Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

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Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Barbara Gabogrecan » Fri Aug 17, 2012 9:02 am

ImageWelcome Jim! We have had some pretty interesting topics discussed on this Forum, but I can't wait to read the content of this one! Sharks eating my profits....?

What an interesting background Jim has had – spending 20 years manufacturing and exporting light weight racing catamarans; his mechanical engineering background has obviously helped him with the success he has achieved in this field. Jim is also a qualified coach and in the running of his business has come across many ‘sharks’ he has had to deal with. I wonder if he 'catches' them with his catamaran!!!

Join us in finding our just how to deal with 'sharks' in our business and I have no doubt we will have a giggle along the way!

Cheers
Barb
Barbara Gabogrecan assists HBB's to market their business online
http://www.HomeBasedBusinessAustralia.org

Barbara is an artist specialising in silk painting; her video is on page one of You Tube http://youtu.be/1ZA9HObN_Go
http://www.SilkPaintingByGabogrecan.com/

Having survived a stroke and a brain tumour, Barbara wrote a book titled 'Thank God I Had a Stroke' to motivate and inspire others suffering from similar afflictions.
http://GabogrecanStrokeRecovery.com/
Barbara Gabogrecan
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Mon Aug 20, 2012 12:05 pm

Hello there,
This week we are on the dark side of business, talking about the customers you would have been better off not meeting. Those that use your time and resources then fail to pay. Consider that in most businesses one bad customer will wipe out the profit from 10 good ones and the importance of this topic is clear. So this week I will give you some tips and strategies for protecting yourself and your business from the Sharks of the business world and how to identify the situation before you are bitten.
Jim

Mostly the people we deal with in business are honest and of good intention. However not everyone is like that.
I’m not talking about the slow payers that are just struggling in their businesses or life, but those who don’t regard being cooperative as important or can’t see why they should pay anyone unless they absolutely have to.
These people could be viable customers, though if you swim with sharks accept that you need to respect the nature of the shark. You don’t manage a shark, you just avoid being eaten.
There are some common traits I’ve seen in deals that go sour. The good businesses you deal with also have these same issues from time to time, but not regularly. It’s a case of asking yourself- is there a pattern in this?
Some of the traits to be wary of are:
• A business proposition that is so good you can’t pass it up.
• The offer that if you give a really good price they will bring all this work across to you.
• Accounts being paid progressively later and rarely paid without you calling first.
• Each time the account is not paid there is a plausible reason and someone to blame.
• When you push for payment you will get a cheque...- for half the amount owed.
• Every month there is generally a dispute over the amount actually owing.
• Orders are often placed at the last minute, then changed when you are almost finished the work.
• They will offer to “look after” something you know is your responsibility, in an apparent act of kindness. (They rarely come through with it).
• They want more: stock on consignment, delivery dates are changed, Specifications are “updated”, all at your expense of course.
• They place an order which puts them over their trading limit, if asked they promise to pay COD. Once the goods are on site there is no cheque, and they get angry when you insist on one.
• You are accused of being difficult to deal with.
• They regularly threaten to pull out of the deal.
• You will hear statements like: “Your prices are too expensive”, “your late delivery has cost us that order“ It’s costing us a fortune to fix your mistakes.”
The overall tactic is to have you financially over committed at all times, and keep you off balance. They want you to feel you are responsible for the mess and trapped in it.

Tomorrow How to Identify a Dodgy Deal
Jim Boyer
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Barbara Gabogrecan » Mon Aug 20, 2012 4:55 pm

Oh, how I love this quote "You don’t manage a shark, you just avoid being eaten." You know, I think one of the problems is that we all hate 'chasing' money or asking for action that should be the norm. I must admit, with a good customer, we allow them to pay a monthly amount, regardless of what is owed, and this pays off the dept in set incriments. It has worked for us - but I guesss you think this is not the way to go Jim?
Barb
Barbara Gabogrecan assists HBB's to market their business online
http://www.HomeBasedBusinessAustralia.org

Barbara is an artist specialising in silk painting; her video is on page one of You Tube http://youtu.be/1ZA9HObN_Go
http://www.SilkPaintingByGabogrecan.com/

Having survived a stroke and a brain tumour, Barbara wrote a book titled 'Thank God I Had a Stroke' to motivate and inspire others suffering from similar afflictions.
http://GabogrecanStrokeRecovery.com/
Barbara Gabogrecan
 
Posts: 341
Joined: Sun May 03, 2009 12:57 pm

Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Mon Aug 20, 2012 6:15 pm

Hi Barb,
For any customer a little at a time is better than not at all, and it's a strategy I like. And a good customer will continue to honour such an arrangement.
But a Shark? that's a different situation.
Jim Boyer
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Tue Aug 21, 2012 7:22 am

How to Identify a Dodgy Deal

(The 3 red Flag Rule)
Yesterday I gave you a list of ways that sharks behave. Yet even when we know the warning signs our natural thing is to see the good side of people and trust them. If we didn’t then we would treat everyone as a shark and not only loose most of our customers, but probably most of our friends too.
First though let’s be clear about what a Shark is:
A shark is someone who sets out with a deliberate strategy to not pay, or to at least get things without payment by manipulation.
So here is the simple, accurate way to avoid these people, while not doing a disservice to your good customers. .

