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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Where Brick and Mortar Pure Play Beats eCommerce

Now if you ever talk about any given business, even with audited statements, you really cannot tell very much.  And even if a single example is valid, then question the is, is it reliable?  Will it work for anyone else?

I've been in Paris the last couple of weeks, and was introduced to a brick and mortar retailer specializing in sporting goods.  The tactic is pure contra-eCommerce, something I have yet to see, a "brick and mortar pure play" to reverse the jargon of the 1990s.

The natives tell me this fellow spotted the flaw in the eCommerce conceit, and devised a way to best the internet.  But first, let's review.  There are two insurmountables in eCommerce -

1. It costs more to gain a customer marketing online than you can make off what you sell to that customer.  eCommerce is a money pit.

2. The "last mile" is the most expensive part of logistics.

And what is the big advantage of the internet?  If you know what you want, the best version at the best price, the internet is the place to go.  (Fantasy, of course, but that is the world we live in now.)  knowing reality, you may then proceed to make money.

Dealing with reality, this fellow has rented out many small storefronts in one section of Paris, called the Latin Quarter.  Take a look at their website (and scroll down to see a map for a visual of how many stores he has in this one area, and only this area.)  Twenty years so far and still ticking.

Each boutique is dedicated to one sport.  There is the sailing boutique.  The rock climbing boutique.  The whitewater kayaking boutique.  The skiing boutique.  The bicycling boutique.  In each the has the the best brands, the best models and sizes at persuasive prices.  In this way he kills the internet competition.   He has what you want, in your size, at the right price and you can have it right now (which means the last mile is handled by you taking it home.)

Not only has he conquered Paris for sporting goods, he has repeated this pattern in ten other French cities.

Yes, you can order online.  Sort of.  But pay by check is preferred, mail it in.  But over 800 euros, they want a bank transfer. Yes, you can pay by credit card or debit card, but they make that difficult, not easy.  In essence this is just the way you'd pay thirty years ago from a mail order catalog,

Indeed, their stores hand out free-of-charge a huge 500 page paper catalog, for today, as 30 years ago, you have to have a paper catalog for effective retail.  The internet is strictly self-service checkout.

It has a website, with all of the social media buttons, so it is not short of organic materials for being ranked high in search engine searches.  But guess what?  The number one retailer of sporting goods in Paris shows up not until page three on a google search for "Paris sporing goods."  But then, who cares about what a google search gets you?

Another sporting goods store, REI, has proven to be internet-competition-proof as well.   In this instance the store is a co-op, that is it is owned by its customers, so it is not another example as a test of the hypothesis.

How did he figure this out?  First of course, ignore the hype, deal with reality. Was a Starbucks on every corner an inspiration?  Who knows?  But as the dinosaur retailers die, and a small business renaissance fills in the vacuum, examples of how to do it right will be valuable.  If this example is valid, now it needs to be tested for reliability.

The title of this post is disingenuous.  eCommerce is a non-starter, so brick-and-mortar is already the winner.  The internet is about self-service check-out.

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A Colloquy On Entrepreneurial Error

On Nov 12, 2016, at 4:39 PM, DS wrote:

‘

See: https://mises.org/blog/there-are-two-types-credit-%E2%80%94-one-them-leads-booms-and-busts

Shostak writes about the distinction between the two. He also says that firms experience difficulties not because of entrepreneurial errors but in tandem with the economy.

In your blogs you state that start-up firms fail due to assumed customers. That is, founders assume there is a market of ready, willing & able customers for their products when, in fact, no such market exists.

Question: Does this kind of assumption represent an entrepreneurial error?

Question: Does anybody bother to measure/quantify commodity credit? In other words, how much commodity credit is available to the economy overall? Does it matter?

All the best

DS

On Nov 17, 2016, at 5:35 PM, John Spiers wrote:

***Right, Shostak is great...  I use the terms credit and ex nihilo credit...  Mises assumes an interest rate is legitimate in biz, I do not...***

In your blogs you state that start-up firms fail due to assumed customers. That is, founders assume there is a market of ready, willing & able customers for their products when, in fact, no such market exists.

***One big factor for many...***

Question: Does this kind of assumption represent an entrepreneurial error?

***No, if entrepreneur is defined properly...  it is fantasy, not entrepreneurship...***

Question: Does anybody bother to measure/quantify commodity credit?

****Illegitimate forms yes, but definitions are wild....  legitimate credit is difficult to track, because it is private...***

In other words, how much commodity credit is available to the economy overall? Does it matter?

*** Matter to whom? the amount availble to industry is pitch perfect, since it is created based on supply and demand, and carries no interest.  It is created when two traders trust each other....***

JOhn

On Nov 21, 2016, at 4:39 PM, DS wrote:

Follow up on Entrepreneurial Error. I was looking for an example of what the Austrians mean by Entrepreneurial Error. Mises provides one:

Now it happens again and again that entrepreneurs err in anticipating the future state of the market. Instead of producing those goods for which the demand of the consumers is most intense, they produce less urgently needed goods or things which cannot be sold at all. These inefficient entrepreneurs suffer losses while their more efficient competitors who anticipated the wishes of the consumers earn profits. The losses of the former group of entrepreneurs are not caused by a general abstention from buying in the part of the public; they are due to the fact that the public prefers to buy other goods. –Human Action 298

Question: Is this Mises’ way of saying that (at least some) entrepreneurs simply misread the market?

Comment: JWS has given us Milestones 1&2 to deal with those errors. #2 tells us to get specialty retail to say it’s a good idea but unavailable. So, given the milestones it’s hard to make the errors mentioned in Human Action.

DS

On Nov 22, 2016, at 1:14 AM, John Spiers wrote:

Hey DS,

Great colloquy!  Can I reformat it and hide identity and post it?

