Posts Tagged ‘small business’

Axel’s and Sophie’s quirky guide to running a small business

Thursday, May 1st, 2014

Here’s our list of things we have learnt over the last 10 years of running a small start-up and a guide to the way we do business. It’s all rather homespun and certainly will never find its way into books on how to run a successful business nor in any business school. After all, we are still a tiny business, even though we have been around longer than Facebook and Youtube. While these things might not make you rich, they help us sleep easily at night with a clear conscience and make us happy.

• Never wear a tie or suit
• Like your colleagues
• Avoid meetings
• Living is more important than making money
• Take time out to watch your kids and friends playing sport and music and acting
• Smile, laugh and cry
• Sing, however badly – and we’re really bad
• Never grow up
• Work hard – roll your sleeves up and get stuck in
• Be patient, act swiftly
• Don’t get hung up on sales or profits
• But keep a tight focus on cash-flow and balance sheets
• Don’t do budgets, except if the bank asks for one!
• Always pay your bills
• Avoid customers who are too posh to pay – this is an attitude of mind as opposed to a statement on anything else
• Never become that business or person that talks aggressively about “killing the competition”, just be different to them and do your own thing
• Never become that business or person that lies to get a call taken or to get money off
• Be compassionate – we’re all real people, with real lives
• Be honest to yourself, your colleagues, your customers, your suppliers and everyone else we’ve forgotten
• Reinvent the wheel – it can always be done better
• Break the rules
• Make mistakes
• Admit to your mistakes, understand them, then try not to do it again
• Spend your money wisely
• Spend your money morally and compassionately, doing good things that help make the world a better place
• If you’re not comfortable with it, don’t do it
• Don’t be bullied by customers and suppliers
• Best practice is just average practice with a positive spin
• Don’t trust suppliers who drive flash or expensive cars
• Don’t waste company money on flash cars
• Make teas and coffees for everyone
• Eat breakfast, lunch and tea
• Eat cake, biscuits and pies
• Listen to what everyone has to say – everyone knows more about stuff than you do
• Ask questions, however stupid
• Be fair
• What is fairness? Sharing risk and reward equitably
• Treat people how you would like to be treated
• Try and only deal with people you like
• The customer is not always right
• Never do favours for people you don’t really know, because they are never reciprocated, but bend over backwards for your friends and favourite people
• Shit really does happen
• Everything seems better after a cup of tea and cake, or a bath and a sleep
• Keep on dreaming

Looking back over the past 10 years … part 1

Wednesday, March 26th, 2014

Steenbergs began life in the late autumn of 2003. Our youngest child had just had her first birthday and wasn’t walking on her own. Steenbergs has now been going for around 10 years (our 2 children are nearly taller than Sophie) so we thought it was time to take a trip down memory lane.

We’ve grown from just Axel and Sophie rattling around in an empty starter unit, designed for food start ups, with occasional (very occasional orders) coming in, to 11 Steenbergs staff, most working in production and dispatch. We’ve moved just once in 10 years, around the corner, into a bigger space but on the same business park.

When we first started a pallet of jars lasted us about 6 months, now it can last us 2 days.

We’ve survived a flood, freezing weather (down to -18 degrees), worn out a fork lift, gone through 1000s of pallets, have more trolleys than we ever thought possible, have made a few tweaks of label styles, gone through 3 very different style of tea tins, and are onto our third version of hot chocolate tins. (We’ve also had to incorporate one major Fairtrade logo change and the new organic logo change.) Meanwhile the glass jars we chose right at the beginning for our main range are still very much the core of Steenbergs.

Oh and you still find Axel or Sophie filling jars, labelling jars, packing teas, making up gift boxes and boxing up orders quite a lot of the time.

Steenbergs old style packaging

Steenbergs old style circa 2005

 

Two of our Steenbergs 11 staff have been with us for over 9 years, one of these – Claire – was our second ever employee and we are delighted that both she and Aga have stayed with us and seen Steenbergs through many changes.

Many of our suppliers have remained the same from those early years. Our first ever organic import was from Lanka Organics/Greenfields and we still work with them importing many of our Fairtrade spices from them. We still buy our jars and lids from Croxsons and use the same designers for our leaflets – Colour It In. We like to work in partnership with our suppliers – growing with them and developing a close relationship with over the years.

The original design of Steenbergs products was created by dear friend Alison Balmer and the core range has only undergone tweaks since then.

