Finance Coach - Vol. 32

Finance tip: Income

House-sitting. With a nice break coming up shortly, I was reminded of how necessary a service that of house-sitting is – and how simple a source of extra income it can be as well! Almost everyone knows how it operates: When people go away on a trip, they generally want somebody to either stay in their property in their absence, or pop in on a regular basis just to keep an eye on the place. As almost all home-owners do go away at some point or another, there’s a huge market for the service. The traits you would need most are those of trustworthiness and responsibility – you are, after all, looking after what is often someone’s most prized possession. The income side of it can vary, but as a rule you can make a nice chunk of extra cash for doing very little – especially if you get asked to do long-term stays. Looking after bigger properties with gardens would generally allow you to demand a higher fee, as would having to look after pets as part of the job. Finding work would generally come from word-of-mouth (good house-sitters come very highly recommended), but you could also look at doing mail-drops in your area, or putting an ad in your local newspaper – especially as you get closer to common holiday times…

Business tip: Pricing

Offer a ‘hail-mary’ choice. If you’ve been battling to sell one of your products or services, which falls at the top end of your quoted price range, consider putting in an even more expensive one to boost your sales. While this may seem ludicrous at first, just follow the logic for a second: Say, for example, that you run a restaurant, but have been struggling to sell your most expensive dish, which goes for a hundred bucks. This dish is a high-margin offering, and increasing the number of ‘units’ sold would do wonders for your business. The problem comes in where customers want to buy it (as it’s a wonderful dish) but they’re uncomfortable doing so as it’s the most expensive item on the menu, and they feel that it comes across as excessive and unjustifiable. Adding another, even more extravagant dish at, say, two hundred bucks, could be just the solution to increasing the number of people opting for the first dish, being the one you actually want to sell. This is because, you see, the first dish is not perceived as extreme and excessive, as that mantle now falls on the new dish. The result is that more people will feel comfortable opting for the first dish, and you then have your desired increase in sales. The beauty of doing this is that, if someone does actually go for the new, extravagant option (a.k.a. the ‘hail-mary’ choice) then you’re smiling anyway, as you get a big sale from an expensive offering!

Trend: The return of pyjamas...

I came across an interesting article the other day, mentioning a trend which has been picked up across the globe over the last 18 months. The article started by saying how many clothing retailers have had a torrid time of late, thanks to the economic crisis, but there seems to be one department which is bucking the trend: sleepwear.

Apparently, sales of sleepwear have seen a marked increase over the last couple of seasons – up to as much as 30% in some cases. The most interesting part about it was that it’s not your slinky nightie and boxers brigade which is doing so well. It’s the old, full-length flannel and cotton type!

Now, this does actually make a lot of sense to me, for a couple of reasons. Firstly, as the economic crunch started to bite, one of the first areas that people started to cut down on was entertainment. This means that there are less people out at pubs, clubs and restaurants in the evenings, and more having a quiet night at home. And if you’re at home vegetating in front of the TV, are you doing it in designer clothes? No, you’re slouching around in your PJ’s!

Secondly, these long, comfortable pyjamas are also a lot warmer than your average night-slip or T-shirt and boxers. So, for those looking at saving a bit on their heating bills, this option also makes a lot more sense. Instead of the pumping the thermostat, you settle in for a movie on the couch with your warm pyjamas, a blanket, and maybe a hot water bottle!

The third reason is a bit more psychological. In uncertain times like these – with people losing their jobs, seeing their investments decline, feeling their relationships strained – they turn to those things that make them feel safe and more secure. People cast their minds back to better times, and re-connect with people or items that transport them there. And honestly, what could bring you back to those happy times of childhood and your youth more than climbing into a pair of big fluffy pyjamas?

Just some food for thought… Sleep tight!