To answer, yes...  I say I am informed by the austrian school, but it is capitalist, and all capitalism presumes usury.. its fatal flaw...

The problem is the definition of entrepreneur.. there is Mises', Kirzner's, Drucker's and at least a dozen others I've read...  (and they cannot agree on a definition of money, credit, profit, customer and so many other terms!)

All of them are academics, so had to form a definition of what they were referring to...  and I think their definition formed their entity, not the other way around...  they made the definition fit their ideas...

Reading them against what I learned working for others I could see their errors, and already knew from practice how as Drucker notes, "entrepreneurs do not take risks"  as you so exactly note below...

And they think of entrepreneurs as starting boeing, the corporation, not noting Bill Bowing the tinkerer who manages to get an airmail contract can then went into production, and after 15 years quit in disgust as the government accused him of ripping off the system...

They are rare.  Airborne cold medicine started by a teacher getting sick of being sick is more common, or for that matter, the fish taco stand...

As you say, hard to make the errors if you follow the practice representing actually how humans act.  You still make errors, they are just amendable , one step back, two forward...

and the academics seem to miss it is passion/joy/lifestyle that drives innovation, not some animal spirit that sees some opportunity...

but Mises is great on how we take over lesser utilized resources and organize them into a better result...  we are on the margins in every way to start...  since we can command more, we outbid those marginals, and get going...

Our initial products are poor quality, rare, expensive, inefficient...  we design just enough to get to milestone #3, no more, to start...

think of the first apple computer...

John

On Nov 22, 2016, at 6:17 AM, DS wrote:

People still make errors, they are just amendable , one step back, two forward...

***Go right, in order to go left. Produce in order to consume (Say’s Law). Round-about production. Umweg (detour) Yet, not all who wander are lost (Steve Blank)***

and the academics seem to miss it is passion/joy/lifestyle that drives innovation, not some animal spirit that sees some opportunity...

***Yet, entrepreneurs organize on opportunity. How to organize? Mises has pointed out that value is a ranking, a scale. So it may apply to opportunity as well. More from Mises: “In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained. A man becomes an entrepreneur in seizing an opportunity and filling the gap. No special education is required for such a display of keen judgment, foresight, and energy. The most successful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal to their social function of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership.” Human Action 311.***

***Which opportunities to organize? The one’s that appeal to your passion I guess. Admission: I’ve been concerned about passion because I see so many starving artists. But knowledge of opportunity and the ways to organize it gets me past any fear based objection. So, I’m always checking my passion . . . and matching it with world class discipline.***

DS

On Nov 22, 2016, at 7:03 AM, John Spiers wrote:

 Produce in order to consume (Say’s Law). 

***If you are quoting Keyne's reference to Say's "Production creates its own demand" Say never said it.  The first recorded instance of the phrase is with Keynes, a wicked man who attributed it to Say.  he know it was nonsense, so he tried to pass it off as Say.    Keyne's gerneal theory is full of such nonsense, written as a game  plan for the new utilitrianism...  Keyne sin his foreword to his german language version to the new Nazi regime...***

***Yet, entrepreneurs organize on opportunity. How to organize? Mises has pointed out that value is a ranking, a scale.

**cardinal vs ordinal, an important observation...***

So it may apply to opportunity as well. More from Mises: “In order to succeed in business a man does not need a degree from a school of business administration. These schools train the subalterns for routine jobs. They certainly do not train entrepreneurs. An entrepreneur cannot be trained. A man becomes an entrepreneur in seizing an opportunity and filling the gap. No special education is required for such a display of keen judgment, foresight, and energy. The most successful businessmen were often uneducated when measured by the scholastic standards of the teaching profession. But they were equal to their social function of adjusting production to the most urgent demand. Because of these merits the consumers chose them for business leadership.” Human Action 311.***

***d'accord...  and thanks for repeating his definition of entrepreneur.... ***

A man becomes an entrepreneur in seizing an opportunity and filling the gap. No special education is required for such a display of keen judgment, foresight, and energy.

**Ayn Rand created a comic book hero based on this definition... entrepreneur as here, when in fact the entrepreneur is usually inspired by the mundane "it hurts."  Passion and joy...  Someone who is annoyed and invents a airplane is not the stuff of heros, it is quite common.  Comic books have mass appeal. ***

***Which opportunities to organize? The one’s that appeal to your passion I guess. Admission: I’ve been concerned about passion because I see so many starving artists. But knowledge of opportunity and the ways to organize it gets me past any fear based objection. So, I’m always checking my passion . . . and matching it with world class discipline.***

*** An excellent critique, because starving artist is a lifestyle too,....  All entrepreneurs grow on customer feedback...  Picasso answered a young artist's inquiry as to how to make money as a painter and Picasso replied "use blue paint."  (one original painting I bought was of Hong Kong harbor.  It was largely blue, the only color you do not see in Hong Kong harbor.)

And...  you have not seen the countless people who do the passion/joy lifestyle who are thriving, unless it is the family restaurant 100 year old, etc..something retail...  vast majority are unseen becuase they a few million in sales and lower...

The discipline is in the test of the hypothesis....  keeping the offer standard until enough feedback warrants a change...  the siren is to run and make a change based on each feedback experience...

JOhn 

On Nov 15, 2016, at 9:48 AM, DS wrote:

What to do? Read Say’s Political Economy. I’ll have to follow up on this issue after further study & analysis because Says’ book is a deep read. And that takes more time . . . Meanwhile, I have WH Hutt’s book: A Rehabilitation of Say’s Law to get me going. Straight away, it seems as if barter plays a prominent role in Say’s economy.