Some suppliers have taken longer to find but it’s how they help us and have come to our aid when we needed them that is at the heart of our relationship with all of them. Norpak in Bradford deserve a big mention for helping not only with labels but making our label printers work…..

Although our spice packaging has only had a few tweaks over the years, tea has been an area that has seen more design changes than anywhere else, the photo above has the first tin, then we moved to a square silver tin.

Mark II for tea at Steenbergs

Organic chamomile loose leaf tea shows the second version of our tea tin.

 

 

 

 

 

 

 

 

 

 

 

 

Steenbergs tea begins to take on it's own identity

Steenbergs tea begins to take on it’s own identity

 

 

 

 

 

 

Steenbergs vanilla extract when it was still part of the main range

Version 1 of Steenbergs organic Fairtrade vanilla extract

 

 

 

 

Tea wasn’t the only thing that underwent a radical overhaul. Vanilla extract – organic & Fairtrade – started life as something we had created for chocolate manufacturers, it was only later that it became part of the core range of home baking extracts and flower waters that you all know and love. We found a photo of the original packaging, when it was still part of the Steenbergs blue and white range, before it went pink…

We’ve now introduced some machines to help us build the business. Originally everything was hand packed and hand labelled. Our first exciting machine was the labelling machine. We still have a lot of hand finishing – the heat seal labels, the top labels, the translation labels. Our gift boxes arrive flat pack and are built up and created here so we still lovingly finish off all our products, but we do have some machines to help us along the way.

Sophie and Axel are still very much involved, with Axel overseeing production and blending and Sophie more involved in marketing and orders. Although both of them will physically get stuck in and help where needed. As a small company we can’t really cope with narrowly defined job roles, everyone lends a hand wherever and whenever needed – teamwork is crucial.

Along the way we have worked with some lovely enthusiastic people and those who have been the most enthusiastic are still close to our business.

Steenbergs labelling machine the first machine to help us.

The labelling machine has been wonderful. It doesn’t do everything we still heat seal and put the top labels on by hand (and translation labels where necessary)

 

 

 

Sophie and Axel 10 years ago starting out with the business.

Sophie and Axel 10 years ago starting out with the business.

Steenbergs hand packing.

Originally, everything at Steenbergs was packed by hand. We still do pack some things by hand, but we also can use a machine for quite a few of them, although some things like bay leaves and cinnamon quills will always remain by hand. (One of this merry crew is still with us although in a different role, in dispatch).

Where’s the money…for us?

Tuesday, September 7th, 2010

In the last couple of weeks, I have been contacted by The Executive Chef magazine and St James’s House on behalf of the Royal Agricultural Society.  Both of them had the most wonderful advertising opportunities and we had been specially selected out of all businesses in the UK.  We really must appreciate the lauded company into which we have been specially allowed to enter. 

I think not; it really must be a deep recession if they are having to scrape the barrel trying to beg money out of me, a tight Northern curmudgeon.

The Executive Chef is running a one-off magazine and we were offered a full page at the heavily discounted price of £12,500 down from £22,000 (I perhaps correctly typed prize first as these really do sound like those spurious competitions you sometimes get rung up about, where you have won a special cruise trip around the Carribbean if only you can get to XYZ venue on a certain day to be flogged time shares).  The St James’s House offer was a mere £5,500 for an entry in some book that will be circulated around politicians and civil servants – not a market that has any particular interest for us.

What annoys me about these hard sell tactics is not actually the wasted time, although that does irritate nor the fact that Steenbergs could never afford these levels of cost – these figures are just not even in a negotiating area as they are so way off the mark.  Rather it is the fact that they need to explain the benefits to me, i.e. how is it going to enrich Steenbergs as a business and not what a privilege it would be to be part of this special magazine or book or event.  I am not interested in privilege or famous people, so that will not move me, nor am I moved by vanity.  Perhaps, the only thing that can ever sway my mind is a well-timed cup of tea.

For advertising and marketing, I am interested in its financial return; I expect to get a provable level of extra sales of 4 times the cost of the advertisement which some think too high a hurdle.  And that is where the sales pitch falls flat as the salesmen (it does always seem to be men) can never explain how much return they would expect Steenbergs to get, nor will they do a deal where, for example, we pay 10% upfront and the remainder on success.

And that’s why old style print advertising is really going to die out, as you cannot track the results as easily as online, plus the costs are way out of kilter with the rates available online.  So yes, it might work if you have a huge budget and are trying to create a general ambience around your brand as for a car or a lifetsyle brand, where you might put adverts in relevant magazines to support your more targetted marketing elsewhere.

