GoHuman Blog

But as I thought about it, I realised I have already indirectly done this myself anyway. Globalisation is here and it’s not going to go away. I believe that globalisation is a major factor in the world economic crisis – or maybe that should be economic adjustment – and instead of trying like King Canute to keep the tide of less expensive overseas labour away, we just have to find ways of working with it and adapting to it. There are many positives to be found in this situation.

For example, I have used a website called fiverr.com several times and I’ve been pleased with the results. On fiverr.com people advertise what they will do for five dollars. I have had a cartoon version of a photo of myself drawn, a logo designed, and a QR code that links to my website. The people I purchased from were all apparently based in the US, so even in relatively wealthy countries you can find people willing to offer good, quality work for very cheap returns, for reasons known only to themselves.

When I clicked on the QR code I had commissioned, my website appeared with adverts on it that I hadn’t booked and wasn’t earning any money from – so I’ve nailed the reason behind that one. As for the others, maybe they were looking for ways to broaden their portfolio or have full-time work but wanted some extra cash from doing something they enjoy.

On www.freelancer.com, project fees start at $30 and rarely exceed $200, according to the website. I think we’ll see many more of these websites soon, offering a range of skills within various price brackets. When I designed my own business website, using a WordPress template, was I denying a local website developer income? Not really, because I simply couldn’t afford to pay the £600 which was the lowest price quoted when I tried to find a developer. I just don’t have that kind of money.

The first website template I tried gave me terrible results, so I did an online search and found www.350.com. It has a very user-friendly drag-and-drop system. The result looked a bit rough round the edges, but was easy to update and served its purpose well. I stayed with www.350.com for about a year before reading an online blogging course from Glen Allsopp of www.viperchill.com. Glen’s course explained how to design your own website using an online web-hosting company (I went with http://tsohost.co.uk) and a WordPress template. I am very happy with the result. The website looks professional and is inexpensive to operate. There is much more I could do with it if I had the time, but the important thing is, it brings me customers – relatively high-spending ones.

I launched an online shop about 18 months ago, and I pay for a UK-based professional online shop template service, www.ekmpowershop.com. So I have used inexpensive outsourcing to get me started and then upgraded when the need arose.

Social media is an important learning curve. It’s easy to do it yourself, but experts can help you maximise its potential. Finding the right expert is the problem. I have a Facebook and a Twitter account for my business, but I haven’t made the best use of them. I haven’t had the time – or maybe I haven’t prioritised the time.

Social media can be a great way to reach a target market, to link with the people who like the type of products you are selling. And you don’t have to be a brilliant wordsmith or a marketing genius to use it. I got a few “likes” after I simply posted a cute photo of a squirrel drinking a smoothie and a link to the Daily Mail article it came from.

But this is elementary. A new pub opened near my shop just a couple of weeks ago, and it seemed to be full of customers from the day it launched – despite the fact that the site had been host to a couple of restaurant failures in the recent past. I asked around and was told that it has been running a targeted Twitter campaign. I don’t know whether the owners have put the campaign together themselves or if they have been working with a marketing expert, but they have certainly managed to build up awareness very quickly.

This example illustrates that there are some areas where it pays to work with local people. I think someone based overseas would have struggled to put together a social media campaign of this nature. Clearly, not everything can be outsourced. The trick is knowing when to outsource and when to stay local.

I said I could, but that I wouldn’t be able to guarantee that it would be there before 12:30 – however I would try my best. “Oh, but we’ll have to have it by 12!” was the reply. “Well, I might not have time to do the other sandwich then,” I said. “But we need it!” the secretary pleaded.

It doesn’t take long to make a sandwich, but there were other customers in the shop and the lunchtime traffic was building up. There was no point arguing anyway. “I’ll see what I can do,” I said. Then I turned to serve the next customer. 

“Do you have any egg mayo sandwiches?” he asked. “No, but I can make one up for you,” I said. 

“How long will it take?” he asked, anxiously looking at his watch.

“About five minutes,” I said, not wanting to be hurried. “Umm…” he dithered, looking at his watch again, impatiently. “Umm… OK then.” It actually took about two minutes to make the sandwich, and he seemed very pleased. And the lunch got to its destination at about 12:05.

It would be hypocritical of me to complain about how impatient people are these days. I always seem to be in a hurry, and it does seem to get worse as the years pass. Why is this? Labour-saving devices were meant to give us more time, not less. I remember watching programmes as a child in the 1970s that told us that in the future we would all have so much leisure time we would need more sports centres and libraries to help us fill the long hours. How quaint that sounds now!

I think the economic climate has made things busier for those of us who work. We are expected to do a lot more in less time.