I borrowed that phrase (we produce in order to consume) from Paul Cwik’s discussion (https://www.youtube.com/watch?v=9YTJtwYrzak) Around t29:30 he discusses Keynes’ spin on JB Say: supply creates its own demand. So, in Cwik’s rendition of Keynes production becomes supply and consumption becomes demand. Keynes’ error here is that a definition has been transmuted into a cause. Even Austrians may be victim to the same trap. To say that we “produce in order to consume”, as Cwik does, may be a transmutation in itself.

All the best

DS

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How Apple Gets a Subsidy Avoiding Taxes

Stumbled across this:

Report: Government Paying Apple Millions to Shelter Overseas Profits  
Bloomberg:

Many of the biggest U.S. multinationals have seized on the same exemption, which lets them avoid or delay repatriation taxes by buying Treasuries with their overseas cash. (The top 10 alone hold over $100 billion of the bonds.) That, in effect, enables the companies to turn billions of dollars in potential tax liabilities into millions of dollars in taxpayer subsidies--all while they publicly bemoan the sky-high taxes that make it impossible for them to bring the money home. 

  Yes.  That is not an accident.  It may costs $100,000 a year in lawyer/accountant fees, but it is what you get when you borrow enough ex nihilo credit to get huge, and then have lobbyists write legislation to benefit you.  I can do this thing as well, but it costs $100,000 a year in lawyer/accountant fees.  Not worth it unless I am huge.

Since 1962, the U.S. tax code requires overseas profits to be taxed at the corporate tax rates. So, companies can either keep the profits over seas, pay the tax on the already taxed profits, or, as this article details, invest in government securities. Proceeds from such investments are subject to the same tax rules as the overseas profits.
It interesting outlining how Apple's tax scheme works, including its own in-house investment firm to manage its cash investments. Where things go weird on me though is suggesting Apple is getting a tax subsidy buying government debt. The article goes so far to claim Apple has been paid $6 per tax payer over the past 5 years. The fact though is the government sells debt and anyone who buys those securities receives interest on their investments. If Apple, and other companies weren't purchasing the government securities, someone else would.

Not true.  If Apple and other companies were not purchasing them, the interest would be higher, for the demand would be lawyer.  G'ma on fixed income would be doing better.  At higher rates, Uncle Sam could not finance as much whimsy as he can now.

At the same time Uncle Sam taxing those profits in real time would not do anyone any good, for when Uncle Sam has more money, he just starts another war.

This is simply another example of the misallocation and malinvestment that comes with an ex nihilo credit regime.

The solution is to go back to import duties being the sole revenue source for the general (federal) government.  All else is free trade, and all product liability is on the importer.

It was the original design of the USA, a free market, until the bankers, led by Hamilton, overthrew the revolution.

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Export Food - Repping Supplier Approach - LCL MOQ FOB Part 1

Here is the continuing of the colloquy started last week.  The names & location & product & urls are changed to protect the innocent... it’s the tools, tactic and attitude that matters...

On Nov 19, 2016, at 2:28 PM, J L wrote:

Hi John,

Thanks for sending over all the info for week1. Very insightful!.

So the product I have in mind is Specialty Snack Chips. You can read all about them here https://specialty*chips.com/ but in brief these are Gluten free, Non GMO chips containing only limited ingredients. I have tried them out and they are good. But I guess that does not matter :). This idea came from a restaurant owner in city state and he currently sells it to speciality shops in the area and through his website. I am originally from Ghana and have never heard of or had Specialty Snack (South Ghanian cuisine) chips before. 

I went through the steps outlined by you to find the HTS number but I don't think I have one for something like this. This is what I got 

• HTS 2005.20.0020  ( These are Potato Chips ) and the data came up with nothing which is very odd. Either I'm doing something wrong or data is incorrect

• HTS 2005.90.0000  ( These are Chips made from other vegetables) and the data came up with nothing

• HTS 2005.99.6550  ( These are Other Vegi Preparations ). I do get data for this which I have attached but don't think I have the correct 10 digit HTS number for this product. Any suggestions on how I should go about finding the correct HTS?   

Regarding the above product, I guess here are my questions

• I guess after the data has been analyzed and once confirmed that there is an opportunity, the next step will be contacting the supplier just like in your sample letter. I don't have a registered company. Does that matter?

• Now I'm assuming the production capacity will be on the lower side for these chips. From an agent perspective and with the process outlined by you, is our supplier generally this small?

• Please let me know your thoughts on this idea

For me I love the breads (Dave's and Eureka) and chips that are produced in USA. I haven't travelled the world that much but love these products and think there is scope. I'll probably do some analysis on Eureka bread too after this :) but they are pretty big and I suspect might not need someone like me to export. What do you think?

And finally thanks for the blog today morning. Very timely. I'm a (job & location) and have a bunch of friends proposing a startup and leaving our jobs to concentrate on it after we get funding :)    

Thanks,

J

On Nov 19, 2016, at 10:07 PM, John Spiers wrote:

Of course you don’t need funding, you need customers.  Until you find customers, you cannot know what funding, if any, you need.  It is rare for a start-up to require any more funding than what is lying around.

On Nov 19, 2016, at 2:28 PM, J L wrote:

Hi John,

Thanks for sending over all the info for week1. Very insightful!.

"Specialty Snack is a kind of pancake made from a fermented batter. Its main ingredients are (ingredients)." well, then they are a rice product, not potato.... nor veggie...

from http://rulings.cbp.gov/index.asp?sjeudjksed=Specialty Snack&vw=detail

"

The applicable subheading for this Specialty Snack will be 1905.90.9090, HTSUS, which provides for bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa…other…other…other. The duty rate will be 4.5 percent ad valorem.

"

In export, the Sch B number seems to be....

1905.90.9090

But when I go to the report, it said "communion wafers...."

so I dropped back to 1905.90.9030  "..savory chips..."

and here is what I found...

