Export Food Small Business Start-up

This is why, in addition to my general small business international trade start-up courses I teach a a specific class on food export.  The information offered everywhere except from me is not only bad, it is downright harmful.  The harm in these articles is people contemplating export expansion say "If that is what it takes, then I cannot do it." Well, what is described in the article is not what it takes. What is described in the article is a whole lotta waste.  The way it is done worldwide is not at all like this article describes.

Someone has to present what really happens in small business international trade.

This article is an example, and start out with a claim that is rather wrong.

While food giants such as P&G, Nestle and Unilever have long operated with a global footprint, it’s only recently that small- to mid-sized companies have been able to effectively tackle these markets.

Small businesses have been exporting food from the United States all along, nothing has changed in recent years, the tools tactics and attitude necessary have been there all along.  Yet the story will tell us about a "pioneer" in this field.

One of those food retail pioneers is Kontos Foods, a mid-sized New Jersey-based manufacturer and distributor of traditional artisan breads and Mediterranean specialty foods. A little over three years ago Kontos began a vigorous overseas expansion program, and now ships its products globally, to a wide range of locations, including Singapore, Indonesia, the Caribbean, Panama, Bahrain, Saudi Arabia, and Dubai.

I've never heard of Kontos Foods, and I am sure they are a fine company.  But what bothers me with these perennial articles telling us about "pioneers" is they never mention cost/benefit...  I can get sales into all of those countries pretty quick too...  at a cost.  The trick is to have sales and maintain a profit, at least as good as what you would have if you expanded domestically.  If Kontos is New Jersey based, then export orders ought to be no more difficult (or costly to acquire) and every bit as profitable as a domestic sale.  And alongside testing the overseas market, one would be obliged to test expanding domestically to compare with the overseas opportunities.

Now, recall the opening false claim that biggies like Nestle and Unilever were the only possible players before.  And who is making this claim?

Before Kontos, I worked at Unilever and my colleague, Kontos Foods’ Global Sales Director Doug Werts, is formerly of Nestle. Combined, we’ve lived and worked in different markets around the world, including the Netherlands, Brazil, and the U.K.
At Unilever, for instance, I spent significant time and resources building market share in Europe and South America. Those experiences, along with our current Kontos research about consumer shopping habits, provided us with the deep consumer insight we needed to target the right products and packaging to shoppers.

So to help a small or mid-sized company break into export markets, the process is the same as for Unilever and Nestle?  This is an internal contradiction: "nothing has changed, things are now different."

Now notice the valentine-to-self slipped in there, "my experience and my time spent on the Kontos dime travelling gives ME deep consumer insights."  Bull$#!+.  Since valid and reliable market information costs tens of millions, any other "experience or insight" is mere anecdote, and the plural of anecdote is not science.  There is a way to test market with spending tens of millions, and getting solid results.  It is search and learn, a process where you discover customers not otherwise discoverable.  But the tool tactic and attitude is utterly contrary to all of the elements this article proffers.  In short:

1. The tool - LCL MOQ FOB ...  if you have specialty, overseas buyers are looking to test this in their market.  They want and need that smallest order rational, not the largest order possible.  They want a pallet load to test, not a 40' container. It is FOB because you will be prepaid before anything rolls out of your warehouse destined for overseas.

2. The tactic:  Your export offer is one-size fits the entire world.  You ship overseas what you ship domestically. All "localization" for the export market is up to the importer overseas.  No good deed goes unpunished, so you never help your buyer by doing localization.  Recall we are talking a one pallet load shipment, and as a tst possibly several of these in sequence.  Why would you foot the cost of "localization" for a test order, in which most test will come up nil?  Don' worry, your importer overseas knows how to localize on the spot if necessary.  I am also an importer, and have had to "localize' many shipments on the spot in which customs has found fault.  it's a small shipment, no sweat.

3.  The attitude:  I came here to sell, why are you here?  At the trade shows, every buyer ought to place an order for your LCL MOQ FOB.  If not, why not?  If the person you are speaking to is not a buyer, end the conversation and move on to a buyer.  If the buyer says no to your one-size-fits-all worldwide offer, then find out why not.  Start a matrix of objections to see if any changes wold be worthwhile in your offer.  This is science, something sorely lacking among those who go to trade shows happy to settle for "trade leads."

What exporting gets down to is a test of the product by the importer overseas to whom you sell.  This article has a lot of moving parts, but bottom line is you find an importer overseas who wants to test your product.  On the one hand all of the rigamarole laid out in this article nets no advantage, and on the other hand you can achieve the same results with none of the rigamarole.

Then on this this:

The problem, however, is that overseas research isn’t cheap: Attending one trade show could cost upwards of $15,000-$20,000. There are nonprofit and government programs to help assist with companies as a means of trying to boost overseas trade. We found FoodExport NorthEast, a non-profit organization that supports international commerce. The organization is designed to help American food and beverage manufacturers attendforeign trade shows, connect with potential customers and learn about consumer trends.

Sigh. It could cost that much, but you can achieve the same results at a fraction of the cost.  Here is the funny thing, it could cost that much if you take the help those orgs offer, because their help is in the form of rebating half your costs if you do things their way, which "could cost upwards of $15 -20K..."

