The team don’t work

Flush with hitchhiking success, I often encouraged friends to thumb lifts and wherever possible join me on my travels. I genuinely wanted to share the road freedom I had discovered. However, only a few ever followed in my footsteps and on the odd occasion I hitched in company things rarely worked out as planned.

Pain across the Pennines

Easter 1984 was a scorcher. Three of us spent a week walking the Lake District mountains. Such thirsty work led us to the pub each night and on the last evening I persuaded the others to hitch home the following day. Train ticket money saved, the beer kitty overflowed.

The next morning (and with a collective hangover and hazy sense of discovery and adventure) we stood with our humungous rucksacks by the roadside.

Unfortunately, this trio of fluffy half-beards did little for passing motorists and it didn’t take long before I was getting abuse from the others. “You said we’d get picked up within 30 minutes Harrington…” and other similar but unrepeatable accusations were fired my way. It quickly dawned on me just how much easier it was to travel alone.

Eventually, a slightly battered motor-home did stop. Perfect! I felt vindicated. Rick and I scrambled in the back door and Adi arched his hulking frame on the passenger seat next to the driver.

For the first few minutes all seemed fine as we made headway along the A66. But the romantic rosy picture of hitchhiking I had painted the night before was about to be completely torn up.

Our Leeds-bound driver rarely broke 40 mph and chain smoked all the way. Between puffs she ranted continuously about ‘hating sport and competitive activities’ and we’d regularly hear a loud horn sound off as another angry driver risked life and vehicle to pass our chug-along.

Trying to maintain a degree of harmony in front, Adi never disagreed or questioned any of the driver’s opinions. She never asked him a question. He felt it was better not to mention he was off to the Seoul Olympics with the canoeing team that summer.

That nightmare 90 mile journey to Leeds took 5 long hours and included two stops. Delighted to escape we tried to hitch south to Nottingham but without success. With daylight hours running out and patience long gone we eventually gave up and walked to the Leeds railway station. Adi and Rick never hitched again and I decided not to encourage others to travel with me.

Lessons for the entrepreneur

When you think about starting a new business for the first time, it can be a scary experience if you’re going it alone. As a result, there is a natural tendency to want to reduce the sense of exposure and financial risk. One way of doing this is to involve others in the new venture.

Unfortunately, your own perceptions of how you want to run a business are unlikely to be the same as other people. Whilst every individual will have the best of intentions at the outset, it’s very easy for things to fall apart later – with potentially disastrous effects.

So if you do want to create a business with others, you need to dig deep so that all involved really understand and appreciate each others’ motives, values and goals. Taking time with this process pays real dividends and don’t be concerned if people choose to back out – much better that they do this at the outset.

I loved hitchhiking because I enjoyed the freedom to make my own decisions and deal with the uncertainty. If things went wrong I got a sense of achievement by overcoming the challenges that presented themselves. However, after the motor-home fiasco I realised that I didn’t want to hitch with other people unless it was absolutely necessary (I’ll write about a round trip to Lands End with another friend later).

Working solo is completely different to working in a team and if you are making career decisions it’s important you know the kind of environment where you work best. Teams can do amazing things but they can also stagnate as well as halt meaningful activity.

Whilst entrepreneurs do not always succeed, it is their single-minded determination and ability to act quickly and without time-consuming consultation that often makes them successful. And their working environment gives them plenty of freedom to make choices, something that is often much less easy when working in a team.

Key Learning Points: Entrepreneurs enjoy making things happen and can be very single-minded. Such behaviour is typically not as effective within a team. When starting a new business think carefully before committing to working with other people.

Jump the job queue: Free is the way

Frustrated, annoyed and angry are just three of the more polite descriptions for how I feel when I see waste.

Whether it’s a plate of half eaten good food or a quango created to check a tax dependant public body – in my opinion it’s senseless and myopic waste.

A shrink might say my take on waste led me to hitch hiking. No unnecessary money was spent and my carbon zero approach to travel left the ozone layer none the worse. That said, I was often skint – so don’t think I was some kind of evangelical environmentalist seeking a better world. I wasn’t that bright.