John

On Nov 20, 2016, at 10:18 AM, J L wrote:

Thank you!. I started all wrong by doing a search for chips.

J

On Nov 20, 2016, at 10:29 AM, John Spiers wrote:

I searched Specialty Snack and was surprised there was actually that customs letter on the item...

So now try to do the USITC Trade Data analysis...

John

On Nov 22, 2016, at 1:03 AM, J L wrote:

• So the exports to Canada far exceed any other country, though the amount exported has been decreasing gradually since 2012. Also the Average selling price is less than the world average selling price

• Exports to Australia and Mexico have been increasing since 2012, with the Average selling price is higher in Mexico.

• Philippines exports have somewhat remained constant but have the highest selling price among the top 6

• Exports to Japan and Korea have gone down and they also  have selling price cheaper than world average selling price.

Based on the above analysis, the best target country appear to be Mexico

.[ Analysis attached ]

Thanks,

J

On Nov 22, 2016, at 1:18 AM, John Spiers wrote:

On Nov 22, 2016, at 1:03 AM, J L wrote:

• So the exports to Canada far exceed any other country, though the amount exported has been decreasing gradually since 2012. Also the Average selling price is less than the world average selling price

**Cheap mass production chips, but that means here is market for high end too...***

• Exports to Australia and Mexico have been increasing since 2012, with the Average selling price is higher in Mexico.

• Philippines exports have somewhat remained constant but have the highest selling price among the top 6

• Exports to Japan and Korea have gone down and they also  have selling price cheaper than world average selling price.

Based on the above analysis, the best target country appear to be Mexico.[ Analysis attached ]

*** Very good...  now to create the offer, the LCL MOQ FOB...  you'll need to approach the supplier for  that, let's discuss that...

John

On Nov 25, 2016, at 11:14 PM, J L wrote:

Hi John,

So the owner has closed down his restaurant until further notice but his voicemail says that he still does Specialty Snack chips and points to his website which only has an email address. I guess I’m left with only 2 options now, go meet him personally or email ( which I know you strongly recommend not doing ). Would it not be worth trying to email hom with the details and then calling in a few days?. What do you suggest? 

Thanks,

J

On Nov 26, 2016, at 1:10 AM, John Spiers wrote:

Find a mailing address for him...  google, google...  real estate agent for location would know... 

The second you say “call me” you give u conrrol of the process.  Syat in charge of this business deal.

Find the mailing address and a phone number and then when you've drafted the letter, let me look at it...

JOhn

On Nov 26, 2016, at 6:46 PM, J L wrote:

Hi John,

Appreciate all the advise and help you're offering!. Done. I googled his home mailing address and have attached the initial draft of the letter. For the Company name, I have also included my brothers name as I'd like him to join me if/when this turns into something. I concluded the letter with the alternative of he contacting me as I do not have his direct phone contact.  Please review and let me know.

Thanks,

J

On Nov 26, 2016, at 6:50 PM, John Spiers wrote:

the letter comes thru garbled on a mac...

Why not just call the company L ?

(What's it mean?)

John

On Nov 26, 2016, at 7:02 PM, John Spiers wrote:

On Nov 26, 2016, at 6:46 PM, J L wrote:

 initial draft of the letter.

If you can send it as a .pdf, great...

On Nov 26, 2016, at 7:39 PM, J L wrote:

Attached is the pdf format.  

The name L does keeps it short. So just L?. No Company or Corp or Inc after it? or maybe the old fashioned way L & Sons. 

Are you asking what does L mean ?? ?    I actually don't know. I'll have to ask my parents

On Nov 26, 2016, at 7:56 PM, John Spiers wrote:

Here are some notes...  do you have your name spelling in (ancient script)?  And the suppliers usually has a capital D.

Problems in the letter:

do we know "savory"?

I think price per kilo, but includes plain old potato chips...

Initially we'll discover what market there is in Mexico, and then whether we can work together building this new market,and after that...

 best to find his phone number,. what was the phone number of the restaurant?  do cached webpages say?  Even if dead, name a phone number...

John

On Nov 26, 2016, at 9:56 PM, J L wrote:

Thanks John. I've updated the draft with your recommendations.

• "Do we know savory?". The chip is not sweet and is crunchy with little salt added. The HTS number 1905.90.9030 is for "Corn chips and similar crisp savory snack foods". I'd say these are similar to corn chips 

• I found suppiers landline number and have listed both landline / restaurant numbers in the letter. John, I'm hoping he won't mind me contacting him at Home address & number. On specialty*chips.com, he's clearly mentioned the email address as contact info and that's the reason I'm being a little skeptical.

• 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!

• So my first name means "whatever" :) and here's the first and last name in Anciet Script.

On Nov 27, 2016, at 3:50 AM, John Spiers wrote:

On Nov 26, 2016, at 9:56 PM, J L wrote:

Thanks John. I've updated the draft with your recommendations.

• "Do we know savory?". The chip is not sweet and is crunchy with little salt added. The HTS number 1905.90.9030 is for "Corn chips and similar crisp savory snack foods". I'd say these are similar to corn chips 

***Good...  gotta be careful when using words and representing data, you have...***

• I found his landline number and have listed both landline / restaurant numbers in the letter. John, I'm hoping he won't mind me contacting his at Home address & number. On specilty*chips.com, he's clearly mentioned the email address as contact info and that's the reason I'm being a little skeptical.

*** He very well may freak out, but I doubt it. He already put himself waaaay out there opening a retail biz...  as to the phone number,  it's tactical...

1. He pre-empts you, calls you with a 

a,.  I'm interested

b. get lost...

With a, you proceed, humbly, with him in charge...  with b, you find a new source for Specialty Snack chips...

