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Archive for December 2013

A Business Lesson From Starbucks

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A lesson that tastes good

A lesson that tastes good

I enjoy the coffee at Starbucks and have been a recent convert to their brand.  The usual criticism of Starbucks is that the coffee costs $5. That is not the case. It is higher than most coffee at a convenience store or fast food restaurant but not that much. It is only about $2 for an average size cup that would normally be $1.50 at other places. That is pricey, but nowhere near $5 per cup. They do sell $5 drinks but they are usually the fancy ones that I can’t pronounce and don’t drink. Enough about my rationalizing on my expensive coffee habit and on to today’s topic.

What I want to talk about today is the preloaded card concept that Starbucks utilizes very effectively.  On their balance sheet for the 2012 year-end they had over $510 million of cash in their accounts from customers like me for these prepaid cards. That represents 43% of all their cash at the end of the year.  In 2012 Starbucks recognized $65.8 million of income from cards they deemed to have a remote likelihood of redemption based on long periods of inactivity and historical experience.  The United States consumer just gave away $65.8 million to Starbucks!

I also find it interesting that they call the prepaid cards “Stored Value Cards” rather than a prepaid card.  I personally feel much better holding a stored value card than a prepaid coffee club card.  I am sitting on “stored value” not allowing Starbucks to keep my money due to a prepayment.  This stored value card might be part of my investment portfolio.  Heck the way the banking system was failing in 2008-2009 I should have put all my money on this stored value card.

What can you, as a small business owner, do that is creative to bolster your cash flow?  Perhaps, you can start selling stored value cards as a great gift idea for Christmas.  Maybe you can offer “insurance” on your products to cover the cost of early obsolescence or as a warranty.  Why do you think electronics stores try to sell the extended warranty?  Are they doing it to be nice or do they know they have it priced so the odds are stacked in their favor?

Have a great week coming up with your own Stored Value Card idea.

Written by pacelinebiz

December 30, 2013 at 8:01 am

Seen Or Heard During Christmas

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Too Much Figgy Pudding

Too Much Figgy Pudding

Things you are likely to hear or see during the Christmas Holiday season.

  • You, your dad or your grandfather will likely say; “I needed a new electronic stud finder”.
  • Someone will loosen their belt or put on pajamas after dinner.
  • Wrapping paper will be heard crinkling as presents will be torn open hastily.
  • A child will begin to whine, a mother will say it is time for someone to go to bed and then silence will ensue.
  • That kid on TV will stick his tongue to the flagpole again and again.
  • The beginnings of a weight loss resolution will rumble in the recesses of the minds of 2,648,324 people by New Year’s Eve.
  • Football will played and watched and discussed and analyzed on cable channels too numerous to mention.  A new one seems to be popping up every month.
  • Someone will get “frisky” under the mistletoe.
  • Punches will be thrown as people jockey for position to get the new tech toy.
  • Someone will stand out as they remember the reason for the season.

Have a great Christmas.

Written by pacelinebiz

December 23, 2013 at 8:01 am

Christmas Is On December 25th Every Year

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Cute Puppy Says Merry Christmas

Cute Puppy Says Merry Christmas

Q: What the following years have in common?  (Don’t rack your brain I will tell you and save you the trouble.)

  • 2013
  • 2002
  • 1996
  • 1991
  • 1985
  • 1974
  • 1968
  • 1963

A: In all of these years Christmas was on a Wednesday like it is this year.

What is my point you say?  I am getting to that.  After over 4 years of writing this blog, I have probably written about 90,000 words and every now and then you need something to write about and today is one of those days.  So, for some reason today I thought I would look back on other year that Christmas fell on a Wednesday going back 50 years.  When the Christmas holiday is in the middle of the week, it makes for some difficult vacation planning.  You must ask yourself;”Do I take the whole week off or do I take the first half or the second half off”?  For now I will assume you have already figured out what you are going to do and I am finally going to get to my point.

What was going on in those Wednesday Christmas years?  Let’s take it year by year.

1963 – This was right after we lost President Kennedy and I am sure it was a somber mood.  This was a few weeks before the 4 lads from Liverpool would appear on the Ed Sullivan show.

1968 – This was the peak of social unrest in the U.S. and around the world.  We lost Dr. King and Bobby Kennedy.  I am sure this Christmas people were looking forward to better things on the coming year.

1974 – This was another turbulent year and by Christmas we were probably just happy to have a Vice President.  Richard Nixon resigned in August and Gerald Ford took over but the VP position was not filled until December 19th when Nelson Rockefeller took office.  Gerald Ford was the only President to attain office without a single vote being cast for him as he was appointed as VP after Spiro Agnew resigned.  There were some good things that happened in 1974 like the end of the OPEC oil embargo and Hank Aaron became the Home Run King, a title he holds to this day in my book.

1985 – 11 years has passed since the last time Christmas fell on a Wednesday.  I assume this has something to do with leap year.  1985 was a relatively peaceful year compared to prior years mentioned.  Live Aid concerts to raise money for famine relief in Ethiopia were held in the summer and “new” Coke was launched to replace classic Coke but that ended in about 3 months. MTV was near the peak of its popularity.