So we will not be swayed from our chosen path of search engine optimisation, social networking and general online activity.  It is perhaps less sexy, but we feel much more comfortable with gentle and slow hard graft than fancy one-off jamborees.

A Big Shout Out To Small Business Owners

Monday, September 6th, 2010

We, the small business owners and micro-entrepreneurs, are the forgotten, ignored and trodden upon solid foundation of the British, American and every other economy in the world.  We employ most of the employed people and generate much of the new, ground-breaking discoveries that have shaped the world.  We pay huge amounts of employment taxes, local business rates and tend to have greater loyality to our fellow local businesses, supporting local support services rather than going for the national groups.

However, big Government pays little heed to our plight.  They presume that all business is big business with unlimited amounts of time and deep financial pockets, and so able to consume all the new bits of legislation, digesting and understanding the intricacies of what the legislature has to say for itself, while carrying the financial burdens of increased local and national taxes to pay for quangoes, pensions, sinecures and further layers of bureacratic inefficiency.

Sometimes it feels as if no-one really gives a damn nor that they will ever give useful help or advice.  They criticise; god, isn’t everyone good at telling you what you should have done, what you have done incorrectly and what they would have done better, but practical, helpful, apt advice never seems to be available.  Armchair advisers rarely seem ever to do anything themselves; yes, they have worked for big businesses or government, but actually to have done something starting from scratch and doing it all themselves, those people are really few and far between, then few (if any) of those ever have time to give you any help.

In spite of their best efforts, the lobbyists for small companies are pretty ineffectual as they do not have real, small business entrepreneurs at the centre of government that understand the difficulties of small businesses – what did Alan Sugar know about small business, having built a large empire and so assuming that all small businesses grow like big oaks from a small seed; most of us just run around in a never-ending wheel, getting tired but not much further forward despite our heavy exertions and great, grand schemes.

Nor am I talking about the bright and sparkly, sexy start-ups that find media favour on TV programmes like Dragon’s Den, nor techie startups that can find early stage capital from Enterprise Ventures like Yorkshire Seedcorn and live by cash-burn and flip on to a new buyer, rather than building a profitable, cash-generative business.  Our newspapers are full of these successful, media savvy small companies. 

I mean the small retailers, the pie makers, the painters and tilers, the gardeners and the tea shops, as well as the small butchers, brewers and shoe shops etc etc.

We toil.  We busy ourselves.  We strive.  We have business dreams.

So from us, we say well done, you are all doing a great job.  It is damn hard and at times soul-destroying, but carry on and you never know we might all become successful one day. 

But do not expect any useful help from Government, bureaucrats and bankers as they do not genuinely have your best interests at heart; you are just there as cannon fodder to win elections, to tax so they can create new jobs, to busy themselves with in inventing mindless regulations to tie you in knots and waste your valuable time and so prevent you growing your sales, and to charge humungous arrangement fees and overdraft rates when you need leaner margins and overextend loans to you on low rates just when you should not be taking them.

This is a big shout out to all small business owners.  You are doing great.

BT Has Let Us Down

Tuesday, February 16th, 2010

Many apologies for anyone trying to reach us by email at the moment but currently Steenbergs has no internet service at the factory. The website is not down and is still fully functioning and we are able to access orders from a site elsewhere – this service is not affected by BT.

The problem is due to what should have been a simple upgrade service on Sunday which sadly went awry. 48 hours later and BT has currently “forgotten” to book a service engineer (promised yesterday) and so we have been let down again.

We do have the telephone service and faxes are getting through, but we currently have no access to our emails so many apologies if you are expecting an answer. We aren’t being dilatory we just haven’t received the email.

I seem to remember that when we moved into the factory 3 years ago we ended up having similar issues and ending up being dealt with by the Customer Services Main Board Director’s Assistant.

It does seem staggering in the age of technology that these disruptions in service can still occur and with such apparent lack of priority and follow through!

Will keep you informed.

Update 17/2/2010 at 3.15pm:  After two engineers being out here since 8.30am this morning, BT have fixed the faulty transmission equipment at the Melmerby Exchange and Steenbergs is finally reconnected to the ether.