2. The phone number is dead, THEN you email saying, "I wrote, I called, and now I email....

You are driving at a contact, and rather obliging him to answer yes/no...***

***

• 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 chips going in...  

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

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

• So my first name means "whatever" :) and here's the first and last name in ancient text.

*** Maybe your parents will answer first, but let's see what my sources say...

There are brand names like Ernest and Julio Gallo, and of course just a last name, Nordstrom.  People read it first, then sound it out, and then maybe wonder what it means...   You can always change it, maybe ask a dozen random people at a starbucks...  I am starting a food biz selling Specialty Snack chips, what do you think of these two names (L and then brothers L and J & ?  L...    Indeed Brothers L J might be interesting...

*** As to the letter, make it Dear Mr. d’Daddy  be formal...

clean this up...

 what market there is in Mexico and then whether we can work together building this new market and after that can negotiate if we are the team to represent you. 

maybe : what market there is in Mexico and then discuss (negotiate is too hard) if we are the team to help build market for Specialty Snack chips in Mexico.  

I see now the two phone numbers,  do just the restaurant one, avoid the home one if possible...  

So now it is attitude - he'll want to know about you...

Answer matrix:

I am nobody, (Fedex driver?) hate it and love your chips... (what's your "conversion story"? keep this real short...)

I am Ghanian, but did not know about Specialty Snack of Specialty Snack chips...  (south v north) it's Ghanian, clearly, but new to me...

"I'm hungry for change, you might be hungry for more customers, let's find people hungry for your chips, and then see if there is work for me too..."

Took some training on how to break into new markets, but no accomplishments yet, so no demands on my part: if I find customers, please sell to them, but if you don't want to work with me, OK, I'll find another product I love....  it really is not hard to find out if the customers are there...

(Also, who knows, "you may want to take mexico, and let me have France...  way too early to decide anything because we know nothing...")

So once this letter goes out, you shift to attitude with the supplier...  "you get free market info, I get a chance to maybe start my export food biz with you...***

Indeed, to use his very nice website to add the lcl moq fob would be ideal...

anyway, good to see this proceeding...  your views?

JOhn

(Part Two Tomorrow)

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India, Gold and a Monetary Event and Some Change

So India is working on what USA has not quite done yet,  but Europe did, and that is eliminate certain bills and when people tried to trade the old for the new, they were obliged to explain where they got all this cold hard cash.

In USA, cash is "probable cause" of a crime at any level any cop says so, and since they get to keep what they seize, "says so" getting less and less every day.  War on cash.

Here is a guy whose reasoning is sound, although I agree with Sennholz that the Hegemon has way too many options, plus the Hegemon does not lose if the system crashes.  When the Soviet system crashed, the same people ended up on top.  The Russians were just smart enough, this time, to let change happen without bloodshed.  With USA having shed so much blood worldwide in this last 40 years, what goes around comes around. (Name a time when the news covered Soviet soldiers in combat.  Just Afghanistan?  That was only ten years long, and the Communists had the decency to self-destruct peacefully after that.  We are at fifteen years now...)

This guy is pointing out that gold is up to $1700 in India, about 40% higher than spot.  A change of currency is a monetary event, and inflation what happens when you print too much currency.  India explicitly here is printing more currency, and inflation is showing up in terms of money (gold.)

It is fun to read a prediction that you'll be able to buy an average house for 2.6 ounces of gold soon, and let the mind work out how easy it would be to buy that much gold and hold it.  This guy sells gold.  If it gets to that, you'll have so many other options, no gold required, that as today a gold play is just one marginal opportunity among countless others.  At one point I had a couple of kilos of gold in my house, plus 1,000 ounces of silver, I accumulated over the 00's, with a view of the "main chance."  I repented of that, and sold it all (at the top it turns out; taxes on gains will impact much getting a house for 2.6 oz of gold, making the play probably risible at that point in the future.)

The stories are black market machinations are pushing the price of gold up in India.  Could be, but I'd stick with printing too much currency.

As to the price of gold in India, the solution to high prices is high prices.  The high prices themselves will widen the smuggling, from petty to grand, and that will solve the problem of state policy failure.

People are still panicking over Trump, and those panicking I still think are doing so becasue they know the ex nihilo credit regime si over.  As to that, Trump is merely the messenger, Hillary would have done what trump will do, just as Obama did What McCain would do.  Just as Obama was used to draw back the disaffected left, so Trump is drawing back the disaffected right.

What is true no president keeps promises, at all, and Trump will be no exception.  What is also true is the iron is hot, and everyone can pointlessly vote, but everyone can also effectively act.  The election is decided, buy how you contribute to forging the iron up to you.

As the ex nihilo credit regime declines inexorably, your action replacing it, at the small business level, is both doing good and doing well.  It is the only reasonable "prepping" that can occur, because entrepreneurship is about the unseen, as Drucker says, "creating customers and innovating."  If you create something, then necessarily it is unseen until you act. When you start up a business, your product is a solution to a problem (and there is no solution that can be improved upon) but you cannot know what that product (or service) will look like around the bend, because its development is by iteration and iteration, based on customer feedback preceding each iteration, something that cannot be plotted linearly.   Whole lotta zig zaggin' goin' on. You have the passion and joy, but you have no idea what your offering will look like in a year, let alone a decade.  Neither does the hegemon (or competitors for that matter) so as fruit to pick you are too high and too far apart to mulct.