At some point you will notice something not quite right– a promise not kept, a phone call not returned, a payment for the wrong amount, an apparent small lie, a demand that you have promised something you can’t recall. All easily explained by the other party.
Let’s call this an unfortunate incident and give them the benefit of the doubt. This is red flag # 1.

A similar unfortunate incident, (not necessarily the same) happens again,
This time we think to ourselves, “Uh, that’s a coincidence”. This is Red Flag # 2

Sometime later another similar incident occurs. STOP! This is Red Flag # 3
Not an unfortunate incident, or a coincidence, but a pattern!
My experience is that if there are 3 red flags there will be many more, and it’s a high probability that this business relationship will cost you money, time and energy.
Tomorrow: What’s really going on?
Jim Boyer
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Wed Aug 22, 2012 7:45 am

What’s really going on?
In Todays post we will examine a way to tell if there is something of substance behind our feeling of unease about the business relationship.
Using the Red Flag to tell what people are really up to.
When the 3 red flag rule applies, look in the pattern for the answer, rather than looking for hard evidence. Or to put it another way, it’s the indirect evidence that will point to the real situation, a good Shark will have any direct evidence well covered.
As a friend of mine often put it: “where there’s smoke there fire”

Are You Being Accused?
When dealing in Business you will sometimes find yourself being accused of some wrong doing, breaking a promise, even of dishonesty. Sometimes the accusation is correct, we really have made a mess of things. This is not always the case though, sometimes despite our best efforts we are still accused of wrong doing.
This is time to sit back and take a bigger picture view of the situation.
The possibilities are:
1. They are right and it’s time to sharpen up the business practices.
2. They have misunderstood the situation and some communication is needed.
3. They are wrong and something else is going on.
But which is it, and how do you tell?
Here is a clue:
People will often accuse others of what they are up to themselves.
How’s that?
People voice what is on their minds, and if they are doing something that they know is not right it plays on their minds, so it comes out, and the easiest way to let it out is to accuse someone else.
That’s not to say the accuser is wrong, but it’s a flag to check for any evidence that the situation may be opposite to what has been said. This is especially true where the accusation is totally unexpected.
It’s a case of “the pot calling the kettle black”
If this is a Shark you are dealing with you will find that this person regularly accuses you of wrong doing, where other people are not. Chances are they are also making the same accusations to other suppliers.
The 3 red flag rule applies again, if there is a pattern emerging look in the pattern for the answer, rather than looking for the hard evidence, which sharks are expert at covering up or distorting. To emphasise: it’s the pattern in the indirect evidence that will point to the real situation.
Keep an open mind though; we all deserve a fair chance.

Tomorrow What’s the real cost to serve these customers?
Jim Boyer
 
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Location: Bendigo, Victoria

Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Peter O'Connor » Thu Aug 23, 2012 1:00 pm

Jim, your post reminds me of my own bygone days. I can remember a cutomer who would never pay the full amount owing on his account. He had money outstanding 180 days. I put him on Stop and told him we would not deal on credit with him. He continued to purchase and pay cash. He never attempted to pay off his account although he always promised he would do so.

It got to the point where he placed a large order on a COD basis. I found that the value of the order was more than what his account was. I thought "two can play this game". When he paid for the order, I waited for his cheque to clear and applied the payment to his account. I then rang him and told him what I had done and that if he wanted his order, he would have to come up with more cash. He abused me uphill and down dale and threatened all sorts of things. It's funny, but I never heard from him again. I made sure I was never caught like that again either. Once bitten. twice shy!

He is probably out there doing the same thing to someone else right now. He exhibited all the signs you have spoken of, but at the time I didn't wake up to it.

You are spot on when you say you cannot manage sharks - just avoid being eaten. I was lucky!

