Sharpening the saw

Sharpening the Saw

Stephen Covey used the illustration of sharpening the Saw in his book, “7 Habits of Highly Effective People.” His premise was that it was more valuable to spend time sharpening the saw periodically than trying to chop down the tree with a blunt blade, which would take longer.

As a consultant, it’s common to have gaps between major projects. When this happened at other consulting companies I worked for in the past, I was forced to come into the office the next day despite working 80-hour weeks for months. It was one reason why I tended to burn out at jobs.

Now that I control my time, I find the Sharpening the Saw concept applicable for learning, but I also find it useful for rest and recovery, knowing how hard I work when I have a major project. So, I’ve adopted this approach with my newest business, Roundbox Consulting.

Sharpening the Saw this time:

With this current major project gap, this is how I sharpened my saw.

  • Visited family in the US (which I haven’t been able to see for three years because of Covid).
  • Spent extra time with friends around Australia.
  • Attended an in-person conference and two virtual ones for software vendors.
  • Began an online course with UC Berkley.
  • Hired a new strength coach to help me with my fitness goals.
  • Documented some processes for the podcast to help me eventually delegate more work to others.
  • Finished my marketing plans for the year with a supporting budget.
  • Read many books / listened to podcasts to help my business.
  • Investigated some new software, specifically around notes and research.
  • Prepared for the final closure of The Refoundry so that I can finally focus on Roundbox full time.
  • Created lots and lots of new content to help with SEO.

This list is not exhaustive, but it represents what “Sharpening the Saw” looks like for me personally when I execute it well. I may not always have such long gaps between major projects, but my goal is not to waste that time whenever I do.

What would “Sharpening the Saw” look like for you?

End of business sale

Pulling the plug

After failing to do my last market for Harvestcare on Sunday because I couldn’t authenticate my credit card machine, I’m pulling the plug on the business now to meet the EOFY closure deadline I gave myself.

So, today I sent an email to all my stockists and offered to sell the remaining stock for a huge bargain. Anything left over, I’ll give to family and friends. I’ve also posted some equipment and packaging inventory for sale on my local market stallholder’s Facebook page.

After contemplating this decision to close the business for so long, it now feels like a mad rush. But I know it’s truly time to end this chapter so I can fully jump into Roundbox Consulting. It just feels a bit bitter, not bittersweet. 🙁

Ever have a Saturday like this?

Ever have a day that starts out great and ends so badly? My rookie mistake yesterday was so dumb, that it was time to bring out the margaritas.

  • Spanish class with Fernanda
  • Wrote blog post
  • Canoe Polo training
  • Stopped by the local volunteering expo to scope potential guests for the podcast
  • Haircut
  • Updated Harvestcare store pricing on website
  • Went to storage shed and picked up everything for my last Harvestcare markets tomorrow.
  • Checked the battery on my credit card machine and then realised that it wouldn’t authenticate because it’s tied to my old phone. Square customer support is only 9-5 Monday to Friday. F$ck! Drank the rest of the tequila and decided to watch the federal elections.

Balance of purpose and financial sustainability

I spoke to an old friend of mine the other day, and she reminded me of my first business attempt. It was a home health care business where six older adults would live together in a shared, single-family home with a live-in carer. This was essentially the middle ground alternative to the cheaper aged-care facilities and the most expensive, full-time, in-home support.

At the time I was living in Los Angeles where the regulations and experiences around these models were proven, but still new to the rest of the country (and world). Now they are very popular.

My friend asked what happened to that business idea, and I told her the truth. I couldn’t find the balance of purpose and financial sustainability. In that particular market, the majority of existing owners had overseas workers (likely family) acting as caregivers. When I ran the numbers with paying staff fair wages, I couldn’t get the numbers to work unless we could buy the houses for a steal. This was completely impractical during the real estate boom of the early 2000s before the GFC. And so I abandoned the idea after getting licensed because the P&L didn’t make sense.

I’m glad I didn’t press go as it had a lot of financial risk, but I also regret setting up a company structure and investing in the creatives before I had all the numbers as it was a complete waste of time and money.

I did end up pivoting to a different business idea that had a better balance of purpose and financial sustainability, but I had to go through a formal business name change. And all the creatives I had developed including logos for the health care business were useless.

Did I learn my lesson from this business mistake? Honestly, no!

I’m the kind of person that loves the creative part of a start-up. So, I still tend to overthink the branding at the beginning. Then, I get bored with the day to day operations once the real creative part is done. This impacts the potential for real growth because I’m not motivated enough to push through the more financially difficult times.