(The point of Intellectual Property Rights, monopolies issued by the hegemon, are to set designs in stone, with a promise of riches, so that creativity and innovation is suppressed, especially by threat of litigation if anyone dare improve on a monopolized idea, so we have extremely limited options from which to choose in life.  Car companies could not start in USA after the Big Three pooled patents among themselves, and anyone who tried to start up was obliged to overpay the big three for each automobile function a car needed.  Windshield wipers? Pay us.  Radio?  Pay us.  ABS?  Pay us. )

Obama was elected to stop the wars, the bailouts, close gitmo and fix healthcare.  Of course all of those are far worse today.  In 2010 he announced he wanted to double exports in five years.  Whole lotta ex nihilo credit spent on that, never happened.  If McCain won, it'd be the same.  Obama was against the Standing Rock pipeline, but as you can see from the video, on his watch, whole lotta work got done.


Trump won, meaning the iron is hot.  What gets forged depends on how people act, what they do.

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Chinese Banks Prepare For the Scheduled World Economic Crash

China-haters salivate at the prospect of The Chinese Communist Party coming apart when the banking system, modeled on the USA system, fails.  Never mind the obvious implication; if the Chinese banking system modeled on the USA fails, well, then...

It ain't gonna fail.  The Chinese want to replace the USA, become #1, exactly the same way USA became #1.  And what I love about Marxists is they get their facts straight and proceed in a straightforward manner.  No hype, no halo on exploitation, no "it's for the children" cant, just "get 'er done."

This reporter hilariously wonders if the efforts of the five Chinese state-owned banks is coordinated: all five have proposed subsidiaries to offload bad debt and funded with ten billion yuan-

ABC Asset will specialize in the debt-to-equity swap business, including acquisition of debt assets, converting debt into equity, holding, managing and disposing of equity in debt-to-equity swap enterprises and other financial business, according to the announcement.

The investment, which will be funded by ABC's own capital, "meets the bank's needs to adapt to changes in the internal and external economic and financial environment".

"It will enable the bank to enhance its competitiveness and gradually transform its business model from over-reliance on the deposit and loan business and to carry out integrated operations," the bank said.

...

"We commercial banks regard this as an opportunity to transform our business," he added.

After the subsidiaries are established, they will raise funds for debt-to-equity swaps from qualified institutional and individual investors.

The sources of money will include insurance funds, pension funds and industrial investment funds that can make long-term investments.

"By setting up a subsidiary, we'll have a professional team specializing in debt-to-equity swaps. Moreover, it will be easier for the subsidiary, as a legal entity, to isolate risks from the bank," Zhang said.

Just like GoldmanSachs and Lehman Bros did (does?) secretly, China will be forthright about it.  The ten billion yuan is a ludicrous amount to deal with China's credit problem, it is probably just the start-up costs of the office building necessary to conduct the wealth transfers.

So there it is.  The crash is coming, the Chinese will simply raid "insurance funds, pension funds and industrial investment funds" and oblige them to "make long-term investments."

That is exactly what the USofA plans, it is called "opt-in" where they seize your "assets" (ex nihilo credit is nothing but tally of nothing) and turn it into a long term investment, "for the children."

Now you know.  Forget about guns and ammo, stocked prepper foods, and gold coins.  Start an authentic business, that does not require ex nihilo credit.

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Black Friday

In business, black means good, as in black ink, positive balance, as opposed to red ink, negative balance.  The day after Thanksgiving in USA is called Black Friday because for many retailers it was the day they turned from a negative balance to a positive balance. the cash registers running red hot.

Mish has a post on how all this is changing, with the obligatory hype regarding internet "sales."

I call it hype, since predictions, that never quite pan out in the future, are presented as earth shattering, and never do the analysts report the two salient factors:

1. What is the net profit of the Black Friday sales? If the draw is loss-leaders, then what is the net?  For all of the extra overhead, what money do you get that you would have not gotten otherwise?

2. When will they report internet sales net of returns?  Never.

How important is Black Friday?  Let's look at an authentic larger retailer, whose model has thrived for over 80 years, through thick and thin.  It is a sporting goods store, thriving while the likes of dinosaur Sports Authority has come and gone in a fraction of that time frame.

Such is the effect of ex nihilo credit.  Nothing from nothing is nothing.

Like last Black Friday,  this Black Friday REI will be closed.

For authentic retailers, Black Friday does not matter.

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Is Internet Sales Just Mail Order Self-Service?

For all his precoccious perspicacity, Mish can make seom glaring errors.  Maybe it is just his age and wasn't there.

Retailer inventory-to-sales is a reflection on a huge move towards online shopping and a massive buildup of new retail stores despite the clear shift towards online shopping.

Whoa, Mish... what huge move to online shopping?  Still no more than roughly 6% of retail sales, what is massive about that?  94% is brick and mortar, and even Amazon is opening brick and mortar stores.   And maybe ex nihilo credit dinosaurs are not opening new, but specialty sure are.

And did the internet really take sales from brick and mortar?  I don't think so.  To what degree did online sales cannibalize its market share from mail order catalogs?  

And even the mail order catalogs are still working, in both senses, operating and profitable.

Victoria Secret as $4.5 billion in "online sales" and 450 million catalogs.  Do you know what it cost to open enveopes and prcisses cheacks and credit cards back in the 80's and 90's?  I don't know, but VS remembers.  I was probably in the hundreds of millions at least.  With the internet VS pushed all that order processing back onto their customers, getting that work done free, money not spent that went straight to the bottom line.  Alaska Airlines saves a lot of money now that I book my flights, not resevation clerks. Ka-ching!

Or did they save money?  The easier online shopping gets, the more returns there are.  All these "sales figures" don't take into account returns.  I never see that mentioned.

I was speaking with an international banker once asking if deflation was a problem.  He waived the question off and said "Everybody is lying.   that is the huge problem. We cannot make a loan decision because we cannot trust the information."  Well, with ex nihilo credit, nothing matters, so why not lie?  About such things as sales figures.

