Depends on What You Mean by Great

The reaction to Trump is largely narcissistic, either way a plea "but what about me?"  The USA economy is so based on freebies, to either left or right, that the focus is on what we can get instead of what we can earn.

Any human being has a limited capacity any given day to move, speak, think, consume, decide and so on, that is to say human action, which leads to given results.  The results are cumulative and can be either beneficial or deleterious.  There are people who want to keep things going the way they were. There are people who want change. Either way, it gets down to choice. Your choice.

U S A !  U S A !  U S A !

While the USA Ex Nihilo Credit regime, a regime with degenerate results, is dying off, and people clamor for more free stuff, the Chinese are busy taking their time to move, speak, think, consume, decide and so on, to build the Belt and Road economic zone.

This zone was last activated in the Early Tang Dynasty, which became China's Golden Age.  President Xi knows what he is doing.

You can be deliberate as well.  If you are in the San Francisco area,

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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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Unemployed PhDs

For over 30 years I have taught on the side, in live classroom settings and online.

This avocation has added feathers to my hat, developing a product, setting up a market distribution channel, written a book, aside from the fact I work when I want, where I want, for what I want, and teach what I want.  This is a second career (a double major?), when most people are lucky to have a single career.

I have no tenure so I never had to falsify science or suppress truths I know to get a position.  I bring money to the school, the school does not have to pay me out of taxpayers subsidies.  It's not that I cannot be fired, it is just they don't want to cut off what money I bring them (out of which they pay me some.)

The point if this is when people say "I have a PhD and can't find work in education..." well, I say, you aren't trying.  Like everywhere else in the world, there may be no jobs, but there is plenty of work.  Just because the ex-nihilo credit regime distorts markets to the point no one needs you IN THAT REGIME does not mean no one needs you.  Look outside that regime.  Get creative.

Here is a book I wrote on this...  Kindle version... paperback version...

It does not matter what happens on Wall Street or in Washington, what matters is what we do.  It ain't what we think that makes us happy or unhappy, it's what we do...

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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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Effective Sales People

Sales people are not entrepreneurs, or essentially entrepreneurs depending on the definition.  I don’t know and I don’t care, I just know they are critical to success, and are sui generis, they are not like business people.  Few people are salesfolk, and those entrepreneurs who are not must be good consumers of salesmanship if they wish to reach their goals

To be clear, what follows assumes specialty and business to business, a specific category of selling.

To proceed, the essence of selling is communication.  Everyone mentions the 80 20 rule, sales people need to spend 80% listening, and 20% talking.  The paradox is the best communicators listen most. What makes a good salesperson is they listen  Contrary to what most men think, (women just don’t listen) women are some of the best salesmen.

Salesmen match the need they heard with the solution they represent.  If not, they communicate the “mis-match” (need v offer) back to the supplier (you).

If they make a sale they communicate what they heard that would also sell (in essence a lack as opposed to a miss) back to the supplier they represent.

What makes great salespeople is they immediately qualify a buyer and detach themselves from anyone not ready, willing and able to buy on the spot.  A bartender can talk to anyone else.  Batenders make a sale to people who just want to talk.  Don’t deny a bartender his just compensation by talking to anyone who just wants to talk.

Salespeople hand out one of two things: 

1. The sales offer.  Take it or leave it.  There is no negotiation. A buyer cannot place an order until you say “no” to requests.  The irony is it is best to say no immediately, in order to fatten your order book.  As search engines, Yahoo tried to get you to stick around, Google gets rid of you as soon as it can.  Who won?

A salesperson gets either a sale, or a how come no sale. Now we switch from passion/joy to science. Science is objective knowledge established by a valid and reliable test of a hypothesis.  Your offer is the hypothesis being tested. The “how come no sale” is tabulated, as data.Also gathered are the anecdotes as to what else would sell that come with sales. The approach is to the customers, who represent a sample of the population being surveyed.  At some point you get a valid and reliable samples size from the population in which one draws the responses.  The responses need ot be valid and reliable.  The responses are data.  Now it gets tricky.

In summary, nominal variables are used to “name,” or label a series of values. Ordinal scales provide good information about the order of choices, such as in a customer satisfaction survey. Interval scales give us the order of values + the ability to quantify the difference between each one.

The entrepreneurs job is to be in essence a clerk, to collect and distribute information between all of the acrors that make commerce happen.  You are compensated in the measure you effectively assess information, collect and distribute, and effect change in the form of creating customers through problems solved.  All products and services are solutions to problems.  There are no solutions that cannot be improved upon.

Now it gets trickier. Assuming you got the science right, then your job is to examine the feedback, and it’s source, and match the least change necessary indicated in the data with the least amount of expense to effect the most customer acquisition.  The feedback is the warrant people need to work with you.  You've got it, you share it.  Hegelian dialectic kicks in.  You propose a thesis based on the information.  Someone proposes an antithesis. Between the two of you, or someone else, develops a synthesis, better all around, often.  The joy part of the passion joy is atmospheric.  Steve Jobs blurted out "insanely great" during these data-application/product-development sessions.