The only time I’ve been able to get the balance of purpose and financial sustainability right for my own businesses has been when I’ve done consulting work. That’s because every project is so different and it requires creative problem solving. It’s incredibly challenging and mentally stimulating which makes it fun for me (yes, I know I’m weird!).

So, hopefully after my many attempts to create other businesses in the past, I’ve finally learned my lesson and know that consulting is my thing. Any endeavor I do outside of that (like my podcast) has to be related to this work.

Lessons to take from my story:

If you want to start a business, especially one with a strong social mission – don’t be like me! Get the balance of purpose and financial sustainability right from the beginning and know what kind of work motivates you out of bed each day.

Turning the Page

It’s been a few months since I last wrote a post here. During this time I have been very busy with my consulting practice. I have also been thinking hard about turning the page in my book of businesses and starting a new chapter.

Those of you following this blog will know I have been considering this for a while. However, I have finally decided to sell the Harvestcare product line and shut down The Refoundry by the end of the FY.

My reasonings for selling this business are many:

1) Failed to achieve the mission objectives

I’ve written about this before, but I don’t feel that I am meeting the original mission of the business to reduce plastic waste. While we could have done that with the hotel line of Harvestcare, the consumer line is doing well for different reasons: the products use locally produced, all-natural ingredients – effectively delivering a different mission.

Unfortunately, the hotel demand is unlikely to recover soon when the pandemic still causes so much uncertainty. Furthermore, all the other products lines we have tried have failed to find market fit.

2) Misalignment with my strengths and passions

My goal was never to be a hair and body care product maker. It’s not my natural passion though I enjoyed the formulation of new recipes to some extent. The day to day of making and selling is actually very tedious to me.

As such, I’ve often found the fulfilment of orders to be a burden rather than a win. There are other people who could enjoy and run this type of business much better I ever could.

3) My consulting practice is growing fast

My consulting work is keeping me crazy busy and it’s growing fast. I provide IT investment strategy advice to Not for Profit organisations. It’s a niche set of skills that the industry really needs, and I know that I am making a positive impact on these organisations in way that no one else can because of my unusual background.

If I can just focus on Roundbox Consulting rather than trying to fulfill Harvestcare orders too, I feel like I could really grow that business and help even more organisations. Plus, I love this kind of problem solving work so much that I weirdly enjoy the “hard” parts – even when I have to work nights and/or weekends from time to time.

4) Administration nightmare

The Refoundry is an administration nightmare because of two unique reasons: 1) It’s accounting is complex because it’s a small manufacturer; and 2) I am both an US and Australian citizen that must report detailed company statements to each country which happen to have different financial years.

Apparently, the IRS will want me to change my Australian company to their calendar tax year the moment we show a decent profit (another expensive exercise). So, now I am disincentivised to grow that business until this can be sorted.

Note to Self: If I ever set-up another company in Australia, just declare a calendar FY instead.

Turning the Page

Having made that hard decision, the next steps are to try to find a buyer for Harvestcare. I have someone in mind that would be a good fit if they’re interested.

I’ll share more as things progress over the next few months, and I start turning the page to begin the next chapter in my book of businesses.

Calculating Cost of Goods Sold

With the end of our second financial year, I just spent my entire Sunday calculating Cost of Goods Sold (COGS) for Harvestcare. What a chore! Despite having a financial system in place, it’s still a huge burden. Luckily, I have a solid cost accounting background. Other businesses tell me they use spreadsheets too.

Last year I did a full review of all the available financial systems and none of them could properly calculate COGS for a small manufacturer. I even verified this with my tax accountant. It doesn’t exist.

I could have added a complicated manufacturing plug-in for Xero, but it was completely overkill for what I needed, especially at its monthly price.

I can’t handle this amount of manual work each year. So, I plan to build a database for calculating Cost of Goods Sold and keeping track of inventory since there is nothing available.

Who knows… maybe by doing so I can solve a problem for other small manufacturers too. After all, how do they even know how much their products cost to make if they don’t know cost accounting?

Handmade Markets postponed

I’ll have to wait a few more weeks to gauge consumer interest for our Harvestcare brand as the Handmade Markets in Canberra were just postponed. This is due to the recent Covid outbreak in Sydney.

Handmade Markets Postponed

While I’m a bit disappointed (and exhausted), I really have nothing to complain about. From the stallholders’ Facebook page, it’s clear that some of the interstate vendors had just arrived in Canberra or were on their way. Some have thousands of dollars in very perishable items too. My heart goes out to all of them who have lost money.

