Steve Olsen writes about finding the right location for your business. It’s an interesting piece with a lot of good advice, but this stood out to me:

Several years ago, we almost opened a traditional retail book store[...]. We never signed the lease. The rent was right, but the taxes were too high. In Minnesota, retail tax rates are out of control. In our case the taxes were 4x the rent. High tax rates keep small family owned business like ours out of the prime locations. The problem is, no one in government seems to care. When I recently mentioned the problem to a government official, she replied, “If you can’t afford the taxes, you can’t afford to be in business.”

This is a hard thing to fix. If you live in openly business-hostile states like Minnesota and California, this sort of thing is common. You can move to a more business-friendly place. But that’s a pretty drastic step. For a lot of new entrepreneurs, losing their networks of contacts and their knowledge of the local business environment might outweigh the advantages of a friendlier tax clime.

Steve continues:

We decided against renting traditional retail space, in high rent areas (for now). Even in a recession, when the landlords reduce rent to attract tenants, the government doesn’t budge on taxes. The only viable solution for us was to rent a location zoned showroom/industrial where the taxes are 1/3rd of traditional retail.

99 of the next 100 books you read on retail business will tell you the three most important things are “location, location, location”. Most people evaluate a retail location based on customer traffic, rent, appearance, parking, and the like. But you have to consider a lot of other factors when determining whether a business location is “good” or “bad”. A critical part of doing your homework before you commit to a business lease is finding out what sort of non-rent costs you’re going to pay to operate there.

Here are just a few:

• Sales tax – The amount you have to collect, and the agencies to which you must report, can vary from street to street in some places. You don’t want to be facing a competitor within sight of your store that can collect 2% less than you on the same item.
• Business license – Your location will affect what business license(s) you need, and may affect how much you pay for the same license. As Steve pointed out, property tax rates can be staggeringly high, and in many places, you will be the only person who cares at all whether the taxes kill your business.
• Fire and safety codes – Fire marshalls sometimes act as though they have something to prove (not all of them! Please don’t email me with anecdotes about how great your local fire marshall is). You may not be aware that safety officials often have the authority to impose expensive and draconian “safety measures” on your newly-opened store. This is doubly true if you buy the commercial property you plan to open in: property transactions are basically red flags for building inspectors to come in and find everything they can and force you to upgrade. Sadly, many officials in this capacity make a very good side living getting paid to tread lightly. You’re an honest business person (right?), so bribery is not an option open to you. So do your homework instead!
• Insurance rates – The cost of covering your business against fire, flood, and theft, as well as liability protection, can vary widely within the same city. Get actual quotes from insurance agents for the locations you’re considering and compare the cost.

Finally, don’t be in a hurry, and don’t fall in love with a particular business location before you know whether it’s going to love you back. Quoting Steve again:

In business you need to make more money than you spend. If you can’t do that, you don’t have a viable business. And if you need a bricks and mortar location for your business, rent/mortgages can wipe you out.

But keep in mind it has to be a win-win for you and the property owner and finding the right location is going to take time. We have been passively looking for years, and actively searching for over nine months.

Got good advice for locating and evaluating property? Did I miss something? Leave us a comment and let us know!

When I arrived in London last week I was curious to find how I'd be treated over here and the short answer is, well, marvelously!  From the people helping me find my way on The Tube to the helpful curator of the courthouse in Warwick (and his lovely wife!) to Jo and Sharon, who run Coffee, Eats & Treats, a wonderful little eatery on Beaconsfield Road in Farnham Common, just west of London.

Jo and Sharon are great examples of what I mean by a business being nice. When my friends and I walked in these delightful ladies were all smiles and helpfulness. They didn't care whether we were from England or America or Timbuktu, they just wanted to help us; wanted us to enjoy ourselves. Simply calling them nice would be my lame attempt at British understatement. Even when the 4-year-old in our party spilled her Slushie on the floor they exclaimed "Oh, those things happen!" and cheerfully cleaned it up.

Sharon (l) & Jo

Everything about them made me like them and want to come back, and I doubt that's by accident.  I'll go out of my way to eat here every time I'm in London – I feel like I now have friends that I simply must visit when I can!

How is it with your business?  Do people walk out the door dying to come back, vowing never to, or just not caring?

There's been a bit of kerfuffle lately about Kindle and DRM (see part 1 and part 2, though you can mostly skip part 1).

Megan McArdle wrote:

This is why customer service matters. It's often the first thing to be cut by companies, because bad customer service doesn't show up anywhere on the bottom line. Not until much later, and not very clearly even then. But I'm willing to bet they'll lose substantial sales to people who see the first post, but not the second.

I won't rant here about why DRM is evil. But Amazon has no excuse for not anticipating people's concern over it. Recall that "DRM-free" was one of Amazon's biggest talking points when they launched the Amazon MP3 store in 2007. So the lame excuse Dan received that "we've never run into this problem before" and that it was "a training glitch" ring hollow.