OK, so you spend $15,000 on a trade show and get $7500 back.  And their way is not the optimal way.  And I can do an optimal version the same thing all in for about $5000.   Now what kind of leverage is it when you net net you spent too much to do largely the wrong thing?

With the assistance of FoodExport, we started hitting the global trade-show circuit. They provide exploratory tours to help retailers discover whether a particular market is right for them. These tours offer crucial learning time, where retailers, manufacturers and distributors can quickly learn which regions are worth pursuing. When you’re on one of these tours, I recommend maximizing every minute of your research gathering.
For instance, while in Shanghai for a trade show tour, I learned that people in Northern China prefer bread much more so than their southern countrymen. This helped steer Kontos’ sales efforts to the correct part of the country, saving time and money.  

Any any Chinese food importer would already know this.  Why not just find a competent Chinese importer and have them test your product and provide feedback?  If and when something developes, then you might go visit China.  All this travel and time is expensive.

The international export business is on an upward trajectory. If you plan to join in on an overseas expansion program, gather an experienced team, do your homework and get your passport ready. People are now enjoying Kontos flatbread in Bahrain, Singapore, South Korea, Saudi Arabia and Dubai. Who would have dreamed that three years ago?

As I started out this post asking, where is the cost benefit, I am pretty sure Kontos has gone well into the hole getting those export orders.  The question is when, if ever, it will proven to have been profitable.  For overseas expansion, you need no more talent than a good Freight Forwarder and a solid importer, who may be discovered without ever leaving your office.

Because these articles claiming "small businesses can export just like Nestle now" have been coming out the last 40 years, I offer a corrective course.  No nonsense, the tool, tactic and attitude to find export business no more difficult and every bit as profitable, from the first sale and onward.  You may read about the course here, and enroll now and pay later at the same site.

Tuesday 1/24 - 2/14/2017   Four Sessions

Section One ~ 6 PM to 7 PM Pacific Time

(This would be 7 PM to 8 PM Mountain, 8 PM to 9 PM Central, 9 PM to 10 PM Eastern)

This work can be done either as a proprietor producing food, or an agent representing a food producer.

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Small Business Optimism Huge With Trump

Actually, it matters nothing what happens on Wall Street or in Washington, it is always a great time to start a business when you have customers.  As I have blogged here countless times before, entrepreneurs take no risks, and mainly because we find our customers first.  To achieve customers first takes a process, which I each in my seminars.  But to the news:

“We haven’t seen numbers like this in a long time,” Juanita Duggan, president and chief executive of the NFIB, said in a statement. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy. Business owners are feeling better about taking risks and making investments.”

Feelings canot trump reality for very long, what is the basis for this optimism?

The share of business owners who say now is a good time to expand is three times the average of the current expansion, according to the NFIB’s data. More companies also said they plan to increase investment and keep hiring, which reflects optimism surrounding President-elect Donald Trump’s plans of spurring the economy through deregulation, tax reform and infrastructure spending.

OK... if The Donald does all of those things, and there is zero reason to think he will, that could be good.  Far more interesting is if he gets rid of the FED, and we finish off what is dying anyway, the ex-nihilo credit regime.  And that is the big source of optimism (note not mentioned in the article), the fact that the the dinosaur retailers created by the ex nihilo credit boom, concentrating the family life small businesses into one family's life, such as the Waltons.  Into that vacuum much demand and thus opportunity beckons.  That fact has nothing to do with who won the election, plus there is nothing any politician can do about the fact that economic regime is near dead.

So now the work for all businesses is to adjust to he new regime, and small business is always the small quick agile British Fleet against the Spanish Armada.  We win.

You just need to know how to approach this.  That is what I teach in my seminars, how o launch a small business international trade company.  The current rundown of courses available, both online and in-person, may be found here...  if you have any questions, you can email me from the link on that page.

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Start At The Top

In my book I address the specialized work in international trade of acting as an agent, giving the example of a friend who put together a deal between a Mexican manufacturer of a specialized device and a Japanese hospital group.  I point out this is in essence semi-retired work for people who have established themselves in business and are trusted by all the players to put the deal together.

Regardless of role in international trade, there are two things that are fundamental: relationships and taking no risk.  Since here is no recourse in international trade if and when things go wrong, everyone relies on the other party to do the right thing when things go wrong.  Insurance might help, but the bottom line is relationship.

The "taking no risk" is not a matter of somehow pawning risk off on a third party, it is a matter of pay as you go and at no step would failure be catastrophic.  For the semi-retired player, he knows what he is doing and manages the risk with experience and wisdom.

Long before there was ever an internet, there were trade leads and trade lead brokers.  They were to be ignored then as now, for they are people with no product talking to people with no customers. The best customers and suppliers with whom the start-up needs to work cannot be found there.  Alibaba is the most successful and worst. My analogy is Alibaba is a firehouse of waste water when you just need a sip of clean water. Great place to waste time and lose money.

To my regret, in my book I mention a clever tactic one of these semi-retired experts employed, and that is occasionally looking at old trade leads, and I explain why this was clever (although in the context, it should be clear it is inadvisable.)  Lord help me, occasionally someone will seize on that secondary tactic in an unlikely scenario and bet their life on it.