And we should never underestimate the importance of time. When you’re running a business, every minute counts. The minimum wage in the UK is £6.08 an hour for those over 21, and it increases each year. That means every minute of labour for each employee costs the business owner at least 10 pence, and five minutes with a customer costs 51p.

If it takes five minutes to make a sandwich, that 51p has to be factored into the cost. It might seem petty to worry about such costs, but when the business electricity or rent bill arrives, these concerns won’t seem petty at all.

And if you’re the business owner, what value do you put on your own time? If you run a café it’s tempting to compare your prices with the café down the road, or to set your prices according to the price of the food. The research I did before I launched my café advised me to add a percentage margin to the cost of the ingredients. However this method of pricing does not take into account the increasing cost of labour and other costs, such as VAT. So I will have to look into my pricing structure again.

When we visit the hairdresser we don’t just expect them to charge for the cost of the scissors and shampoo and add a percentage to that. We’re paying them for the service they offer, for their time. It’s the same with any service.

That’s why we should never undersell ourselves. Time is precious. Whatever you do for a living, make sure you’re paid the full value for your time.

I’m now working on a new website with a slightly different offer. How do I convert clicks into sales?

I could do it by having the cheapest offer available – but sticking to that principle could eat into the profits. There’s not much consumer loyalty on the internet so as soon as my prices increase, my thrifty customer base would probably vanish.

Instead, I’m going to have to make the readers feel they just have to have MY product – and one way of doing this is to dress it up.

It’s easy to see how this might work by comparing websites selling similar lines.

For example, let’s say you’re a consumer looking to buy a “kiln clip” storage jar. You enter the search terms, and this website comes up. It’s a good website – professional and easy to navigate. But your first thought might be: “I wonder if I can find the same product at a cheaper price.”

Conversely, what if you landed on this page? I know several people whose reaction would be, “Oh, they’re so cute! I love the little dinky one – in fact I think I should just order the whole collection! Ooh – they’ve got beanbags too…”  The website is much more professional, but that’s not the most important thing – it’s the fact that you see the product at its most alluring, and in a way that displays what it could be used for, that inspires you to think of different ways you could use it.

Dressing up your product is not just about pretty things. It’s about presenting the product in a way that gives it extra desirability to the person who’s looking for “one of those” so that they have to buy it now. In YOUR shop.

Here’s another example. If you read about the Fitbit Ultra on this online shop  your first thought might be “I wonder if that’s the cheapest price I could get.” The slogan “Mobile technology specialists since 1992” doesn’t exactly put you in the mood for fantasising about how you might use the Fitbit Ultra.

But this website could have you hooked. It presents so many ways that the Fitbit Ultra could enhance your life in such an engaging format that the price of the product could slide way down the agenda. Oh, and just look at the SKLZ Speed Striker Boxing Trainer and the Quantum Scale shown at the side of the page!

Looking at these websites has inspired me to try and see the website I’m working on through the eyes of a prospective consumer. How do I best present my products so that the reader says: “Wow. I just have to have that!”?

As I say, I’m working on it.

For example, last week I visited the cash and carry intending to buy honey. I use it in our smoothies. It was £7.99 for 1.3kg, or £6.15 a kilogram. I suspected I could get it cheaper at the local discount supermarket.

I was right – the discount supermarket had 500g jars of honey for £1.64, or £3.28 a kilogram, almost half off the cash and carry price.

Honey is not the only product that is cheaper to buy in discount supermarkets, although the cash and carries do offer some savings. You have to shop around to get the best deals.

No wonder so many small retailers are going out of business or selling up. If you compete on price alone you’re up against a lot of unbeatable competition – and in a recession consumers have become increasingly price-conscious. You need to offer something more.

The internet offers great opportunities for anyone with creative talent or a good idea. If you have a skill or can offer a service, the internet allows you to market your product or service directly to your consumers (like on GoHuman for instance!), without having to pay commission to retailers. I have an online shop for The Flavour Co, but because my business is locally-based, I have to work out how to reach a very local clientele.

One person I know who has grown their business by using the internet is my former part-time employee, Christopher Currie. He used to work in my café while he was building up the wedding photography business he runs with his partner, Gillian. He now works full-time on the wedding business. A brief look at his website shows why he and Gillian have achieved success. They are passionate not just about the photographs they take, but about the presentation, the editing and the finished product. They are painstaking in their efforts to get every detail right, and the blog on their website reveals how much they enjoy what they do.

An enterprise like this cannot just be flung together on a whim. It’s the passion – the wow-factor – that makes the difference between an enterprise or idea that stops you in your tracks and a lack-lustre one.