Finance Coach - Vol. 31

Finance tip: Entertainment

Restaurant specials. If you’re fond of eating out, but find the expense of it killing your budget, make sure to take advantage of restaurant special offers. Many restaurants are struggling at the moment, and have introduced these offers to entice patrons to their establishments. If you’re determined to get good value for money, consider going out for a meal between Monday and Thursday – many restaurants have reduced prices or freebies thrown in on these days, as it’s not their peak time, and they’re just happy to have feet through the door. Also keep an eye out for ‘early-bird’ specials, even over weekends. This is where the restaurant offers a significantly reduced price on meals served earlier in the evening (in by 6pm, out by 8pm, for example) – they are generally able to fit in another sitting afterwards, and are keen to get the extra revenue pumping through…

Business tip: Sales

Get your prospects to try out your product or service. If a potential customer has the opportunity to physically experience the product or service for themselves, they are up to 300% more likely to buy it. This is because they are able to experience first-hand the benefits or enjoyment of it, instead of having to theoretically conceptualise what it would be like. Why do you think car sales-people are so keen to get you in the driver’s seat? Similar psychology applies to promotions and give-aways. If you’re handing out freebies or product samples, try and get your promotions staff to open the packaging in front of the customer. If they take it home all still wrapped up in plastic, the chances of it never being opened and used increase exponentially. The same applies to Christmas presents!

Finance Coach - Vol. 30

Finance tip: Savings

Harness the power of compound interest, and start saving early. There are many examples of the power of compound interest (essentially interest on interest), but here’s one that I remember seeing recently: Imagine you have two people, Mr A and Mr B, who are the same age. Mr A saves ten thousand bucks a year for the first 12 years, and then stops saving altogether, leaving his investment to grow. Mr B does not save a cent for those first 12 years, but then saves ten thousand bucks a year for the next 28 years. At the end of 40 years (12 + 28), assuming a real return of a few percent a year, Mr A’s investment will be worth substantially more than Mr B’s! Mr A only saved for 12 years, versus Mr B saving for 28 years, but the fact that Mr A started earlier means that he had compound interest working for him – with his investment being worth more in the end. The moral of the example is thus, if you’re not saving anything at the moment, to start saving NOW (not next month, or when you get your raise next year). The sooner you can get started, the sooner you can have the power of compound interest working for you!

Business tip: Sales/Marketing

Sell benefits, not features. Whether you’re selling a product or a service, make sure that your marketing message entails the benefits of what you’re offering, and not just the features. By explaining the benefits to your potential customers, you are going straight to the heart of the matter – which is ‘what the product/service will do for them’. For example, a bad car salesman will go on about how the vehicle has ABS brakes and multiple airbags. A good salesman, however, will mention these features, but then put them into context by explaining that the car is very safe to drive. The good salesman has put forward the benefit of driving the car, whereas the bad salesman has just listed features of the vehicle (which one could find in a brochure). Or if you had a small business offering accounting services to companies, a feature would be that you can cover the full financial function. A benefit, though, is that your customers no longer need to worry about paperwork, and can concentrate on growing their businesses. Do you see the difference in the two messages, and how much more effective the latter would be?

Nice international readership!

Just had a look at who’s been visiting this blog, and over the last month, I’ve had readers from 10 different countries! Now, that’s not exactly mind-blowing for an established blog, but I’ve only been doing this since January, so I’m pretty chuffed :)

What’s even more exciting is the spread of countries that the readers have come from… Here’s the list, in order from most readers to the least:

1. South Africa (obviously, thanks guys!)

2. Japan

3. Indonesia

4. Ireland

5. Norway

6. United Kingdom

7. Poland

8. Brazil

9. USA

10. Singapore

That’s five out of seven continents represented – all I need to do is get a couple of Aussies and some polar scientists and I’m seven out of seven! You might notice that there’s also an above-average representation from Asian countries. That’s probably due to the holiday that I had over there earlier this year, and some networking I managed to get in with a few of the locals (as if I would actually ever just relax on a holiday!)…

Definitely puts a smile on my face :)