It is occurring to me way back then and to this day, those who want to work the "trade-lead" fantasy essentially want to start at the top.  You know, find a lead, a supplier, bring the two together, $100,000 deal, letter of credit to eliminate risk, make $5000 commission, next... sounds great but it cannot happen, will not happen in the real world.  It's all fantasy.  You know, someone has a great script, you get it in front of Spielberg, he contacts De Niro, they put a movie together, you make a $100,000 grand commission, you have passion for the deal, what could be more natural?  It ain't gonna happen.

(Some day I will catalog all the ways the delusion can go wrong.  Well, some week, since the problems are legion.)

Now as one of the participants this special session proceeds, I can see clearly the juxtaposition.  Continuing with the movie analogy, there are plenty of people today who contact Spielberg with a script, who then contacts De Niro, they put together a movie and the guy with script gets $100,000, etc.  That guy started at the bottom 30 years ago.  He was a messenger boy in a mailroom.  He worked his way up.  it wasn't the passion for the deal, the deal is easy, it was his passion for producing quality results within that medium, knowing everything there is to know.  All parties know and trust him.

Still with the analogy, what I teach in this export food class is how to start the only place you can start, in the mailroom as a messenger boy.  You take news you found and bring it to a seller, and then when you have permission you tell a buyer what the seller offers, again as a messenger boy.  The risk is mediated because the deal is so small, the lcl moq fob.  if the deal goes bad, expect both sides to expect you take the loss.  of course.  That is true no matter what.    But the deal is so small, and amelioration so easy, this risk is unlikely.  Frequency, not volume, is the way to growth and prosperity.

You flogging the lcl moq fob is to act as messenger boy between people who can trust you that much, to deliver a message.  if and when anyone cares about the message, then you can offer to help with the discussions, and given the likelihood more work is necessary than both parties can handle, you have created your own opportunity.  So all this work is search and learn, passing messages, finding the unseen opportunity that you create.  You grow from there.

I cannot teach anyone to be successful, or even what to trade.  i only teach people how it is done so they can save time and money getting to their own success. And how it is done is you start at the bottom and work your way up.  You cannot start at the top.  With what product is the one you love, you see how this product is a solution to that problem.

Spielbergs work is limited to pop culture and engllsh and disposable income.  With food it is non-discretionary budget, all languages and worldwide.  More opportunity there, but as always, demand is for quality content.  In food we call that specialty.

The process is easy, the customers are easy, getting the product right is the only hard part in this business.  That takes passion/joy.  Without it, your progress is unlikely.  And there is no way to start at the top.

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Never Open a Business in China

Here is an academic teaching in China being interviewed on foreigners starting-up business in China.

I think it is very good. Firstly, the support of the Chinese government is rather extensive, from incubators to subsidies, and a lot of supportive measures to facilitate entrepreneurship and innovation. However, there is much more that makes China a great place for entrepreneurs, including foreign entrepreneurs.

Well, he is conventional. All of these elements are counter-productive, and lead to an inauthentic business built on sand.

Fourthly, the policy and regulation is still changing and upgrading, which may mean new opportunities. Industries like internet finance, digital health and cross border e-commerce, are not fully regulated yet. So it is a good living laboratory for entrepreneurs to try out their business ideas. At the same time, when businesses grow up and industries mature, a better regulated environment in terms of consistency and clarity is desired.

Aha.  Not fully regulated yet.  I wonder what "fully regulated" looks like?  Here again, we see China replacing USA by the same means the USA became #1.  If continued, China will end up like USA as well, only faster.  I do wish China would be Chinese, not USA.

At least he has this right:

I do research on foreign entrepreneurs in Shanghai, and also mentor in an incubator to help foreign entrepreneurs to start and grow business in China. I think the first key obstacle for them is to understand Chinese customers, to understand what they really want.

The customer is most important.  And getting the offer right is the hardest part.  Very good. And if so, then why would anyone need the four elements he is quoted as praising in the article.  Of course, not at all.  Always start with the customer when starting-up.

Never open up your own business in China.  Just sell to someone Chinese with a business in China.

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Export Food - Repping Supplier Approach - LCL MOQ FOB Part 2

This is part two, part one yesterday...

On Nov 27, 2016, at 11:18 AM, J L wrote:

Hi John,

Appreciate you taking out the time to provide such a detailed feedback. The "Answer matrix" is amazing and very helpful.  

• I actually liked the idea of having the LCL MOQ FOB listed on his website. It puts the supplier at ease in terms of transparency ( which you have been advocating all along ), they are still in charge of their product and will probably make them comfortable doing business with me. It's a win win situation for both parties

• I've cleaned up the concluding statements in the draft and also made the other changes you suggested. Please let me know how it looks?.

• I like "Brothers L". My brother's name is K’yo and I was also thinking of names like Kyoto or Tokyp by combining both. Though they sound more Japanese than Ghanian :). What do you think?

• By all means strip and edit this as an example if it helps.

Thanks,

J

On Nov 27, 2016, at 12:00 PM, J L wrote:

I've included "export" in the letter for specificity. Thanks!

• You're right. I checked the HTS for units and it is Kg. So then is the analysis correct?. The Specialty Snack chips, 1 packet is 5 OZ and cost ~ $5 (retail). For Mexico the average price is $4.55 per Kg!

***Right, mostly chips...  at costco chips are about that...  he might say, that's too cheap, you reply..

a. that includes the cheapest mass produced chips too, it's the average, so skews very low give the mass amount of bad chops going in...  

b.  the bigger the mass market, the bigger the specialty market too...  