Respect time & money

Like hitchhiking, entrepreneurs quickly recognise that time and money must be treated respectfully and cannot be thoughtlessly wasted. Pennies and minutes really matter and if mistreated will kick the abuser hard sometime later. But orders rarely walk in the door and therefore decisions about spending money and time, so that work is won, need to be made all the time.

In this economy, entrepreneurs have had to develop more innovative and creative methods in order to find and secure income, orders and sales. One clear development is the array of free offers that are now available. Just look at digital applications. How many are not charged for in the hope that the prospect will test and subsequently pay for something later? This approach is far less wasteful than mass marketing and seemingly involves both customer and supplier in the building of a better and more sustainable relationship.

So what can the entrepreneur teach the job hunter?

If you are seeking work in these difficult economic times, you can benefit from the entrepreneur’s creativity and learn how to jump the job queue. So many people are sending out endless CVs and going to the job interviews (but without much success). If this is you, I suggest you put a stop to the expense and change your tactics.

Learn from Ivan Gonzalez

Ivan Gonzalez, a young Mexican man, lived in a cramped one bedroom flat in London with his wife. Keen to work in the pharmaceutical industry he wrote endless application letters, attended many recruitment fairs and secured a handful of interviews. But with thousands of people competing for the same space, and the economy in a nosedive, he never got a job – apart from being a poorly paid waiter working long shifts, often at an anti-social hour.

After a couple of months, Ivan reasoned he was probably wasting his time and money competing directly against other job hunters who might be better qualified or connected. So he stopped writing the letters and catching buses and trains; instead he found a new way to reach his employment goal.

Ivan researched small pharmaceutical companies on the internet and then wrote a personal letter to the boss (by email) offering his time for free for several weeks. It didn’t take long for one of his target employers to respond. Within a small space of time Ivan had thrown himself into work with a pharmaceutical research agency knowing that he had a short time to impress and build the necessary trust.

And the approach worked. Ivan was offered a full-time job by a highly satisfied employer who was delighted to find a hard working, entrepreneurial young man who he discovered would fit perfectly with the team. As a bonus, the employer hadn’t wasted any time in the recruitment process and certainly had not paid an agency a handsome fee to find Ivan.

More than ever, employers are seeking to take on people who demonstrate entrepreneurial thinking. If you can follow Ivan’s lead you’ll cut out waste, streamline your efforts and probably find the kind of job you are seeking, quicker than you think.

Key Learning Points: Don’t waste time & effort following the crowd and wasting money & time. Learn from the entrepreneur & offer work for ‘free’. This compelling price & approach gets you noticed. You’re attitude means you also more likely to be hired.

Figuring out pricing

Many start-ups wrongly copy the hitchhiker when it comes to pricing. An outstretched thumb works by the road, but a finger in the air almost always plucks financially flawed figures.

Pricing products or services (especially the first time) isn’t easy, but considered calculation based on some key principles can make all the difference between business success and failure.

Using the following fictitious example throughout, this article seeks to highlight what needs to be done to price goods effectively.

Kay has started a business making specialist waistcoats and wants to sell them online. She is not confident about setting a price for the garments and is worried about being too expensive or too cheap. How does she price the waistcoats?

Know your ‘costs of sale’

It’s vital Kay knows what it costs her to make the waistcoats. Known as ‘costs of sale’ this information makes business and sales planning as well as pricing decisions much easier. After a bit of calculation she works out that the materials to make each garment cost £15 and it takes her less than half a day to make a waistcoat from scratch.

Kay is surprised at the inexpensive costs and thinks that by setting a price of £30 per garment she will be making £15 profit per garment – a 100% margin! But then she realises that the £15 profit in half a day has to also cover her own salary; and then there’s all the other bills such as energy, website costs, phone bills and bank charges etc. Before she does anything else Kay decides to work out her total costs each month.

Know your overheads

Kay discovers that including her salary, phone bill, energy costs etc. (but excluding all material costs to make the garments) she is committed to spending £2,000 per month on her business (these are her overheads). She reasons that she works 20 days a month which means each day costs £100 before she makes anything! Armed with this information, Kay is a little more confident about setting an appropriate price to make a profit. She scribbles the following information down on a piece of paper:

Waistcoats made in a day = 2  / Total Sales Value = (Price * 2) ?

