Small Office, Home Office Information

There was a time when Toni and I shared the one big room and we could always see what each other was doing as we worked. But since we moved to our new place in June last year we have worked in two separate rooms so it can be hard to know just what the other person is doing.

Yesterday it wasn’t hard to see or hear what I was doing. I was digging through some boxes that had been packed at the old place and not yet unpacked because I needed to find our video camera and and the battery charger for it. (We’ve decided to have a little play with some video advertising on a couple of our sites just as an experiment and probably because I’ve become a bit bored doing the same thing day after day.)

But Toni was her usual quiet self and I wondered what she had been up to for most of the day.

When I asked her she lamented the fact that she hadn’t achieved anything. Instead she had emailed some of our writers - paid all their accounts for the week - set up some links to an online jewellery story we’ve just started - talked to a couple of clients and picked up some new work - but she felt she hadn’t achieved anything.

Sheesh - sometimes you just have to realise that time spent doing admin type work for a small business is every bet as valuable as producing whatever it is that you produce.

I really had to impress that on her … because I didn’t want to admit that I had spent all day looking for a battery charger that I didn’t find

For those of you who run small businesses and home office businesses based on affiliate marketing may be interested to hear that Overstock has posted a $15.9 million dollar loss for the first quarter of 2006 and expect Q2 will see a similar result.

Overstock’s press release said in par:

Overstock.com Reports First Quarter 2006 Financial Results

Summary of results:

* Q1 Total revenue: $180.2 million, up 9% versus 2005

* Q1 Gross profits: $25.2 million, up 2% versus 2005

* Q1 Gross margins: 14.0% compared to 14.9% in 2005

* Q1 Net loss: $(15.9) million or $(0.82) earnings per share

SALT LAKE CITY, April 28 /PRNewswire-FirstCall/ — Overstock.com, Inc. (NASDAQ:OSTK) today reported financial results for its first quarter ended March 31, 2006.

“Chop wood, carry water.”
- Wu Li

Dear Owners,

We lost $15.9 million in Q1. I anticipate Q2 will look about the same, before we start climbing out of this hole in the second half of 2006. Our theme for this year is to slow growth during the first half of the year so we can work on improving internal business processes in preparation for stronger performance in Q4 and beyond. We continue to anticipate things will look better in Q3, and to be out of the ditch by Q4. Nothing that has happened recently suggests to me that we should change course.

Sales and operating expenses in Q1 were just what I expected, though margins were a bit lower than I anticipated. The lower margins are a function of a couple of things. Part of it stemmed from warehouse costs that were simply carryover from the systems problems that plagued us in the last part of 2005. We are currently working on an improved build-out of our Salt Lake City fulfillment warehouse, and I am hopeful that when we finish this in June, we will see a drop in our variable handling costs immediately. Additionally, a small amount comes from customer service costs, which again, were inflated due to our systemic problems in 2005, but also because we are emphasizing quality over cost: when our new customer service application goes live in June, I expect a significant drop in these costs.

Again, I believe that Q2 will look like this past quarter. It is going to take until Q3 to start seeing the benefits of the various technologies and platforms we have spent the last year building. I believe that our expense management (how much it costs to handle a package, a customer service call, etc.) will be much better starting in June and July. Other corporate expense management looks good. But gross margins will likely remain where they are in Q2 for other reasons. As a result of improvements in our inventory management systems, I believe we are carrying more inventory than we really need, and we plan to bring it down another $15-20 million over the next few months.

We ended Q1 with $52 million in cash and marketable securities, including $20 million of borrowings on our inventory lines. We have an additional $30 million of availability on our lines, and are continuing to reduce inventory to turn it back into cash.

In summary, I’m committed to stay the course: slowing growth while we improve our systems and enhance the service we provide to our customers. Unfortunately, Q2 will be another disappointing quarter at the bottom line; then the tide should start coming back in by Q3 and we should be afloat in Q4.

Your humble servant,

Patrick

There was a time when the thought of firing a client was totally foreign to us.