People try to copy people losing money on the internet, like Jeff Bezos and Bill Gate. Learn from the people making money, like Les Wexner and Steve Jobs.  It is unlikely the Hegemon will find you like he did the money-losers, but the Hegemon won't get in the way of you making money like Wexner and Jobs.

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Start-up Requires No Funding

Funding a start-up is risky, and as Drucker noted, entrepreneurs never take risks.

The risky part is not for those who assign a bit of ex nihilo credit tally to a given start-up, but to those who sign the slave papers in return for the granting of ex nihilo credit.  Now that is risky. You might end up like a college graduate today, huge debt and unemployed. No need to do that when starting up, for a proper start-up takes no money or credit to speak of.

The banks promote the idea of "risk taking" by entrepreneurs as a means to unload the unlimited ex nihilo credit, the granting of which is no risk to them.

We have at least one generation that has been trained to lose:

get enough funding to live off of for a year or two, and blow through it... who cares if anything succeeds, cuz you get to play "business" for a year or two...  and who knows, great resumes have serial start-up experience.  Those days are over, but the idea is embedded in a generation core curriculum at the universities.  (And as Drucker said you can tell when information is obsolete, the universities make it core curriculum.)

If you are serious about start-up, you must have a business plan that moves forward without funding.  If you are saying "I just need funding" then you are deluding yourself.  If you are saying "I just need customers" you are at least assessing the problem correctly.

Start-up is about creating customers and innovating in the redeployment of excess capacity (or lessor demand capacity) to the end of solutions to problems. (And as Drucker says, there is no solution that cannot be imporoved upon.)

It takes no money to conceive of the solution.

You must speak to the customer at some point, why not first?  It takes no money to do so.  And you walk away from this phase with ideas and contacts, with which you begin to fill your rolodex and files.  And this is critical, to begin to build your "world trade organization" that is the people you've met, with whom your synergies will produce more than otherwise possible.

It takes no money to talk to your customers.

You have no credibility as a start up, so you borrow authority from target customers... talk to them first...  do they say yours is a good idea and does not otherwise exist?

Then you begin to work on the design, which the best is on a royalty basis. Again, done right, no money up front. And as to design, you work only to achieve "enough design" to generate enough orders to cover the suppliers minimum order requirement. Repeat this mantra: customer is the most important thing in business, getting the design right is the hardest.  But even with this in mind, people fail by working way too hard on the design.  Learn from Steve Jobs.

https://en.wikipedia.org/wiki/Apple_I

You learn quickly that in the real world "intellectual property rights" thinking is counterproductive.  Forget about patents, copyrights, trade marks, you get nothing you can use for your time and money. You leave all that behind. With necessary and sufficient product design you expand your world trade association. You begin to discover those whose expertise is in your area, and gather their advice: freight forwarders, customshouse brokers, 3PL, and with it the realities of logistics and costs of your product.  You do not waste time and money becoming expert in international trade, you become expert merely in the international trade of only your items.

It takes no money to gather to get this far.

Please note what "snowballs" here is your solution with customer feedback packed around it. It is what is rolling and why all the other people you contact stick to it getting bigger and ever more momentum (and value).  Each door is opened because of the work getting the previous door opened.  You have not made any money yet, but you haven't spent any either.

Now, you propose importing or exporting (or both?)  Neither importing nor exporting is a business. They are steps in business.   In essence, authentic international trade is simply accessing optimal excess production capacity to the end of production.  Business is buying and selling, not making.  The world is full of production that created no demand.  We do not want to join the 80% of start-ups that fail.

Customers (there is that word again) call forth the product.  We are the impresarios who gather the players necessary to respond to that call.  Yes, we suggested the solution, but the customers power the rationale for all the players you collect to act.  (And I might add, dealing with very talented people each in his own narrow field is a privilege and often breathtaking.  It is also tempering, you just know not to waste these peoples time, you know you must do your best work. Re: best work, see below.)

With importing, you are moving from general (the domestic market) to specific, the best supplier in the world.  In exporting, you are moving from specific to general, the best supplier in the world, to any buyer worldwide. With either, you are discovering markets no one else considered, directions informed with data no one else has created and studied.

This costs you nothing, and you cannot buy it anywhere, it is not for sale.  It is free.

For specialty, the best source is rarely, if ever, the cheapest.  Usually it is more expensive.  We are not achieving perfection in initial product design, any more than Apple's first product was perfect.  We are achieving milestone #3, enough orders to cover the supplier's minimum order requirement, in a workable amount of time, profitably.  Again, learn from Steve Jobs.

https://en.wikipedia.org/wiki/Apple_I

Then you find the best sources for production, and discuss what you've done so far. And now this is where you do your best work, as paranthesied above: you promise nothing except to test this very well informed (by now) idea, by presenting the sample of what you created in the form of products, agricultural items, services, you name it, back to the customers you first encountered in your start-up.

What you are offering is new market study at no cost to the supplier.  Your compensation comes only from customers you create.  Everyone involved gets something for nothing, and you get paid by customers (your markup on all the discovered costs) if you get the design right.  Never promise anything more than to report back on a test.  No one needs anything more, expects anything more, nor would believe you if you promised anything more.

You form a hypothesis and shift from passion/joy to science. You seek out valid and reliable information about the market, you search and learn the contours of a market no one else yet sees.

You may of may not pay for samples, but otherwise it does not cost you money to pay your dues. The less money you spend and the more time you research, the better off your start up. As the carpenters say, measure twice cut once.

Now, here is where people those with funding fail:  since they did not start with the customer, they promise the supplier much in the way of flash and imagery but no customers (or worse, assumed customers).  The wrong suppliers respond to that (or just plain scammers.)  Just as these people begin "selling", things go bad fast.  (Alibaba is the world center for failure match-up.  Amazon and eBay is the medium upon which failure occurs.)