Reflections On Le Credit Crunch

Saturday, January 30th, 2010

I think I am now pretty much up to looking back on 2007 – 2009, and thinking about 2010 and forwards.  Le credit crunch and le recession have been a roller coaster, like surfing a bad set of hairy, tumbling roiling waves, but it’s been a truly cathartic time, that has allowed Steenbergs to be reset on a better course.

We’ve rejigged the way we run the business, what we’re trying to do with Steenbergs and truly Steenbergs Organic is now a better business, and one both Sophie and I feel much more comfortable with.

One of the key additional themes has been Sophie’s cancer, which Sophie hinted at in one of the blogs in December.  It certainly makes you focus on what is important in your life, and in our case it’s each other, family and friends first and foremost. We love Steenbergs as a business and it has to work for us and what we want it to be – luckily it appears we can match our interests with the market.

2008: somehow we realised really early on that banking was going to get really tight for small businesses; I would like to claim a sixth sense, but it probably was more a case of realising that they way the banks had been getting us to run Steenbergs was rubbish because we (that’s the owner-directors) were not getting a penny out of the business despite our daily toil and ownership of Steenbergs, and were having to plough cash in at an alarming rate.

In any case, in one of my best ever business deals, we fixed all our development debt into 2 tranches, repayable over 15 years and 20 years at 155 basis points and 200 basis points over base rate plus an overdraft facility.

The rates on the overdraft have been unilaterally changed several times over the last two years for small businesses, but we have been in credit pretty much ever since we renegotiated our long term debt.  This was not the highly clever corporate finance of the City but it was well done and very timely.

While we were on a family holiday in Bridlington in July 2007, there were loads of floods in Tewkesbury where my mother in law lives.  It was like a forewarning of what was to come – in September 2007, Northern Rock collapsed and almost exactly one year later Lehman Brothers was allowed to fail in September 2008, which saw the vacuum that’s at the centre of international credit and finance exposed and the global financial system start falling into that hole.

I say it’s a black hole because it is based on the premise that no-one will ever ask for all their money back from the banks at the same time, so a bank can always borrow money from somewhere else to plug a financing gap; so banks tend to lend long term on borrowings that are short term, whereas most real world businesses operate the other way around.

Also, thinking about risk-reward and whether or not it is commensurate would have helped people with the credit bubble and risks in proprietary trading.  Banking is really a low margin, low return staid old game, so to get higher rewards you need to take on more risk, i.e. bet bigger, to get your profits ahead of normal banking returns, but if the reward and the risk for those actions are uncoupled then too much risk will be taken on.  So if I am a trader/banker and get the reward while a shareholder takes the risk (or even the tax payer) then you are likely soon to get to a situation where too much risk is being taken on for the level of return being generated.  It’s a bit like going down to William Hill’s with someone else’s cash – I would tend to bet bigger and on longer odds because where’s the real downside for me.

During 2007 – 2008, we really tried to batten down the hatches.  We did not replace any staff except for a few essential posts and let our staff numbers drift down from a peak of 15 to our current level of 9, without any change in sales.  Some of those employees were really quite expensive and were not revenue generating.  Also, we let a small 1500 square foot warehouse go, reducing our rent roll.

Simultaneously, anything that wasn’t obviously revenue generating was ditched, so pretty much all advertising has been curtailed as it doesn’t generate us any return on sales, because we are not in the big supermarket chains, and we have cut down on the trade shows we go to, as we have maxed out on the number of direct independent retail accounts that we are going to get (basically while it is going up still and the quality is getting better, the rate of growth of new accounts has slowed and most of the new enquiries come direct to us from our web site or word of mouth and not from trade shows).

But as unlikely as it may seem 2008 was our record year for sales since we started and we were profitable with really strong cash flow.

2009 began with the world full of gloom and doom – the worst financial crisis since 1929 and the worst recession since modern records began in the 1950s.  Actually, we found 2009 a mixed picture – our internet site and sales to retailers had our best year yet with the web site growing sales by over 40%, while our sales of raw materials was down, particularly to those customers that sell directly into the supermarkets who have reduced their interest in organic and premium products despite what their marketing might actually say.

Our retail sales were up as we have done 2 new things: we have targetted specific parts of our product range direct to distributors for the health food market and fine food marketplace, with good sucess for Steenbergs Home Bakery products and our organic Fairtrade mulled wine; and we have widened the scope of the products we offer via the web site to cover more ambient products that green people might want.