Total Cost of Sale = £30 / Total Overheads = £100  (Total costs per day = £130)

Breakeven Point

Kay immediately sees that if she sets a price of £65 per waistcoat and makes and sells 2 a day she will breakeven! Then she realises she could set a higher price and make more money. But will anyone buy waistcoats priced at £65?

Competitor Research

Information, Kay tells herself, brings power and she immediately searches online to see how comparable waistcoats are being priced. She discovers that garments are available from £50 upwards and those of similar quality are typically around and above the £75 mark.

Kay concludes that if she prices her waistcoats at £70, they will be affordable to the customer, competitively priced and will ensure she is selling at a profit. The information gleaned from the competitor review has also helped her to promote the waistcoats so that prospects feel (rightly) that they are paying a very reasonable price for a first class high quality garment.

Most importantly, Kay feels she has a robust formula for working out future prices which means she can much more strategic in her thinking and thus construct meaningful forecasts and plans. In addition, she is more confident and informed about her wider business finances and now understands the fundamental relationship between costs, prices and sales figures.

You can read more about this subject on a number of good websites. The ‘Inc’ site is particularly useful and provides relevant pricing tips and advice. Likewise, if you are running a creative business, this financial information should prove very helpful.

Key Learning Points: To price effectively you must first work out your total cost of sales and overheads. Once you know your breakeven point and have researched competitors, you will make informed & confident decisions about pricing strategy.

How to play the business dating game

This article is accompanied by a warning.

Networking is a very important activity for people running start-up businesses, but it can kill you!

Worry not; there’s no evidence of widespread use of semi-automatics at events, nor are consultants known for popping poisonous pills into pints.

However, there are some well-meaning people out there who regularly attend network meetings and possess a stealth-like ability to bore others completely to death.

The right mindset

Getting on with people is a very important skill in business. Entrepreneurial minds tend to be much more relaxed about meeting others for the first time and networking events are organised so that people can do just that.

Unfortunately, many people network with the wrong mindset – they focus on themselves and treat all the people they meet as potential customers or people to talk at. And unfortunately, the majority of people in business confuse selling with talking. To find out more on this dynamic, read: ‘Building sound business relationships from scratch’.

As a consequence, networking events are often dominated by people trying to sell to one another which can get rather dull. And once you have been talked at by more than one person on the subject of insurance, banking or image consultancy for example, you’ll notice that you become quite defensive and/or your concentration levels start to flag.

As a consequence, you’ll either get wound up and want to leave or you’ll fall into the same trap and start firing ‘talk salvoes’ back, all about yourself. It’s like two magnets with the same polarity squaring up to one another.

How should it work?

Ideally, networking events would attract buyers and sellers in equal measure but it’s a very rare thing. However, this powerful equilibrium is demonstrated perfectly in the world of hitchhiking because the hiker and driver are equal in number and actively seek something from the other person. Typically the hitchhiker is seeking transport and offers companionship; meanwhile the driver is seeking companionship and offers transport.

One of the underpinning reasons why hitchhiking works is the fact that neither party expects to pay or receive money (I did once offer to pay a driver because I was so relieved to get a lift but he rightly refused – we got on like a house on fire).

With no money changing hands there is no sense of expectation or failure. Everything is based on trust. People behave in a much more relaxed manner and are typically much more open and interested in the other person and their ideas.

Open mindedness

So to play the business dating game effectively, you need to focus not just on what you offer but critically on what you seek and might buy. Such an open-minded approach requires you to question and listen (avoids boring) and means you find suppliers as well as clients. By questioning and listening, you allow the other person to talk and discover all sorts of stuff which you didn’t know beforehand.

Importantly, being open minded also means you are able to discover creative ways to work in partnership with people. Rather than buying and selling from each other you can be innovative and work together to provide a fresh product or service to new markets that you had not previously considered. It doesn’t have to be complicated, it just requires you to look at what you both have, think laterally and be prepared to work together.

And if you can seek and forge effective partnerships, you will be very effective as well as popular on the business dating scene.

Key Learning Points: Networking is an important business activity but don’t fall into the trap of just telling people about what you do. Uncover new opportunities and partnerships by questioning, listening and keeping an open mind at all times.