I have none of those concerns. Yes, I need to move a planned trip to Melbourne that I had scheduled that weekend. However, in the middle of a pandemic, I’m really one of the lucky ones because my primary income job (consulting) allows me to work from home. For that, I am grateful.

Counting down to the Handmade Markets

The Handmade Markets in Canberra is this weekend. I’ve spent every possible hour of free time the last few weeks to make products and prepare for it.

In volume, that’s about 30k of shea butter, 15 liters of olive oil, 4k of beeswax and endless other ingredients. From a labour perspective, I’ve personally spent 100+ extra hours on this, and I’ve also had about 10 hours of help from friends.

shea butter block and oil oil drum
This is what 25 kilos of shea butter looks like with a 25 liter drum of olive oil next to it.

What will this translate to in terms of revenue? I have no idea. People in the private Facebook group side kept saying to make as much product as possible. However, a friend just told me that a good market for them would be less than $5k in revenue. If this only translate to $5k, then I’ve truly wasted my time.

So, stay tune for the results of our first Handmade Markets. I’m planning to have a massage and some time afterwards to really think about the future of our Harvestcare brand.

Harvestcare products on shelf

The blessing and challenges of stockists

Choosing to use stockists for our Harvestcare products has been both a blessing and a challenge. Today’s email from one of them just reminded me once again how hard it is from a cashflow perspective to depend solely on wholesale.

I actually do prefer to deal with wholesale orders rather than retail because even though the margins are lower, they buy in volume. Plus, I often get repeat orders without even trying. The direct to consumer model is much harder in my opinion, but I think a healthy balance between the two would be ideal.

Chasing payments

I tend to send weekly reminders if a stockist misses a payment date. I do it personally rather than via automated messages from my accounting system because I tend to get a better response. Most of the time, it’s just a misplaced invoice, but other times there’s a high chance I won’t get paid for products already delivered.

Today, I sent a weekly reminder to a stockist that was late once before but did communicate with me and eventually paid. I was tempted to force them to pay in advance for their second order, but decided to take a chance that it was only a one off issue. I should have listened to my instincts as the first time I met them to drop off extras as samples, they immediately said, “Sorry, I’ll make sure you get paid right away,” even though they weren’t late yet.

When I sent the email today, they replied that they had to close their shop due to matters now in court, but they would pay me soon. I now have a little bit of hope since they did respond, but there’s still a big risk that I won’t get paid.

The first difficult stockist

The first time this happened to me though, the stockist wasn’t as nice. After multiple follow-up emails, I finally called the store and asked for the owner. When he answered, he said that the products weren’t selling, and that I should pick up the remaining stock. He then accused me of pushing product on him, and that the only reason he did order was to “support local small businesses.”

For the record, I only followed-up because he kept telling me to check back, and then all he bought was a $100 box of lip gloss. He wasn’t being fair to me, and I gave him have a piece of my mind in response.

When I finally did pick up the stock, items were missing, and everything was out of the display box and shoved in the crack between the cash register and the counter. Of course, no one was buying the product! He obviously never had any intention of displaying the product properly or paying for even the few he sold.

I had to throw it all away because I had no way of knowing if it had been tampered with.

But most stockists are good customers

Despite these experiences, I don’t want to paint a picture that all stockists are bad. In fact, most are very good, and I have some really lovely wholesale customers that even pay me early. They’re the ones I always prioritise when I get a new order.

If only, they were all this good!

Walking on a thin wall

Risks of running a small business

I’m still trying to process some really sad news I received yesterday. My soap maker’s brain tumour has returned. This not only has devastating impacts on him and his family, but it will likely put our growth plans together on hold as he potentially undergoes chemotherapy. These are the risks of running a small business.

Fortunately, he does have an employee that can continue to do the heavy lifting of soap making. But this does limit any expansion plans this year. This includes our ability to do anything with our big hotel chain client other than the second pilot itself. The ability to expand into all their hotel locations would be impossible at this stage as I don’t have the knowledge or resources to do this work myself.

So, what does this mean for The Refoundry?

It’s really too early to know yet. Fortunately, my best selling Harvestcare products are actually the ones that I make myself, not my soap maker. And his employee can continue to support the soap product quantities he currently makes for me now.

I did ask my hotel client for an update earlier this week (before I heard this news), but haven’t heard back from them yet. I wouldn’t be surprised if a delay in this next pilot would be beneficial for them too while we’re still in the middle of a pandemic.

So, more decisions to come, but it does remind me again of the risks of running a small business in the start-up stage when so much of the operations is dependent on the founders. My own income streams right now are just as vulnerable until I figure out how to scale and create recurring revenue.