What we promise all of our associates is not a single order.  What we promise is to test against samples the most informed hypothesis of whether there is enough customers collectively to cover the supplier's minimum production run in a workable amount of time, profitably.

Sound complicated?  No, it is quite simple, and may take some unlearning to "get it." It is what the best suppliers expect.  And so far it costs nothing to speak of.

That minimum production run requirement is specifically the LCL MOQ FOB:  Less than container load, minimum order quantity, priced free on board country of origin port of lading.  That is often merely a pallet load.

 In importing we are the ones buying the lcl moq fob, in exporting, we are the ones selling the lcl moq fob.

And if we do achieve the initial goal of enough orders to cover the suppliers minimum in a workable amount of time, profitably, then we execute.  And we are talking a min order qty of one maybe one pallet, no more than say $5000 worth.  Do you really need a venture capitalist for this?  Or a banker? Or even a rich uncle?

And if we do not achieve it, then what we have in hand is market feedback, what is wrong (shape, weight, color, size, package, material, speed, flavor?) with our product.  Aren't you glad you only have samples, not a garage full?  You can go back to your world trade association you built and fix the problem.  And then go at the market again.  These is no excuse for failure, or especially burn out.

You may fantasize some business in which you are paragraphed in the Wall Street Journal.  Sure, if you want, but both Apple and Vandor started the same way.  Vandor never got above $3 million in sales (at least when I was managing it) and you've never heard of it.  The first company I was working for was at that time the same size as NIKE, tiny.  Phil Knight knew no bounds. But the owners of all had all of their material wants met by the business.  Business is about lifestyle, not accumulation, another conept the last two generations need to learn.

And start-up is not about funding. Anyone investing more than $900 or ninety hours before discovering whether they have enough orders from customers to cover the suppliers minimum order requirement in a workable amount of time, profitably is wasting time and money.  I am often pointing out where people are wasting either in their pursuits.

Now as simple as this is, there is many a slip twixt the cup and the lip.  I came of age when it was no problem to walk down a street and see a "help wanted" sign in the window of an import-export company and after two years of learning every part of the business, be travelling the world as a buyer.  Ex nihilo cedit ended all that for now, but the ex nihilo credit regime is over.  Thirty years ago I could see this de facto apprenticeship program ending, so I began to lecture at colleges and wrote a book to fill-in the gap formed when getting a job and working your way up ended.

Those were boom years, and the damage is done during the boom years.  Now it is the bust, where the losses are laid on the living (the rich take the profits, the poor take the losses) and the work of rebuilding a natural, authentic economy is at hand.

Pro sports bore me.  I spend the time most people devote to pro sports teaching, writing and lecturing.  I find it fun and fascinating.  And writing is how I get paid for time spent thinking. The rest of the time I spend working on my own business.  Lifestyle, not accumulation.

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Compete on Design: Musical Instruments Division

Recently a drummer contacted me about a certain material for the brushes drummers use for certain effect.  The to import them.  The perfect brush he found by taking apart a housewares item.  That housewares item was overstocked in a big chain.  Instead of importing for now, his best bet is buying up the overstock to rework into his ho-selling product.

Only a passionate professional drummer would have gone through that problem solution.

Now here is a problem solution story:

For decades, McMinn has supplied the guitar industry with wood grown from the Columbia River to Alaska. He runs Pacific Rim Tonewoods, a small sawmill in Washington’s North Cascades. It has become one of the biggest wood suppliers in the country for musical instruments. Each year, McMinn ships to America’s biggest guitar makers hundreds of thousands of soundboards (the top of the guitar body) made from Sitka spruce.

So he has a small sawmill and a niche market, that demands a certain design.  For example, here is one of his customers:

Guitar makers like Tom Bedell take their wood sourcing seriously.
“I personally get involved in the entire supply chain,” said Bedell, who runs a guitar company in Central Oregon. To ensure the legitimacy of his wood suppliers, Bedell travels around the world and visits their operations in person.
He recently launched a “homegrown” guitar series, generating one-third of his sales on guitars that use domestically-grown wood like Oregon's myrtlewood and oak.

So enough of the right wood is a problem...  and there are people in the field who work on a solution:

Another solution may be growing in McMinn’s backyard: the bigleaf maple tree. The hardwood grows prolifically in the damp forests of the Pacific Northwest, but very few develop the beautiful wavy grain that guitar makers want, known as “figure.”
“You find it very rarely in nature, and we don’t know what the cause is of this figure,” said Jim Mattsson, tree geneticist at Simon Fraser University in British Columbia.
Mattsson had a hunch. In Finland, scientists found that a similar defect in birch trees was genetic and could be cloned.
So last year, Mattsson and McMinn teamed up to study the genetics of figured maple trees. Mattson’s lab began taking cuttings and using them to grow new trees in baby food jars.
Next year, when the trees grow large enough, Mattsson and McMinn will transfer them to 50 acres of farmland in Western Washington’s Skagit Valley, where they hope to create a figured maple plantation.
“I hope in the long term, people around the world will come to the Pacific Northwest to buy figured maple,” McMinn said.
It could take at least 10 years before the trees reveal whether they’ve developed the wavy grain. But figured grain in maple trees may be triggered by environmental factors like bacteria or fungus, Mattsson said.

This reminds me of the ski manufacturer Vokl, which has its own forest to get the wood core perfect for their skis.

When I share theses stories, there are countless who respond, "Great trade lead! I am going to trade in "figure" maple!"

No, you are not.  Without passion, you'll never compete in guitar board trade.  With passion, you'll overcome every problem and stay in business.

Tje most important thing is business is the customer, but the hardest thing, indeed the only difficult thing, is getting the product right.  This is just one more of the countless stories about people putting their efforts where it matters, getting the product right.

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