Strategically we have been thinking a lot about risk-reward, and come to the realisation that the reward, i.e. gross margins, from selling to the big retailers together with the working capital tied up does not equate with the relative risk that Steenbergs has/would be taking on.  Allied to this, the bulge bracket retailers – Tesco, Morrisons, Sainsbury and Asda – are very much tied up with the big food manufacturers, such as McCormick for spices and British Pepper & Spice and Barts, and British Sugar and Dr Oetker for Home Baking.  So its slim pickings to get the work that falls off the high table of the retailing world, which is already being aggressively fought over by Fiddes Payne, Green Cuisine and a few others.

So we could either go in and fight a price battle on low financing capacity, which for Steenbergs would be a mug’s game or just rejig our business to grow in other ways.  So we have decided to talk cheap and say that Steenbergs will not sell to the grocery multiples bigger in size than Waitrose – it’s cheap talk because while we have done some casual marketing to them all, we are not listed in any of them including Waitrose.  If they approach us, we will just have to say no, as we would want to do it on our terms (our prices and 30 days credit with any big stock up pre-financed by the retailer) and they didn’t want to deal with Steenbergs even when they initially courted us – that’s Sainsburys who said they were very excited about Steenbergs and led us a merry dance via 3 or 4 buyers until finally we were told “we deal with McCormick and cannot see the reason to change this”.  Well, luckily we had only wasted time and not been caught on the hook by investing money – wiser but not poorer.  The truth is that working in partnership with the big retailers means working for the big retailers to fulfil their strategic aims and their margin requirements, one is a bit like a lamprey on shark.

2009 has been a gentle year of managing cash and costs, keeping the ship steady.  Also, Sophie and I have started a process of redesigning key parts of our business.

This began with the complete overhaul of the web site – originally it was conceived as paid for marketing to supplement the development of Steenbergs as a brand for shops, but we now want retailing to be at the centre of what we do.  So the site is now bright, colourful, eccentric and full of rich content that we will carry on adding to and developing as a resource.  The web site also had a massive back end rewrite to make it easier to work with and interlinks now directly into our accounts system.  As a result, we are getting more than twice as many visitors each day and much more stickiness onto the site – we are very, very pleased with the way this has worked.  We just need to work a bit more on speed and navigation.

We have started refreshing our products.  So far, we have redesigned our spice tin and tea tin, with the spice tin relaunched and the tea tin imminent (it’s being made at the moment).  Allied to this, we have redesigned our tea labels and labels for a small range of specialist spice blends in our new spice tins.  We love these as they are bright, fun and happy new products that fit with our personality and web site, rather than being overly serious.  They will be fully relaunched by Q2 2010.

We focused a lot on Home Baking and launched a compact range of 5 high quality extracts that are distributed by a wide array of UK distributors.  To complement this, we redesigned the flavoured sugars, baking powder and bicarbonate of soda (baking soda) labels and launched them in August 2009.

What we are doing is simple, we are pulling out groups of lines within the vast Steenbergs portfolio of blends and creating distinctive designs that still fall within the whole Steenbergs brand features.  They will be bright, fun and have great shelf presence.  This process will continue through 2010 & 2011.

So what do I think about 2010?  I feel it will be tougher than 2009.  2009 was characterised by a very loose financial regime of the government propping up the banks, pumping cash into the larger corporates and printing money, while keeping VAT down temporarily and running a scrappage scheme.  For those still in work, it was an easy year of low taxes, low inflation and very low mortgage payments.  But the ballooning budget deficit will need to be repaid, so the next few years will become (after the impending election) years of abstinence and frugality.

For small businesses, we will be hit by continued tight credit conditions, the uplift in VAT (which Steenbergs has absorbed into our operating margins), the business rates review this year (we are expecting a 20 – 30% increase in costs there) plus a rent review and a complete lack of help from the government, of whatever hue.  We asked for help with some capital investment in Q4 2009 and were told by Yorkshire Forward that we were too small and by BusinessLink that there was no money in the kitty and so while we had a visit by a very nice gentleman last year, nothing came of it.  The answer is simple as always ignore the politicians who know nothing and just get on with doing what you do best and make some money.

I am actually looking forward to the next few years.  The Steenbergs ship is perhaps a bit less ambitious but going in the right direction – and one Sophie and I are very pleased with – and there’s plenty to go for out there that no-one else is targetting well.

It’s back to what we started the business to do – great spices and ingredients in sensible packaging done in a fair and reasonable way.  I will try and explain some of ethics and how we are trying to develop the sourcing and marketing side to get the excitement of the spice trade of old.