rarely bother to use their advantage to its maximum. Why? Because they’ve forgotten how to think like entrepreneurs. Worse still: many of them have forgotten how entrepreneurs feel.”

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Importance of outsourcing

Outsourcing services is very important if you wish to make a great leap forward in terms of your own productivity which can eventually be expressed as how much you earn per hour. If you all of the sudden have a huge workload to tackle it is not wise to save a pound because you will force yourself to work for pennies later. In fact you are losing money if you opt to do all small/time intensive tasks for yourself because you are left with very little time for tasks which are more valuable. Also, if you are on your own, you are limited to certain growth because your two hands can process only limited amount of work whereas outsourcing is limitless.

Another great reason to outsource is if you are not good at something it is much better to scrap big learning curve which will be involved in learning to do things in proper way in favour to seek companies which specializes in niche. They have expertise and they are probably much cheaper as well because their work has been optimized and they know all the ropes.

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Let the time revaluate your ideas

This comes straight from my own experience and has been affirmed by not just one occasion. Let’s assume you have some great idea and you start to make steps to turn it in reality. Don’t expect that you have exhausted idea completely at the day when you spent many many hours to implement it. Your idea is not even close to excellent but also it has more potential than you think at the moment. When you put all your focus on the single thing your subconscious mind kicks in much more later than your conscious mind. Subconscious mind is one which doesn’t think like 2+2=4, it is responsible for emotions, creativity, dreams and other things where logic doesn’t seem to be present. When you take time off, your brains are still crunching through your idea, especially your subconscious mind and what often happens is that right answer strikes in your mind unexpectedly at time when you don’t think about your idea. It might happen right after the sleep or in the shower. All of the sudden you have a new solution which makes sense. Also if you don’t have this kind of moment, I suggest that you come back a day later  to see what you have done and you will spot new flaws in your idea, something will jump at you. Don’t rush, improve over time.

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Excerpts from Richard Branson’s book “Business Stripped Bare”. Part 5.

Whatever your brand stands for, you have to deliver on the promise. Don’t promise what you can’t deliver, and deliver everything you promise. That’s the only way you’ll ever control your brand. And beware: brands always mean something. If you don’t define what the brand means, a competitor will.

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Recession is a double edged sword

More and more reports are showing up in news about countless job losses, foreclosures, businesses going bust and overall perception is that all of this is a bad thing. I would certainly agree that economical climate doesn’t benefit from these factors and it also leaves a big impact on social life. Everyone is required to make some important adjustments to weather this bad climate and this is a blessing in disguise. Adjustment, change, need for improvement and learning from past mistakes. When do we understand that we have screwed things up? Then when we actually are getting slammed, when we feel that our standard of living is not holding on to that expected level anymore, when the job is lost and loan still has to be paid. I believe that everything in life must be earned. There is no free ride. There is only imaginary maybe but eventually your fortune depends on how much effort you have been putting in. And I think in this time majority of people are losing things because they were getting them just too easy. People have no sense of value. They can’t figure out realistically what they can afford. Recession is going to teach them that and not just that. I hope more people will come out with strong survival skills, some sensible approach on how to spend money, to use resources more effectively and not to fall for all kinds of financial baits. Recessions is just a process of purifying , natural selection. Some will survive, some won’t. Quite honestly we don’t need losers, we need people with strong common sense, maybe not too nice and more vigilant. To make sure bad things don’t happen again.

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Excerpts from Richard Branson’s book “Business Stripped Bare”. Part 4.

A brand’s meanings are acquired over time. Some meanings will be the product of serious discussions and years of directed and dedicated effort. Some meanings will just stick to the brand, whether you like it or not. Remember, a brand always means something, and ultimately, you can control the meaning of your brand only through what you deliver to the customer.

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