Never try for the big score; progress is in infitismal increments.This is in essence fail fast, fail cheap.  You don’t go after the massive game-changer, that's not manageable and it will be taken away from you.  

Recall there was a second thing salesfolk hand out?

2. A pre-composed article touting your offer.  These include a $50 bill, with a promise of another $50 if the article is published.in legit industry press.  You have about 12 versions of this, to hand out to reporters.  In this way they can just edit slightly the article to make it sound like they wrote it, and put their byline on it, and turn it in as though they are working hard while on assignment.

The $1200 at risk is the cheapest and most effective advertising in the universe, assuming a couple of elements.

The elements of an effective PR release we’ll deal with at another time.

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Meat Trade

You probably eat a lot of meat, like I do, and I am keen on good meat.  Here is an edifying article on the int'l trade in meat: 

"This week, there will be many remembrances of what we've accomplished in this organization over the past 40 years, and everyone here should take great pride in that, but for most of you, it's not the past that drove you to attend this meeting. It's about what we're going to do today, tomorrow and into the future," Philip Seng, USMEF president and chief executive officer, told attendees.

There is that forty year perspective again, what happened after Nixon took us off the gold standard (lite).  So this article is about "It's not the hand you are dealt, it's how you play the cards."  This is how the meat industry played the ex nihilo credit card, if you'll pardon the double entendre.

According to Seng, the U.S. eclipsed $13 billion in meat exports. “That’s quite an accomplishment when you consider some of the challenges we’ve had over all these years,” he said, adding that the goal is for $20 billion in meat exports in the near future.

Here again, in an ex nihilo credit regime, he who borrows the most wins.

Some recent highlights for U.S. trade include that the U.S. beef industry just surpassed Australia as the number-one supplier in the South Korean market. The U.S. also recently passed Australia in chilled beef exports to Japan, which Seng called a milestone.If there was any doubt that trade is important, Seng pointed out that 80% of the world’s buying power lies outside of the U.S., so “the more we can have this export mentality, (and) the more we can challenge ourselves to do better, the better it is going to be for all of us.”

This is Big Meat talking, the same people who make it criminal to test USA beef for mad cow disease in order to promote exports.  (It's a criminal offense to even own a test kit without a license.) Mad Cow takes anywhere from 2.5 to 5 years to incubate, so USA got rules pushed through for countries to accept USA beef under three years old.  lemme see...  2.5 years to incubate, sell three year old beef....  hmmm... did anyone do the math?

1. They are not sure what it is.

2.  It is hard to spot, making it hard to control.

3. It is hard to kill, and the killing process relieves the meat of most nutritional value.

4. It is 100% the result of cruel and stupid animal farming.

But it makes cheap bovine meat at the cash register, but Big Meat gets so much in up-front subsidies and preferences, plus the cost of the damage done is after the fact, so here again we have the fascist Big Government and Big Industry acting as one, to privatize profits and socialize losses.

(Grass fed beef is natural and popular, and on unused "government land" it can be produced inexpensively.  This is why the FEDS kill ranchers who won't back off from grazing rights, as in Oregon.  This terrorism is employed to smash any competition for Big Meat.)

The Chinese market has provided some success stories for the U.S. Seng noted that there are now nine pork plants in the world’s fastest-growing market for pork. However, challenges remain, as it’s still not easy selling in China, he said, adding, “It’s not the most transparent place, and it’s very hard to follow product in that market.”

Unh... mendacious!  USA pork is fatted up with ractomine, an additive with criminal consequences in every country in the world except the Nafta three.  Since USA Government cannot be trusted with inspections, the Chinese have bought their own pork processing plant in the USA to serve China.  Only Big Meat Americans cannot figure out how to sell to China.  Their only tactic is get subsidies, compete on price.  Also, tracking every pound of pork exported to china is cheap and easy.  Use QR codes.  And QR codes are the small business, specialty meat secret weapon to marketing to China.

"Trade is no longer rising around the world," Seng explained. "Actually, this is the first time since World War II that trade has declined during a period of economic growth. That's why what we are doing in the meat industry — whether it's the beef complex, the pork complex, the lamb complex — the fact that we are increasing our exports (means) we're really going against the grain right now, because most industries are not enjoying robust export sales."

If trade is not rising, this is very good news.  It means that the ex nihilo credit regime is over.  Russia has surpassed USA in wheat exports, when they used to be a importer.  The abominable USA ex nihilo credit regime is dying.  All markets for meat are growing, because people spend their first experience of new disposable income on food.   USA Big Meat product is cheapest at the cash register in China as well as USA.  What with export subsidies, tax advantages and financial engineering, exports give Big Meat Industrial Complex an ability to privatize profits and socializes losses, on steroids (pardon the mixed, but apt, metaphor).

Seng referenced World Trade Organization data showing that 2,100 new trade restrictions were imposed from 2008 to 2016. Sometimes, it may seem like there are fewer trade restrictions and more free trade agreements, but he said, “frankly, we are still in a very protectionist world.”