It's the trends that tell... ***

From point "b", should I initially be targeting Canada then in lieu of Mexico even though the average prices are lower?

JL

On Nov 27, 2016, at 12:09 PM, John Spiers wrote:

Hmmm... do either on either justification... just pick one narrative to start...

John

On Dec 2, 2016, at 1:03 AM, J L wrote:

Hi John,

Thanks for another fantastic session this Tuesday. I have mailed out the initial letter and wanted to be prepared just in case he calls me before our scheduled time this Tuesday. I have started a different email thread since we are on the next phase and also makes it easier.  

So the "Answer matrix" from previous email ( At the end of this email & Thanks for that! ) is an initial Introduction of myself & a proposal on how we can mutually benefit by doing business together. Assuming he's interested, he'll either start getting into specificity then and there OR will want to think about it and get back to me OR will ask me on how I want to proceed [ I'm assuming you'll say "Right Now over the phone" ?? ].  Was hoping me you can give me some guidelines on the following details which I think will be fundamental to our discussions and If there's something else you think might come up in the discussion and is important, please let me know

MOQ

Will the owner provide this?. If I have to come up with MOQ, I have absolutely no idea on what would be the ideal "smallest rational possible" quantity or how to go about finding that out.

Manufacturer Price ( ExW) / My Commission

On his website, he has prices quoted for 1 & 2 packets. Price for 8 packets have a reduction of approximately 12.2%. Going by that assumption, I came up with price for 1024 packets [ Hypothetical MOQ ]. The store I bought them from sold it for $5.50/packet 

• Now I know the reduction will stop at some point but am not sure what I can expect a reasonable price to be. As I'm writing this, I'm guessing you'll say that I should just take his price quote and get back with reliable and validated test data. 

• Should I go with 10% commission as suggested in the class?.

packets

Pricereductionmatrix.xls

JL

On Dec 2, 2016, at 6:31 AM, John Spiers wrote:

On Dec 2, 2016, at 1:03 AM, J L wrote:

Hi John,

So the "Answer matrix" from previous email ( At the end of this email & Thanks for that! ) is an initial Introduction of myself & a proposal on how we can mutually benefit by doing business together. Assuming he's interested, he'll either start getting into specificity then and there

***Yes, and you're best answer is "I don't know... and it will be fun to find out..."  (Will I have to change the packaging? Who in Mexico do you have in mind?)

A N D

No, I don't want or need an exclusive

Yes, you can say forget it... (except for the one, first LCL MOQ FOB)

Yes, you can fire me...  because I am not your employee and don't have anything at riak but some time spent doing something interesting, trying out my learning...

OR will want to think about it and get back to me

***  All I need is weights and measures of say a pallet load, what price YOU want, where I can pick it up from you, and  what would be the lead time, a month?  Then you can think about my export offer, after you see it,  is it something you want out there?  Start your thinking then, when you have something solid to look at.  If you say no, I'll be trying Bison Jerky next, but I like your product more. "***

MOQ

Will the owner provide this?. If I have to come up with MOQ, I have absolutely no idea on what would be the ideal "smallest rational possible" quantity or how to go about finding that out.

***Yes, must...  they have one already for domestic sales, but yours may be bigger, but usually no more than a pallet load.  You see on the template we need the weights and measures (H,L. W each and total) of the cartons, add the pallet height, and the price he wants to earn on the sale (ExW), and his delivery lead time, plus where he wants the goods picked up.  You might just have a rough draft template of the LCL MOQ FOB form with those blanks highlighted to email him, so if he asks how you want to proceed, you can just email him that .pdf.

Smallest rational really gets to logistics cost; if you get 100% more product for 5% more logistics cost (FF will point this out), then yes, jack up the qty to make the offer more attractive, but no, never a full container load...  two pallets is max for a test, and we are testing at this point in the export game.  There is back and forth on the LCL MOQ FOB development.  Measure twice, cut once....  remember, you are stuck with your lcl moq fob through 100 inquiries...***

Manufacturer Price ( ExW) / My Commission

On his website, he has prices quoted for 1 & 2 packets. Price for 8 packets have a reduction of approximately 12.2%. Going by that assumption, I came up with price for 1024 packets [ Hypothetical MOQ ]. The store I bought them from sold it for $5.50/packet 

• Now I know the reduction will stop at some point but am not sure what I can expect a reasonable price to be. As I'm writing this, I'm guessing you'll say that I should just take his price quote and get back with reliable and validated test data. 

****Precisement!  You are testing prices too.  The higher the better.  You get data back from your effort, for future reference, iterations.***

• Should I go with 10% commission as suggested in the class?.

Yes.

His discount is probably an example of the folly of price cutting, he has no economies of scale to offer...  it probably costs him close to your 64 box discount....

Just take his price and work with it...

And make sure you keep records of all of this activity with the potential supplier.  You add this to your rolodex of your contacts in the international trade of specialty chips.

As usualy feel free to email...

This is fun...

John

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Trump's Program: Will It Matter?

Mish has reviewed Trump's program, as he says, from the horse's mouth.  It seems Mish thinks NAFTA is about free trade, but anyway, the post is about Trump.