Peter
Peter O'Connor, is a retired accountant and is involved with teaching home based businesses how to build and manage their own websites.
http://www.HomeBasedBusinessAustralia.org
Peter O'Connor
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Thu Aug 23, 2012 2:10 pm

Hi Peter,
You were indeed fortunate, unfortunately many people are so worried about loosing the business they wouldn't have had the courage you did and turn the situation back on the shark.
Isn't it interesting he got angry because you assumed he was paying his account- its like he didn't believe he owed it.
Jim Boyer
 
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Location: Bendigo, Victoria

Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Jim Boyer » Thu Aug 23, 2012 2:19 pm

What’s the real cost to serve these customers?
The process so far,
We have Identified someone who we are dealing with who is showing signs that they may be a shark, :
A shark is someone who sets out with a deliberate strategy to not pay, or to at least get things without payment by manipulation.
The risk here is that they are not a shark at all and they are just a normal customer who is having a few problems.

So let’s look more closely at this
It’s often part of the sharks strategy to keep changing the game plan. I suspect that part of this is they have no regard for the welfare of others, so it does not occur to them to do anything other than what they want at that moment. So they will put in a big order in the hope that they can sell it all, but as the delivery time approaches they realize they don’t need it, so simply cancel. If you object it will be pointed out that the goods have not sold because the last batch were not of the quality expected/ too expensive/ too late and therefore too difficult to sell. Or their buyer pulled out.
Strangely enough the Sharks deliveries are regularly damaged and as you organized the freight you will be expected to supply replacement items free of charge
Then there is the payment of invoice. Sharks are great at making promises; their attitude is “tell them what they want to hear” Often they claim they are waiting for payment which is due “any day now”, more likely they have spent the money on themselves and are hoping the next payment they get will cover enough bills to keep their suppliers happy. If they do make a payment its unlikely to be the total owed, my experience is they pay you what they judge enough to keep you delivering the goods, but not so much that you can cut your losses and run. Half the total owed is an amount I’ve seen a few times.
The Cost:
Financial:
You are working for free, when you consider that most small businesses make about 10% return on turnover after all costs and wages a $10000 write off wipes out $100000 worth of effort.
The loss of that cash then limits the growth of your business. Additionally any money you do collect will be months overdue, again running your business short of cash and resources.
Time:
The obvious is the lost time producing something you don’t get paid for. The real cost is in administration: Changing orders, changing specifications, Chasing money, dealing with the continual problems that are put forward, changed delivery dates. And of course the claims for damaged goods; with the associated dispute with the carrier.
Eventually as the true situation emerges time to document what has happened and deal with the debt collection process.
Emotional:
We have 24 Hours in the day, about 17 waking hours and 7 sleeping. During all this time our minds are active. During the day we consciously think, and at night we dream. Often our dreams help us work through things, hence the saying “let me sleep on it”, we have all experienced the new clarity of thought about a difficult problem when we awake. According to the latest research we also use dreams to practice tasks we do during the day to drive them into the subconscious. When you first drove a car how easy was is, how much did you have to think? Now it’s automatic, it’s looked after in the subconscious of your brain, put there by practice and in your dreams.
But what happens when your thoughts day and night are preoccupied with worry about the deal that just keeps going wrong? That’s now what becomes automatic- Worry! Sleepless nights and fatigue the next day as your mind works through endless solutions, none of which seem to work.
Now occupied with worry important things like business growth, passion for what you do, looking after staff morale, product development all suffer. The result being loss in productivity, staff issues, despair, and possibly even depression.

Some tactics worth considering:
Pull out early if the relationship is not working for you.
Chase accounts firmly, but politely (be wary of being conned into a dispute).
Put them on a payment plan. If the payments stop so do the deliveries
Insist on payment of outstanding accounts; When they want it “now”, consider making it COD as well, and then closing the account.
Set up your business so all payments are up front.
Make it easy to pay, so there are no excuses- Have credit card facilities, have a relationship with a finance broker you can recommend them to.
Seek legal advice before it gets out of hand.
Think hard about what continuing will cost Vs the cost of pulling out. i.e. What’s it costing in worry and hassle.
Have a coach or adviser, who is not emotionally involved, that can support you.
Remember For many businesses every bad debt wipes out the profit for 10 jobs.

The catch for most small businesses is they “can’t afford to lose this customer”. Reality is It may be a case of “I can’t afford to keep this customer” This is where a small business needs someone on your side who can work through the situation with you, and protect that hard earned income.
Jim Boyer
 
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Re: Jim Boyer 'Dealing With The Sharks That Eat Your Profits'

Postby Peter O'Connor » Fri Aug 24, 2012 7:16 am

You are so right Jim. Some customers you just cannot afford to keep. The trick for most of us, is in recognising who they are. You have given us some great guidlines to do just that.

Keep up the good work.

Peter
Peter O'Connor, is a retired accountant and is involved with teaching home based businesses how to build and manage their own websites.
http://www.HomeBasedBusinessAustralia.org
Peter O'Connor
 
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