USA has never signed a free trade agreement, because there is no such thing as a free trade agreement.  If it is an agreement, then it is managed trade, not free trade. And for Mexican Harvard MBAs to write 14,000 pages of "agreement" with Canadian and USA Harvard MBAs, that protect crybaby billionaires from free markets, then you better call it free trade agreements, in case someone notices.

Fifteen countries account for 63% of world trade. “What that means is there are certain countries that are franchised in, and there are certain countries that are franchised out,” Seng said.
"This is one of the challenges we have with the WTO," he said. “There are more losers than actual winners when it comes to trade, just given those 15 countries. Usually, it’s those 15 countries that write the rules, so it’s become quite complicated when we take a look at international trade.”

Oooooh...  I like this guy... he slipped it in.  It's a racket.  He has to be careful not to lead with that point, but he knows well what is going on.

The challenges ahead, according to Seng, include the state of the Korean economy, the impact of Britain's vote to leave the European Union and whether societal norms will begin to affect trade deals.
The paramount question on everyone’s mind, however, is how to deal with the “tsunami of meat” heading toward us, Seng said. It will be key, he said, to focus on what can be done over the next couple years to move more meat, as well as what can be done for demand enhancement in this industry.

As he must well know, it is over for Big Meat.  To have used ex nihilo credit to wipe out the markets for countries that traditional supplied the world such as Vietnam was once king in rice, Argentina in beef, and Russian in wheat (see the Hanseatic league), and so on, USA was able with ex nihilo credit and guns to knock all of those "comparative advantage" countries out of the game.  Winning a this is a Charlie Sheen kind of winning, where you wipe yourself out in the process.  In the USA the runoff from Big Meat is horrifying and invisible, plus expressly not tested for by the EPA.  Massive water is diverted to grow GMO crops such as rice and cotton, distorting the natural economy massively.  Food that is poison, small business wiped out by ex nihilo credit-based costing, malinvestment and misallocation of resources, especially land, and the pollution, have taken a horrifying toll on the USA economy.  The damage is done during the ex nihilo credit boom.  When the bust comes, the only question is "who pays."  Never the people who gained from the damage done.

The solution is simply end the subsidies to Big Meat, and deregulate Mad Cow testing. At the same time, people need to work hard developing markets for USA produced good food, so the good food producers (necessarily specialty) can grow their operations.

One reality is wherever the USA has introduced a market for Meat Industrial Complex compromised products, there is always as specialty market growing alongside.  So where USA exports the most, there is the most likely specialty market.

It cannot be foreseen, it must be searched and learned.  How to is no secret, I learned it from people in the business, and he meta studies confirm how to, it is just apparently i am the only person who teaches it.

If you have a passion for food, and want to start a business doing the urgent work of restoring balance in world trade and protecting specialty food in USA, then I have a hard core online course open to anyone in the world.  The next session is coming up in January.  If you wish to enroll, you may do so here.  If you do not see your local school, you can scroll down to the bottom of the page and enroll directly with me.  I'll bill you the course fee after the course.  Don't worry if you are overseas, the tools, tactics and attitude apply in all countries.  I am happy to have you enroll too.

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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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Dollar Stores

Some companies have an existential requirement of having taxpayers fund their customers, such as Boeing and Dollar General.  The dollar store category, price cutting is supposed to be hot.  Not so.

Dollar General Corp. reported another disappointing quarter of same-store sales and posted lower-than-expected earnings as the dollar store again blamed results on reductions in food-stamp benefits.
….

The results come as dollar stores have generally been a relative bright spot in a troubled retail sector as recession-weary shoppers flocked to low prices and convenient locations near residential areas. Rival chain operator Dollar Tree Inc., which acquired rival Family Dollar last year for about $9 billion, also reported a disappointing second quarter, though it said last week that sales for the last three months of the year would be better than expected.

Companies acquire each other like dinosaurs acquired each other, they eat them, on the way to extinction.  Stay away from false economy customers.

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New Estimate: eCommerce Sales 8.4% in USA

US Census is estimating retail eCommerce sales, after some 20 years of trying, at about 8.4% of all sales. Here is their definition (opens as a .pdf):

E-commerce sales are sales of goods and services where the buyer
places an order, or the price and terms of the sale are negotiated over an Internet, mobile
device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic
mail, or other comparable online system. Payment may or may not bemade online.

With mail order catalogs having shifted their order processing from the backrroom to self-service by customers online, and calling that "eCommerce" 8.4% looks rather low.  Mail order catalogs hit that in their heyday back in the mid-1980s.

Amazon is giving away eCommerce services to people working on razor thin margins, and this is the best that can be done?

Anyone pursuing internet as a pure play is delusional.  Use it as self-service order processing, but otherwise make no effect to market online.

Even if 8.4% accurately reflects any new business channel, and I doubt it, it means 91.6% of the market is in brick and mortar.  To concentrate one's effort in the more difficult, expensive and unlikely 8.4% and ignore the easier, less costly to serve, and larger 91.6%, due to some delusion, is unfortunate.

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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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