The only real problem is the ex nihilo credit regime.  No one is talking about that.  And until that is addressed, effectively, all the action is just rearranging the deck chairs on the Titanic.

Think of all the wealthy on the Titanic, none of which packed even a rubber raft, which would have saved them.  Well.  Your own business is a rubber raft in these times.

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Black Markets Matter

"That's racist!" When a business is profitable, we say it's "in the black," if not, it's in the red, for black ink denotes positive cash flow, red ink negative.  When I hear "black market" I think of authentic, profitable businesses emerging whenever there is government policy failure (which of course, is everywhere and at all times.)

Mish is wondering at reports of a dearth of new business start-ups.   Mish has an odd take: who cares if new businesses get bought up by Amazon or Google, well let him say it:

When small tech companies get bought out by Google or Apple, is that a problem? It may be the other way around. Google and Apple have large resources to throw at new ideas. Small entrepreneurs don’t.

I have a different tack. I think we lost two generations of entrepreneurs, and we suffer for it.  I think while everyone was away, the progressives had a field day making rules to assure small business cannot start.  Of course, it has always been the case those in government hate small business, so it has always been the case small business has to strive against government intervention.  "Get big or get out" is the mantra.

On the other hand, wherever there is shortage there is a concomitant value.  The fewer the small businesses the more value they are.  It is the big contrarian play right now: start a business.  Check out this graph, fear of start-up:

<http://www.gemconsortium.org/data/key-indicators ...you may  create this and many other graphsupdate them for the day you read this,  for any country you like) >

The upper line is new biz start up, the lower line is fear of start up.  Both swing wildly, in the 100% change range.  No info for the last two years, but do note the trend was both fear and start-up were trending down, from dizzying heights.  If it continues, this is good.  People are afraid, but they are going ahead anyway.  I suppose no one on an ocean cruise wants to jump into the ocean, but if the Titanic is sinking, time to take a dip.

The one big bubble that needs to burst is real-estate.  If we can get rid of Chinese landbanking and banks' failure to mark to market, we'll see a 50 - 80% drop in real estate prices, and then a small biz renaissance will ensue.  Two ways to do this: let interest rates go up to the rectifying 21% or drop adverse possession rules from ten years to three.

In the meantime, plenty going our way - Airline fairs are getting cheap again:

Discover our Autumn Global Sale offers and experience Alitalia’s reimaged Economy Class!
Don’t wait, BOOK by November 6, 2016 for travel from January 9 until May 10 2017! 

	Economy Class, All-inclusive roundtrip fares:
	New York- Rome	$ 839.00 USD
	Boston- Milan	$ 768.00 USD
	Miami- Naples	$ 967.00 USD

We need to run credit-extending businesses (never ex nihilo credit) for that implies local knowledge and relationships, a competitive advantage over the dinosaurs. At the retail end of the small business, cash is king, so we need a currency.  Happily, Uncle Sam cannot ever get rid of the currency, due to the greenback's role as the black market currency:

Black markets matter for central banks because they form such a large share of their potential customer base. According to research conducted by economists Ceyhun Elgin and Oguz Oztunali, the size of the black market globally is roughly 25 percent of world GDP, or roughly $28 trillion in 2014 dollars. Since the U.S. dollar remains the most trusted and recognized currency, it is the top choice for global criminal syndicates.

And don't think Uncle Sam does not know it.  Read the whole article.

Ot's too late to enroll in any of my online courses until January,  but not too late to take my live seminar in the Los Angeles area, Orange Coast College, 12 November, 2016.  I'll have my 2017 January seminar dates up in a week or so, but until then, there are a couple of books, which will indoctrinate you, at which point I am happy to assist you as you proceed, found here.

An email from last night:

On Oct 24, 2016, at 4:51 PM, JB wrote:

Yes sir, I went back to the source and I realized where I messed up.. this data pull is amazing..I went and retraced my steps and followed the pdf print out again.. I missed one major step.. re-did it and BINGO.. 

I will forward you the completed spread sheet..

I see now how you pull the HTS numbers,  and store then in your queries.. l appreciate your learning approach it really makes you think and learn..

Sent from my Verizon, Samsung Galaxy smartphone

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Smart Cops Know: Cash Out! But Then What?

OK, so they are street smart to know a scam when they see one, and take their money off the table before it is all gone.

“I’ve had 40 to 50 officers in my office this week asking what they should do,” said James Parnell, 52, secretary-treasurer of the Dallas Police Association and 25-year veteran. “They’re very nervous about what is going to happen, they’re fearing a run on the money.”
Turmoil in world stock markets and near record-low bond yields are taking a toll on pensions for cities like Dallas, which count on annual investment returns of more than 7 percent to cover promised benefits. In the year through June, U.S. state and local-government plans posted the smallest gains since 2009, leaving them with almost $2 trillion less than they will eventually need, according to data from the Wilshire Trust Universe Comparison Service and the Federal Reserve.
The squeeze on Dallas’s fund is even more acute because of a decision to divert money from stocks and bonds into Hawaiian villas, Uruguayan timber and undeveloped land in Arizona, among other non-traditional investments. The strategy, put in place under prior managers, backfired. The fund lost 12.6 percent in 2015 and 0.7 percent over the past three years.

But then what?  What do you do with your lump some payout?  Take the tax hit plus penalty?  Sure.  but then what to do with it?   Invest it in

Hawaiian villas, Uruguayan timber and undeveloped land in Arizona

Hmmm?

