business

Choose your business partner – CAREFULLY!

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One of the best pieces of business advice I ever got was “You can’t do a good deal with a bad partner.”Having had many partners over the years, I can say that this statement holds true. So I thought I’d offer some personal experiences I’ve had with partners both good and bad. Finding the Right Business Partner by Robert Kiyosaki.

A new line of business

We’ve been considering expanding our business to include ‘after school’ classes for students as a way to supplement our main program and stench defections to other schools that already provide ‘after school’ classes. We have lost a fair number of good students on this issues, students who were making great progress in their language development, but whose parents didn’t quite understand what we were doing, and how our student development programs differ from the more ‘traditional’ programs.

After school classes
In Taiwan, there are many schools that provide these kinds of services; in fact, the ‘industry’ hires thousands of workers to provide for tens of thousands of students. We already know that this is a viable business. And, if we wish to grow our main program further, it may be something that the market requires us to do. However, none of the partners have the skill set to provide this kind of teaching to students, and we’re already quite busy anyway. Inevitably, this means we are forced to choose between hiring an employee or finding a partner.

Finding a partner
We’ve already investigated the possibility of finding a partner, and we found a person who might be very suitable. Unfortunately, she didn’t have any cash to invest in the business. While investing your labor is, indeed, a well recognized form of investment in many countries, it had repercussions for the person concerned. So she brought in a friend of hers, a self-confessed business woman, who had BIG plans, much bigger than we could afford, much bigger than we imagined, and much bigger than we felt viable in our market area.

Therein lies the problem: in finding one partner, we’d have unwillingly gotten into bed with two partners, one of whom was an unknown entity to us; and one who would certainly have wanted a larger piece of the pie.

Cashflow, cash low and rosy predictions
But that wasn’t the only problem: it is likely that the addition of an extra staff member and partner combined with the additional cost of running a business on life support would have drained our primary business beyond what we could have reasonably handled. We’ve always been quite conservative in our predictions from day #1. In fact, when the school managed to pay a full rent on its first three months in business and pay nominal salaries, too, we were all QUITE surprised. We’d budgeted for six months of full rental payments and expenses, until the business started generating cashflow.

Cash, loans, cashflow: Going, going, gone…
 In Taiwan, over the years, I have seen so many businesses come and go. In fact there are several slots on the main street near where we live that regularly change business. In some examples, the businesses are gone in just two or three months. In one location near here, the first business started out as a baby or children’s clothes store, then it became a woman’s clothing store, then it was empty for a while. Now it is a hair salon.

In other places, I’ve seen supermarkets open and close in less than six months, bakeries come and go, etc.. Perhaps in some cases, the business owners have misunderstood the market. In many situations, though, insufficient provision for cashflow while business is building has been the principle problem. Combine this with overly rosy income projections for the first six months, and you’ve got a recipe for disaster. In some cases, I suspect the initial capital was borrowed from friends, family, banks, etc., and once used, there was nothing to follow up!

It pays to be cautious…
So, choosing a partner who understands your business and your own situation, who accepts the risks of running such a business, and who has the financial wherewithall on their own account (without borrowing the cash) is crucially important.

Have you experience working with unsuitable partners? Or suitable partners? How did you find them? Did you deal with the problems?

IBackup.com: essential service for your business, and inexpensive

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Does your business or home business adequately back up its data? Let’s imagine a scenario where one day you go into work, and all your pcs are gone! Not only have you lost the hardware (which can be replaced at some expense, perhaps even with an insurance policy), but your data is likely gone, too. Who’s going to replace your data now? Where is your back up data?

If this seems far fetched as a story. Consider this: it happened to a friend of mine in Taipei. He ran a small school and he had quite an expensive set up for his computing facilities. In addition, he was in the middle of writing a series of text books for his students, one that he was intending to publish once it was gone.

Well the thieves (some young ‘uns with a hankering for pc games) broke into through an upstairs unsecured door and they made off with all the hardware they could find AND all the CD-roms that he had backed up his data on, INCLUDING, of course, his unfinished textbooks. Although his backups were made, they were not offsite, thus negating some of the benefits of making copies. Boom! All gone.

windows

He had made some printouts of his work, but he had lost almost all of his recent work, including business accounts, email, addresses, etc..

Nowadays, it’s much easier to create an offsite backup with an Online Backup service for your business. It’s certainly much more effective than putting copies of your CD-roms right beside the PC! It even functions just like a drive on your pc:

idrive

Additionally, you can schedule backups automatically to ease the strain and allow you to focus on managing your business, not your pcs. Access is also facilitated via a web-browser, so you can find the stuff, should you not be at your workplace.

Sponsored Post.

How to lose customers: Pandora.com

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Pandora’s service is without comparison: it allows you to find musical styles and within that research wonderful new artists that you wouldn’t otherwise find. This is what the website says about itself:

Pandora is a music discovery service designed to help you enjoy music you already know, and to help you discover new music you’ll love. It’s powered by the most comprehensive analysis of music ever undertaken, the Music Genome Project: a crazy project started back in early 2000 to capture the complex musical DNA of songs using a large team of highly-trained musicians.

Unfortunately, citing the DMCA, they have pulled almost the entire service for those outside the geographic USA. Recently, their chairman wrote:

Dear Pandora Visitor,

We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for most listeners located outside of the U.S. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative.