Take this small café, Vanilla Black, which is a few miles away from my own, for example – it specialises in enormous meringues and gooey cakes, but you don’t need me to tell you that. Just look at the picture!

This café is a magnet for hungry, tired shoppers. Of course you have to get the basics right too – a business cannot be run on passion alone. There’s no point offering the best chocolate cake ever if the coffee you serve tastes foul. And you have to be able to look at your finances dispassionately. Customers might be beating down your door, but if your overheads are too high or your prices too cheap, you could still be losing money.

I don’t think I’m there yet with The Flavour Co. I certainly have the passion and have put loads of effort into producing the best-tasting and most nutritious, wholesome food I can, but I need to improve the in-store presentation. At least I know I am still following my dream, and that allows me to keep the new ideas and inspiration coming, while enjoying the journey enormously.

So…what’s your passion?

My motivation in launching my own café was quite different. I was doing a very stressful office job and found it hard to get food that was not sweet, stodgy and unhealthy. I wanted to make light, healthy food available to office workers without giving them a guilt trip if they wanted something a bit more indulgent.

Outside that, my dream of running my own business was of being able to make my own rules, work my own hours and pay other people to run the café when I wasn’t there.

I drew up what I thought was a robust business plan and spent about a year making plans and adding up figures. This advance planning led me away from the idea of a shop selling only smoothies and shakes – I saw that if the business was to survive I would have to expand the concept to include a wider range of food.

I bought some books about running a café and I also worked a few days on a voluntary basis in a busy café. The book that became my bible was Start and Run a Sandwich and Coffee Shop by Jill Sutherland. This book, written by a woman who gave up a career in PR to launch a successful coffee bar chain, details all the steps you need to take in advance of the launch of your café.

I was all set to go – however, I reckoned without the effect of the Great Recession. People are spending a lot less than they used to and as a result I have to work more hours than I had ever anticipated.

Surprisingly, this doesn’t make me too miserable. I enjoy actually doing the job of running a café more than I had expected to, and one of the biggest surprises is how much I love chatting to the customers.

I meet a much broader range of people than I did in my last (office) job. I have some fascinating conversations with customers and staff. I hear gossip and local news, before it hits the newspapers.

If I were to detail the hours I spend not just in the shop, but driving around the cash and carries and markets (in search of the best quality, best value food) – not to mention the meager financial returns – it would put off anyone from starting a business.

Yet, I have no regrets. My new life is more physically demanding than any other job I have done, but much less stressful. I hardly ever get angry. In my previous job I was angry almost every day.

A couple of things have helped me cope with the challenges of launching a small business in a recession. The first is the support of friends and family.

Another thing that’s helped is my love of adventure sports – even though I haven’t had time to do any for the last couple of years. In the past I’ve enjoyed skiing, snowboarding, windsurfing, hiking, camping and back-packing. I’m no Bear Grylls, but having trudged through deep snow at high altitude in Nepal and battled with winds on a windsurf board, if I now have to get up in the middle of the night to go to the fruit market and then carry heavy boxes down to the basement, I can pretend I’m doing extreme enterprise building. And when things go wrong, instead of throwing my hands up in despair, I think: “How am I going to get out of this one?”

As a small business owner, you learn to enjoy the challenges. Each one teaches you something new.

For example, when I first launched The Flavour Co I was making the smoothies using pre-bagged frozen fruit ordered in bulk from a supplier. The delivery cost a flat fee of £17, no matter how big or small the order was. At that stage our sales were quite small. One time I paid almost £85 for a bulk order of frozen fruit, and after the boxes had been dropped off I noticed that the sell-by date was due to expire in 10 days time. I phoned the supplier to complain. He said there had been a big mistake and that the order would be replaced – but it never was.

Instead of making a big scene, I decided to start buying fresh fruit in bulk and getting the staff to freeze it. This was much cheaper, tasted fresher and meant that my staff always had something to do even when the shop was quiet. It also saved a load of plastic.

I often see discussions on social media about “what characteristics you need to be an entrepreneur.” I don’t think there’s any blueprint. Everyone has the potential to be a good entrepreneur.

Rob Law, who invented the Trunki ride-on suitcase for kids, had a rough ride from the business “dragons” on the BBC TV business start-up programme Dragon’s Den in 2006. Since then, 900,000 Trunkis have been sold, in 62 countries.

In a magazine interview last year, Law said: “Being rejected in the Den was the least of the setbacks I experienced. My advice to entrepreneurs is to see every hurdle as an opportunity to develop resourcefulness and character. Once you leap over the first few they start to seem smaller.”

Or in the words of the Roman poet Horace (65-8BC): “Adversity has the effect of eliciting talents, which in prosperous circumstances would have lain dormant.”