The only smart thing to do is start a business.  It is also the most revolutionary act a person can perform.

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No Jobs But Plenty of Work

You can whine about no jobs, but there is plenty of work.  Here a fellow solves a problem for himself which he in turn sells to everyone else...

Who knows how much he makes, but think of all the Epson printers that gum up, and note his vid has a quarter million hits... and at about $20 each for some rather inexpensive parts...  well...

Now since only about 6% of the market is online, this fellow might find 15 times the market if he were to address the brick and mortar customers.



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Cal Poly SLO Live, In Person Import Start-up Boot Camp Oct 29, 2016

You should register soon for the all-day start-up intensive at Cal Poly SLO.  The seminar is filling up fast. You can get going in international trade in a one day live, in-person intensive held at Cal Poly SLO, which is exactly midway between San Francisco and Los Angeles, so it serves both communities as well as the Central Coast.  Make a weekend of it in beautiful San Luis Obispo.

Here are the registration details...



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Paparazzi Proof New Product

Back in the 1990s, people in the Philippines were wearing cell phone holsters, even though they were empty, and carrying lap top cases free of electronics.  I am sure it was not limited to those Islands, here in USA you can hire a team of non-body guards to surround you in places like LA to simulate importance.  Even Paris Hilton can be hired for $25,000 to walk through your event.    In Rome people rented gold coins to display at parties to evince wealth.

So I can imagine these will sell well... a scarf that foils paparazzi.

An anti-flash flash scarf that keeps paparazzi at bay is gaining popularity among celebrities.
The product, called the Ishu, adopts a special fabric containing thousands of nanospherical crystals that reflect light back into the camera, rendering all flash photography useless. Its name was derived from a combination of "isss" and "shu", which are common sounds famous people use to fend off paparazzi.

For $400, you can appear to be a celebrity!

Expect soon someone to create a cheap knock-off in the same pattern without the costly function.  then for $5 you can look like a celebrity, with the added benefit if some fool takes your picture, they will delight in having actually captured your visage.

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South Africa is Halal?

With USA recruiting Syrians and other Muslims to become American citizens, why is South Africa a halal exporter and not USA?

For the provincial government, growing the halal industry is now a key focus as it looks to boost growth and create new jobs in the region. "This industry is growing at an estimated annual rate of 20 per cent,” said Alan Winde, Western Cape Minister of Economic Opportunities. “This is why we are now looking for significant growth in the size of the province's halal industry.
"Certification is also hugely important. In addition to developing a guide to the current certification standards, we will work with the appropriate certification bodies in order to try and establish a single standard, one that is in line with global market demands."

One of the "get-big-or-get-out"policy rules in USA is small beef producers may not test for mad cow disease to gain customers overseas,  A federal offense.  Maybe Moslem butchers could get an exemption on religious grounds.  What we need in USA is more Sharia laws to assure our freedom of choice.

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No Jobs, But Plenty of Work

If you are over 45 and unemployed, you'll never work again at what you are trained to do as an employee.  More school offers no hope of efficacious education, only the trap of unbankruptable student loans.

On the other hand, there is plenty of paid work to be done.  I came a cross a Korean immigrant in Seattle, who operates out of a 75 SF indentation at street level in a high rise condominium (425 Vine St, Unit D, Seattle, 98121).  I have no idea why the architects specified this tiny storefront.  A bucket flower shop?  No idea.  But this fellow operates a bicycle cleaning business in the space.  He is killing it (which kids today say meaning doing real well).  He simply bought this means-of-production and went into business.

Malls are dying, but they also represent quite a bit of capital even if empty.  Cops can patrol only so much, and chasing taggers is dreary.  Retirees who own those big RV, the live-in Winnebago, etc, and often park on Walmart lots overnight since otherwise parking places are difficult.

Well, I met a couple who has parked on a large and largely empty shopping mall lot.  By being there 24/7 they are in effect protecting the asset of the mall owners.  What they are paid, I have no idea.  But the Winnebago becomes the means of production (24/7 security presence) and no doubt qualifies for biz depreciation, and gas as a biz expense.  Wonder how a CPA would handle all that?

You've got a computer.  Contract with under-protected malls to welcome RV parking for people who only want a couple of nights in town.  A constant flow of "watchers" is as good as a long-tern one for keeping the squatters out.  Monetize the parking-match website with localized ads selling to RVers.

What means of production do you have that you are not employing?  Or you see someone else has they are not exploiting?  If Mexicans can sell tamales out of coolers on the street, and every culture has the meat-in-roll offer, you can sell piroshkies (or pastys or calzones, depending on your culture.)

Sure, you'll have to give the cops one, but that expense is covered by your other customers.

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Online Exporting Food Seminar

You want to make your own money?  You ready to be self-employed? You have no money, contacts, experience, and not much time?   How do you get from where you are to where you act on practical results - finding suppliers and customers.

Using what resources you presently have, in this seminar held online for one hour per week, for four weeks, you will be taken through four steps: establishing rationale for buyers and sellers to work with you, create your LCL MOQ FOB offer and no-nonsense competitive website (forget everything you know about websites), find and approach buyers directly with your offer to sell, and then act on practical results.