So Amazon is getting a lot of juicy bad publicity and unwanted attention to the power DRM gives publishers over stuff customer thought they'd bought on their Kindles. Whether it's a good policy or bad, whether DRM is evil or great, doesn't really matter in this respect. Amazon screwed up and let a little tempest be stirred up because they didn't anticipate awkward questions and train their people how to answer them.

By the time you've been in business for a week or so, you'll have done something a customer didn't like. I can say this with confidence, because some customers don't like anything. They don't want to pay for what they buy, they expect you to deliver it to their house, and they think you should mow their yard while you're there. Anything less is just poor service, in their minds.

You can't please everybody all the time (though you should still make that your ideal). As you build your business, you'll eventually put in place some policy that restricts what a customer (or employee) can do, and they're not going to like it. But you can make it much worse if you haven't explained clearly to everyone in your employ what the policy actually is, and how to respond to questions.

I see companies — even large, well-run companies like Amazon — apparently taken by surprise when people don't like new restrictions placed on them. And frequently the companies' first response makes it worse by obfuscating, denying, hesitating, or lying about it. If you're going to do it, do it, be clear about what and why, and don't dodge. If it turns out to be a mistake, don't dither and hedge and pretend, just apologize, fix it, and move on.

Clear and honest communication won't make everyone happy, and it won't turn a good policy into a bad one. But fuzzy or bad or dishonest communication will make any policy seem worse than it is, and will turn an annoyed customer into an outraged former customer.

Bad customer service has always been a hot button of mine.  Maybe I’m just getting old and crotchety but it seems like it has recently spiraled out of control.  Poor service, poor attitude, poor manners – people screw up all the time and don’t even have the courtesy to say they are sorry.

Don’t let your employees do this!  Teach them to use the two simple words “I’m sorry!” – and mean them!  This will make a big difference in how your customers deal with your mistakes.  It’s pretty simple really:

If you forget to call someone back, just say you are sorry!

If you take too long to do something, just say you are sorry!

If you totally ruin someone’s house and they have to stay in a hotel for a week while you repair it, just (really, really, really) say you are sorry

If a customer sends you an email and you don’t see it for a week, jump on it immediately, and just say you are sorry.  Don’t pretend you didn’t make the mistake, and don’t think that because they don’t rake you over the coals it must not have meant anything to them; I assure you it did.

I’m amazed at how people forget to return my call, don’t deliver something they promised, or take three times longer than their estimate, but don’t bother to say “I’m sorry!”  If delivered from the heart, these are just flat out magic words. I find they quench the fire of my frustration nearly every time.

At Conditioned Air, we encourage our people to bend over backwards to give any non-abusive, honest customer the benefit of the doubt, often accompanied by those magic words.  And then we make it right (how we do that obviously depends on the situation).  You should do the same: encourage your people to admit their mistakes to your customers and then fix them.

Ah, you say, but what about abusive, nasty, mean-spirited customers? Well, if you messed up, say you are sorry.  And if they really are abusive, stop doing business with them.  You can’t control their attitude, only your own.

Of course, being sorry isn’t enough in and of itself.  If you screw up constantly, you are going to have a hard time keeping customers no matter how much you apologize (I doubt it would make much difference in Ryan’s breakfast example from the other day).  But if you deliver a decent product or service, a little humility and the appropriate apology will do wonders for your customer relationships.

Andrew Warner (@andrewwarner) has a great piece called How I Spent a Million Bucks and Ended Up With These Two Chairs. It’s not very long, and there’s a handy video at the top where he’ll just tell you what happened so you can be doing something else and just listen if you want.

But pay attention, because Andrew’s telling you something profound but simple: spending money is your enemy. Plain and simple, there it is. You spend too much, you die. And what qualifies as “too much” can be shockingly low.

Even with a small business, it can be a little overwhelming to us as owners how much money is floating around the office. It’s easy to be seduced by your total sales numbers into thinking that your company is “bigger”, and therefore can afford to be more lavish with spending.

Don’t fall for it; that’s the siren song of failure, trying to lure you onto the rocks and drown you in the sea of bankruptcy.

Perhaps this will make it easier: Your business never buys anything.

Seriously, it’s too cheap to buy anything, ever. Instead, every single dollar that you spend on anything comes directly out of your pocket.

Think about it. If you spend $1,500 on a new laptop, where does the money come from? It comes from the net profit you’d made from everything else you do. I mean, today it might come from a credit card, but that credit has to be paid off someday, and it’s going to either be paid out of profits or out of your pocket after you shut down the business. Either way: your pocket.

But if you spend $500 on a used laptop, who keeps the $1,000? You do.

So remember that next time you want to go on a shopping spree for new office furniture. You’re the one paying the bill, not your business.