“It’s habit probably. People like to stick to the places they know,” I said, not wanting to put pressure on him.

“It’s a shame really,” he continued. “We all go to that overpriced deli down the road, instead of trying nice wee places like this – and then the wee places just disappear!”

Ah – some insight into what new business owners are up against, I thought. I launched The Flavour Co almost exactly two years ago, and it’s only in the last few months that groups of kids in from the local secondary school have started coming in for their lunch – the younger ones, who have just come up from the primary school nearby.

It’s a reflection of adult behaviour – we’ve had regular customers since day one, yet I feel we’re only just beginning to become an established fixture in the area. And I’m still not sure if the shop will survive!

Although my shop is regularly full of customers, it’s hard to make the books balance. We need a more consistent flow of customers. Passing trade often just passes us by because the shop is so small.

In addition, people are spending less due to the recession – we’ve had to delist some of our more premium lines. Our margins are good, but you need to make a lot each day to cover the overheads.

I often wonder whether things would be easier if I’d managed to lease a bigger shop. But that can bring its problems too. This is obvious from the number of larger cafes that are closing down. One day they’re full of customers; the next day their windows are pasted up.

Here’s an example that might explain why so many apparently successful retail businesses are having difficulties.

I recently read an interview with the owner of a coffee bar that had been launched around the same time I launched The Flavour Co, but in a different town. It’s much bigger than mine and according to the owner it has an annual sales turnover of £320,000 a year, which seems like a dream to me.

It’s situated quite close to the city centre, unlike my café/juice bar which is in the west end of Glasgow, close to the university but not right in the centre of town.

The owner of this café has 12 staff working various shifts, and they will be needed as the café serves food as well as several hundred coffees each day.

500 coffees over 10 hours would mean you have to make coffees at a rate of roughly one a minute.

According to the owner, the money doesn’t go far enough to pay his key staff what he thinks they are worth, or to give him a decent salary. I found this surprising, so I decided to do a rough breakdown of estimated costs.

Coffee sold in coffee bars is known to have a very high margin, but this particular coffee bar specialises in high quality coffee and also offers food. There will be some wastage. I would estimate the cost of the stock at 25%, or £80,000 for the year.

That would leave £240,000.

VAT (value-added tax) is chargeable on restaurant and takeaway hot food at a current rate of 20%. This would take £48,000 away from the turnover, leaving £192,000.

Given the central location and size of the café, and the advertised rent of a retail unit on the same street, I would be very surprised if the rent and rates combined came to less than £50,000 a year.

That would bring the annual takings down to £142,000.

The minimum wage in Britain is currently £6.08 per hour for an adult over the age of 21.

The establishment in question has 12 staff. Assuming that some of them are part-time, while there will probably be a couple of full-time managers, let’s estimate that on average they are all on minimum wage and working four days a week, eight hours a day, and that they get holiday pay.

That’s £6.08 x 8 hours x 4 days x 52 weeks, which gives them an average salary of £10,117 each – not including National Insurance, holiday cover and other benefits such as maternity or paternity cover.

£10,117 x 12 = £121,405. Subtract that from the total and you’re left with just £20,595 per year to pay the fuel bills, water bills, licensing, maintenance, bank interest charges – and the owner’s salary.

These figures are based on my own estimates based on the owner’s claimed turnover, but my guess is that his actual costs will be higher than I’ve estimated, not lower.

The owner has never run a café before; he is clearly full of passion and enthusiasm, and he may well make a success of it in the end. But it shows what café owners are up against these days. Coffee bar prices really need to rise if these businesses are to be sustained – but that’s not going to happen in a recession.

The alternative solution when people are reining in their spending, is to attract a huge number of customers. It’s easy to think you’ll be able to do this, but actually making it happen is more difficult. And if you’re planning to open a new café, it’s very difficult to establish how many customers you’re likely to get. Few café owners want to share this kind of information.

Before I launched The Flavour Co I searched for market research on this but could find nothing. Instead I sat in various cafes and counted the number of customers coming in at various times. This gave a very inaccurate picture, because there are so many different factors involved.

A much better idea for anyone thinking of starting a café is to look at websites like Company Check in the UK, which gives data on limited (incorporated) companies. Also websites advertising businesses for sale sometimes include details of turnover.

Bear in mind that the figures in adverts might be slightly exaggerated.

Rents can be found by looking at commercial property websites, and remember that they can vary sharply in streets that might be close together, depending on foot traffic.

Business rates in Scotland are shown on the Scottish Assessors website.

Also remember that unless you’re very lucky or conditions are exceptional, it takes time, years in fact, to really establish a good customer base.