Why one earth would anyone want to fire a client? Why would you want to let that income slip away? Why would you risk all the bad ‘press’ that a ditched client could deliver?

Needless to say since that time there have been several clients that we have fired and we know the answers to those questions we once asked.

You fire clients because they are so much trouble to deal with that you actually end up losing money rather thank making it from their work.

You let the income slip away from you because there either isn’t any in real terms or you find that you can make more if they and their work aren’t bugging you every day.

And sometimes you can avoid the bad press if you take the time to fire them in a nice way or maybe the cost of the ‘bad press’ is worth paying just to get rid of them.

To read someone else’s thoughts on firing clients follow the link to read Troy White’s thoughts on ‘How, when, and why you should fire the troublesome client.’

Troy describes the result of firing a difficult client as “liberatinr” - we have only one thing to say about that - “AMEN BROTHER!”

I was watching an interesting video podcast over at Tailored Consulting the other day where Brendon Sinclair and one of his staff discussed the question of whether or not appearance really matters. (You can find the link to it here)

It was interesting to see that after the video podcast one person who saw it took Brendon to task for looking too casual and even using what they described as outdated equipment.

I had to laugh at that because one thing that was briefly mentioned in the video was that appearances can vary from one country to another. Here in Queensland - and especially on the Gold Coast where Brendon’s business is located - successful business people don’t always wear a tie.

Yet that was something this particular commentor really flayed him over - in his eyes Brendon was just not looking the part.

It’s rather sad in a way that so many people rely on appearance when judging a person’s capabilities.

In my personal experience the most effective legal representative that I have ever seen in action in court was a man who always looked as though he slept under the nearest bridge. At the same time one of the sharpest looking barristers was the biggest fool I have ever seen.

The best newspaper reporter I have ever come across was an old guy who never wore a tie and didn’t appear to own a jacket either while the reporter I frequently saw in court who did wear a tie and jacket was the one who usually got the story wrong.

The sharpest looking Inspector in my old job was the poorest manager of men while the meekest looking field officer was the one I always wanted to be covering my back when things were going pear shaped and the nearest backup was 100 kilometres away.

Does appearance really matter? I would suggest that it’s what you see when you look a person in the eye and the firmness of his handshake that matters more than whether he’s wearing a bespoke suit or using a gold pen.

But then that’s just my opinion

In the first quarter of this year Nokia sold 75.1 million cell phones - it’s nearest competitor, Motorola, sold 46.1 million cell phones.

Nokia experienced strong sales in multi-media phones.

Keep that in mind because ever one of those phones is an a mobile advertising medium. You don’t have to think in terms of billboards and other forms of advertising if you don’t want to (although you certainly should) because your market place is carrying mini billboards around in their pockets.

I’ve always understood the power of the word ‘you’ - right from back in my days in uniform when a:

” Oi … come here you!”

bellowed from somewhere down around my diaphram would stop just about anyone in their tracks and change their course for them to bring them to stand in front of me looking nervous (if only they knew that behind that uniform I was just as nervous as what they were).

But I’ve never really understood the power of the word ‘because’ until now. However, thanks to Brian Clark, I now do understand the power of the word ‘because’.

And now you should click here to learn about the power of those two words because once you do understand that power you will be able to use it in your business.

And you will want to use those words in your small business because they will bring results.

Words would spoil the effect - simply click here

Jan Cameron is a name that’s probably not all that well known here in the country of her birth or in New Zealand where she now resides but that hasn’t stopped her from graduating from sewing her own sleeping bagback in the 1970s to selling off 51% of her company for $234.26 million.

From that small beginning back in the 1970s she has grown her small business into a globally recognised brand with an annual turnover of around $100 million a year.

You can read her story here

If you have been struggling to get the best value for your small business advertising dollar then you might have some empathy for big business. They too seem to be poorly served when it comes to getting value for their advertising dollars.

You can see what they face at Outdoor Advertising Stupidity Continues

Ok - all I’m going to post is a link to this story - I’m not going to tell you anything about it because if I did you you would:

a) Think I had gone completely insane

b) Not read the story and so miss the lesson

So follow this link and read an amazing story