Forget everything you know about exporting, you can break all the "rules": you'll go for the smallest order rational, not the largest possible; you'll leave all of the "localization" problems on your customer; you'll get prepaid.

You will learn the tools, tactics and attitude to trade professionally and work with the top freight forwarders on the technical issues.

The course will run Tuesdays, 6-7pm Pacific Time, Oct 11-Nov 1, 2016.

This seminar is like no other, and has been hosted by industry associations and leading schools.  The feedback is stellar. Learn the tools tactics and attitudes with food that can be applied to any product form anywhere to anywhere worldwide.

Go into the Fall with a new skill.

Sign up now, no need to pay now, you will be billed to pay at your leisure.  This is a special unannounced session, so go directly to the enrollment page and scroll down to the enroll now/pay later form.

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"I Can See So Many Opportunities"

The genesis of self-employment (more accurately, customer-employment) is to suffer, that is experience passion. You experience a problem (suffer) in a field you love, and find joy in working on the solution. The finding joy is the part everyone else leaves out, and it is the crucial element in a successful start-up, the joy if it.

So many people fail at start-up for the simple reason is they never learned that there can be joy behind suffering.  Add to that the banker's lie that "it takes money to make money" and "entrepreneurship is about risk taking"  and people are off track immediately.

Joy in solving a problem trumps the competition.

When the solution works for you it is valid, but is it reliable, will it work for others?  Often not, without some tweaking, or in other words, redesign.

All products and services are solutions to problems.

There are no solutions that cannot be improved upon.

It does not take much to achieve the requisite "new" required to launch.  As a practical matter you only need enough orders to cover the suppliers minimum production run.  With samples you achieve your first warranted order, then based on customer feedback (practical information you may act on) you continuously redesign.

A common error is to imagine one must seize all possible market as soon as possible.  This leads people to borrow money to "ramp-up" and lawyer-up with IPR to protect the market, create barriers to entry. This is delusional, since the market is being created as you design, and redesign.  Any idea of market outside of that for which you presently hold orders is imaginary, delusional, and people find there is not enough revenue from the frisson of market they imagined to cover the costs of servicing the debts  they incurred protecting their imaginary market.  A dead give-away someone is delusional is if they initiate contact with a lawyer at any point.  If someone mentions "lawyer" quickly ask if he initiated contact with the lawyer, if so, know he is delusional.

The market is created in an organic process of iteration, feedback, iteration, feedback, ad infinitem in joy.  There is no forecasting where the product will go.  When Jobs started Apple Computer there was no such thing as a phone salesman, and stereo salespeople were one step above used car dealers.  Jobs died the number one phone and stereo salesman ever.  There was no forecasting that.

The work is a relentless, borne in joy, effort at presentation, feedback, correction, iteration.  At no point in the process does an entrepreneur ever take risks.  Each iteration is gauged to achieve only enough increase in demand to shorten the time intervals between placing minimum order requirements.  At the start-up, small and medium enterprise level,  entrepreneurs never seek "economies of scale" only increase of frequency of minimum order transactions.  This is the path to thriving.

One commenter declared he saw so many opportunities right now.  Really?  I cannot see a single one.  But I do know there is a process, valid and reliable, for discovering markets that right now remain unserved.  I do know the work is rewarding, and there is more work than your being can encompass, or put another way, enough work to exercise every fiber of you mind, heart and soul. I do not think opportunities can be seen in advance, it is more one insinuates oneself into a market by providing a superior value in needful things by design.

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New Portland Oregon Import Export Start Up Seminar

If you live in the Portland, Oregon area, on Saturday, April 23, 2016, I will offer an all-day intensive international trade start-up seminar at Portland Community College.  You will be taken through finding customers, suppliers, developing product, lining up the finance, logistics and legal structure all in a one day seminar highly rated by participants for content, pace and humor.  Enroll now!

Write down the CRN 24328 of your selected class to register.

CRN	Campus / Bldg / Rm	Time	Days	Dates
24328	CLIMB Ctr / CLIMB / 303	09:00 AM-04:50 PM	Sa	23-Apr-2016 thru 23-Apr-2016
	Instructor: John W Spiers  Notes: One hour lunch break.  Tuition: $79.00 Fees: $0.00

http://www.pcc.edu/enroll/registration/non-credit-registration.html

Please bring recorders or anything you like, I provide handouts and after-class follow-up by email.  I look forward to meeting with you personally!

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USA Imports: Fewer Cars, More Parts

Here we have some data that may be a trend, and that is fewer whole cars imported, but more car parts. In econ downturns, people repair instead of replace.  USA car dealers are unloading excess production by means of subprime auto loans, against which it is is hard for foreign automakers to compete.

Another item without hard daa yet is how many people are taking advantage of UBER's guaranteed auto sale, if someone has passed the UBER qualification.  It works like this: pass UBER driver qualification, and you cannot be turned down for a car loan with the dealer.  The car must be less than 4 years old (meaning at least $12,000 and up) and your auto payments must be made weekly out of your UBER earnings.  The trick is interest rates may be 20 + percent.  How many people end up a slave to their UBER car?  As an aside, I witnessed a woman who was buying a car explain she was not going to drive for UBER, there was just no other way for her to get a car her credit was so bad.  The UBER rep said "no problem." (So there is an exception to the payment out of UBER earnings?  Does UBER not car for it gets a cut of the interest?) Wonder how common that is, wonder how that worked out for her.