We believe that you are in Taiwan (your IP address appears to be ***.***.***.***). If you believe we have made a mistake, we apologize and ask that you please contact us at pandora-support@pandora.com

If you are a paid subscriber, please contact us at pandora-support@pandora.com and we will issue a pro-rated refund to the credit card you used to sign up. If you have been using Pandora, we will keep a record of your existing stations and bookmarked artists and songs, so that when we are able to launch in your country, they will be waiting for you.

We will be notifying listeners as licensing agreements are established in individual countries. If you would like to be notified by email when Pandora is available in your country, please enter your email address below. The pace of global licensing is hard to predict, but we have the ultimate goal of being able to offer our service everywhere.

We share your disappointment and greatly appreciate your understanding.

Sincerely,

Tim Westergen

This is an open letter to Tim Westergen,

Dear Tim Westergen,

You may share my disappointment, indeed. Unfortunately, turning away millions of customers in this fashion shows an incredible failure of both leadership and vision. When you turn away customers in this fashion, you unleashed a number of problems the consequences of which may very well come back to haunt both your company, and the US entertainment industry (which currently seems bent on extracting every possible ounce of flesh without understanding the long term consequences of such actions!) in general.

I think this decision, while understandable, is perhaps one of the most short sighted decisions I’ve ever seen, and is typical of companies in the US who resort to dealing with a technologically changing environment by employing lawyers whose sole function is to cover their own asses. I think this decision is bad for your (former) customers, your own company, and bodes ill for the US economy; and here’s why.

First, I realize as a small company that you have little choice; however, you have no idea of the goodwill that you are giving up now, that will be VERY hard to recoup or replicate, and that (when you do decide to reenter international markets) it will be MUCH harder because each of the markets you intend to enter will have developed indigenous competition that will give your company a run for its money or simply roll right over your company. Korea, Taiwan, Japan, and China all have hungry technology companies that would LOVE to have one less competitor to worry about today, so that tomorrow they won’t have to fight so hard once their market is established.

Secondly, it is clear to me and many billions outside the US who would like to download music legally, pay for it, and listen to music that isn’t otherwise available in their countries, are being denied choices by corporation lawyers who fail to find imaginative ways to solve the problems created by poorly framed laws. In many cases, many such individuals will resort to the P2P networks that have been the bane of IP laws everywhere. It’s only when companies realize that failing to serve such a market is WORSE for their profits and their business models that these customers will start to be treated well by companies such as yours.

Thirdly, the legal framework of the US is now such that more companies are now choosing to list their stocks in Europe (in London or one of the other large European bourses – they are shopping for legal frameworks that they find conducive to doing business, to making money, and to serving their customers. How long will it be before companies start shopping for countries with more favorable regimes for IP laws. With increasingly restrictive IP policies in the US, how long will it be before even US companies feel so constrained by the legislation that they have to move offshore.

Fourthy, Pandora.com has so much goodwill in its international customer base that I cannot believe you wish to throw it all away. Haven’t you any idea how much it will cost to buy such customers in the future? You have what many companies can’t buy, no matter how much money they throw at the problem, customer trust. If you turn your back on your international customers now, you will likely never get them back.

It’s one thing to say upfront who your customers are and aren’t. It’s another to turn your back on them, once they are your customers. I don’t believe that Pandora.com will recover internationally from this decision; I believe that internationally Pandora.com is now dead as a dodo. Other competitors in Europe (nearly 810 million potential listeners!), Asia (over 3.7 billion potential listeners), South America (371 million potential listeners), etc, will step in, they may not fill exactly the same void, but fill it they will.

Doubt me at your peril: in Taiwan, Kimo set up a long time ago, was recently purchased by Yahoo! and had built up an unassailable lead in online auctions over that time, such that when Ebay finally decided to enter the local market directly, they couldn’t shift the leader, no matter what they did. In fact, last year they bowed out gracelessly of this market and several others in Asia. They couldn’t buy an audience with their advertising budgets; the local market already loved Yahoo! Kimo auctions, even though Ebay had a better service, it was too late.

In effect, Pandora.com is giving up its real and tangible international business in exchange for the chance to create lots of national businesses as they license country by country. Internationally, Pandora.com could garner millions of listeners as a userbase to sell CDs to, make money from an affiliate relationship with Amazon.com (etc.), but as a series of national markets, some or many of these countries just wouldn’t have the population mass to justify the effort. In those others that are big enough, competition will prevent Pandora success, because Pandora will lose its lead.

So, thanks Tim, thanks for Pandora and all its wonders. It was a great service, but now the lawyers are running the company; I’ll be tuning to one of the other 10000 online radio stations. Thank god the internet is available outside the continental US, otherwise the RIAA would try to close that down, too.

Yours sincerely,

Kenneth

The license for this posting is granted to all but the lawyers employed by Pandora.com (or hired by Pandora.com for advising them) to read, print, copy and redistribute as you wish in its entirety. However, any Pandora.com lawyer or any RIAA lawyer who subsequently reads, receives or prints out any copy of this email, either in part or in whole, shall be liable to pay the sum of $10,000 to InvestorBlogger.com within 30 days because of their spinelessness in allowing this decision to be made.