Anyway, parts vs whole cars:

http://www.census.gov/foreign-trade/data/index.html

If the trend continues, auto repair is getting better as a biz.

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Zero Hedge Advises Panic

A Jewish mother's telegram:  "Worry.  Details to follow."

Tyler Durden notes if everyone were to draw out their cash from the bank, to avoid negative interest rates, it would take twenty years for Uncle Sam to print the currency necessary.  Can you wait twenty years for the ATM to process your request? This article is full of fun facts.

The upshot is get gold, although as that is also property, it too will be subject to forfeiture, as we have done in USA before.  But but but, Uncle Sam was only able to get 20% of the gold.  Yes, but he suppressed it 100% for over 40 years.  Gold might have been hidden, but it was useless.  And available if Uncle Sam had decided to get tough.

Also, both USA and Germany had concentration camps and gold forfeiture.  Although Germany's concentration camps were earlier and nicer to start (according to inmates at the time) things got dire in Germany and horrors still unimaginable happened there.  The danger is not that USA will ever get an Adolf Hitler like Germany, the problem is the American and German people are no different when it comes to self-inflicted crises.

Sure panic, but currency or gold or whatever is property, low hanging fruit, and you are begging to have it taken.  The dinosaurs which grew in the primordial swamps of capitalism are now dying: McDonalds, Best Buy, Sports Authority, Petco, CVS,  Home Depot, etc.  The fetid air which they breathed is chilling.  The corner hardware, grocer, gas stations, pet shop, stationers, pizza parlor, burger stand, all family businesses, which they rolled up in the 70s, 80s, 90s...  gone...  but the dying dinosaurs are creating a vacuum of demand that nature abhors.  Ross Perot's giant sucking sound is retail America needing family businesses.

And they will signal what people really want now.  And for this traders will bridge demand with supply in such places as China, and as capitalism fails in USA, in that measure free markets will return to USA and small family manufacturers will begin to re-emerge, creating a new industrial base.  There is no politician who will not strive to stop this, but again, family self employment is fruit too high.

Sure, as Durden says, whoever panics first wins.  But get your assets into the means of production.

And as an aside, I am seeing thriving retailers who have adapted the ancient Powell's Book Store tactic of selling new books next to used copies, on the same shelves.  Hardware stores with new and used tools in the same store.  Boutiques with new and used clothes on the same racks.  It makes sense, a way to transition inexpensively, and serve a wider group.  Every brick and mortar better than  Amazon for selection and price.  Maybe that is why Amazon is now opening brick and mortar stores.

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Business Start Up: Valid But Not Reliable

When I offered as an example of valid, but not reliable, business success stories, in this instance Patron Tequila, a student offered Sammy Hagar Tequila contra my point that although hair-care tycoon Paul Mitchell conceived and built Patron Tequila based in Vegas in the early 90s, while valid, it is not reliable in the sense that anyone else could use his success as a template for one's own success.  But Sammy Hagar has done fantastically well building a tequila brand from scratch.

Yes, another instance of valid, but not reliable, in the sense of it worked for Hagar, but no one else can follow that trajectory.  You need the gift of ADD, a music career, one helluva delegator, and right place at right time.

The Harvard Business School (and copied by countless business schools) uses the case study method, where they study such success stories as templates for how you too can be "successful."

As I state, it takes passion (suffering) to spot in what entrepreneurial area you ought to work, and then finding joy in doing the work that confirms your mission.  Mitchell and Hagar have found both, serially, valid "success" stories, but no reliable because no other hair-care specialist or rock star has their  joy in solving what causes them to suffer.

What is reliable, after the passion/joy process, is to follow the reliable act of switching to science and establishing a reliable customer base for your solution to the problem you experience, to tweak it to the satisfaction of enough market to constitute your definition of success.

That is the work of business start-up.  You do not need finance, a logo, legal structure, advertising, you need only customers, which are not only the most important thing, they are the only thing that matters.  Everything else is trivial.  And although customers is the most important thing, getting your product or service right is the hardest thing, the only thing you get paid for, so the only thing at which you should spend your time.

Too late to join my seminars winter, but I have spring sessions coming up.  email me at the address upper right if you want info on these.

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Start-Up Back Country Trading Post

On Aug 12, 2015, at 9:17 PM, JD wrote:
Hello John,
I'm an American expat living in (exotic locale) and would like to possibly import some food stuffs for a retail operation here. It would be a small retail operation with potential for growth. With the expat community growing here it's niche market with potential as you just can't find the products you want. Any advice would be very helpful.
Cheers,
JD

Hey Jason,

Simple enough, find a relative who will mix a pallet load for you and ship it to you, not so much you can't afford to lose, but enough to meet all of the players and reach accommodations upon which you can build a long term and growing business.  Just keep working absolute minimums and repetitions as a inexpensive way to become a master of the process.  You'll win some and lose some, but you will be in control.  Once everyone knows you, you'll be fine.

Avoid the mistake of the grand gesture, big opening.

Also, after you work out the process, you can move on up to mixed full container loads by being a unpaid (except for what profits you yield) market research manager for Costco.

http://www.costco.com/export-sales.html

(Read the whole page very carefully, it's all there.)

Please let me know how it goes...

John

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