1991 – The year began with the first Gulf War which was brief and many troops were pulled out of the Persian Gulf on March 10th.  The Rodney King beating was videotaped and the Soviet Union began to crumble and as a very nice Christmas present Mikhail Gorbachev resigned and the Soviet Union was dissolved the next day.  It was a very nice Christmas indeed.  I don’t remember that happening on Christmas day but discovered it while doing the research for this.

1996 – Overall there were no long running significant controversies in this election year.  The summer Olympics were held in Atlanta and Bill Clinton was re-elected to a second term as president.  The Unabomber was arrested in Montana.  Sadly, on Christmas day 6-year-old JonBenet Ramsey was murdered in the basement of her parents’ home.    Her murder is still unsolved as of this writing.

2002 – This was the year after the 9/11 attacks and there was an act of terrorism at Los Angeles airport on July 4th and the Department of Homeland Security was created in November.  The internet “dotcom” bubble burst and the Dow Jones Industrial Average fell below 7,200.

2013 – Another 11 years has passed since the last Wednesday Christmas.   Much has happened in those 11 years.  Let’s hope that on our next Wednesday Christmas, which happens in 2019, things will be looking up.

Have a great week.

Written by pacelinebiz

December 16, 2013 at 8:01 am

A Jimmy Sad Eyes Christmas

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Have Very Jimmy Christmas

Have Very Jimmy Christmas

Today I will be relaying what I learned from Little Jimmy when we sat down to discuss his memories of Christmas.

Pacelinebiz: Jimmy, tell me about your earliest Christmas memories.

Jimmy: My first Christmas was a sad one for me.  I spent it in the animal rescue waiting to be adopted.  I remember hoping that I would get adopted and that would be the best present I could ask for.

Pacelinebiz: Oh yes, you were a rescue dog.  Did they do anything special on Christmas for you?

Jimmy: In the dog wing, we all got a bone from Santa.  I think the cats got a ball of string. (Chuckle) Cats…

Pacelinebiz: Tell me about your first Christmas in your new home.

Jimmy: That was something special!  I got a chew toy, some bacon treats, a stuffed elephant and best of all Modern Warfare 2 for my Xbox.

Pacelinebiz: Cool.

Jimmy: Tell me about it.  I nearly got carpal tunnel in my paw playing that thing.

Pacelinebiz: As a dog, do you find it difficult to get all of your shopping done in this human dominated world?

Jimmy:  Dude, I have three words for you; Amazon- Dot- Com.  I should buy stock in that company I spend so much with them, but they never have earnings so I stay with companies that can deliver lots of free cash flow for my portfolio.  Please don’t take that as investing advice.

Pacelinebiz: It seems that you have embraced technology; do you have any favorite gadgets that make your life easier?

Jimmy: As you know, I travel a lot so I use Dropbox for uploading photos from my Smartphone so I can have them ready for my PC when I get back in the office.  Dropbox is not just for your PC.

Pacelinebiz: What is your favorite Christmas TV special?

Jimmy: A Charlie Brown Christmas.  That is a classic and is probably in the top 3 of everyone’s list.  Snoopy and I are good buds.  I look at him as a mentor since he has handled his fame so well over the years.

At this point Jimmy got a phone call and we had to end our interview.  It was good talking with Jimmy; I hope you enjoy this brief glimpse into his life.  Have a great week.

Written by pacelinebiz

December 9, 2013 at 8:01 am

Big Business Is Not All Bad

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It's Not Easy Being Green

It’s Not Easy Being Green

Note: After this week, I will continue with tradition and have blogs with a Christmas theme for the next three weeks and will resume the normal schedule with a business topic on Monday December 30th.

The fourth annual Small Business Saturday was last Saturday, November 30th.  I think it is good that there is a special initiative to bring recognition to the small businesses of America at the start of the Christmas shopping season.  Since Paceline Business Consulting is a small business, I usually focus most of my blog topics on the small business owner – the market that I serve.  We are a celebrated part of the American fabric and should be.  Today, however I am going to depart from my small business focus and discuss big businesses.

I want to talk about what the big businesses have done indirectly to help their smaller counter parts.  A big contribution they make is by being a testing ground for new ideas.  In technology they are typically the early adopters and help work out the bugs while at the same time make it more affordable by subsidizing cost through their sizable contribution to the economies of scale.  They are essentially paying the freight while we ride for free.

I have listed below some free technology services that any small business owner should consider.  While these are not necessarily examples of big businesses paying the freight and allowing small business ride for free I thought that if you are not already utilizing them you should consider this a gentle nudge to try them out.  These services are essential in today’s business environment.  Many of the services I list offer very reasonable prices if the free offering is not enough for your needs.

Consider the free services that are offered at lower amounts of usage.  Things like cloud storage are free with Dropbox, SkyDrive, Google Drive, Box, Amazon Cloud Drive and many others as long as it is a relatively small amount of storage (5-7 GB!).  This small amount of storage is usually plenty big enough for a small business to utilize it for free.

There are also e-mail marketing companies that offer similar free services for a small amount of e-mail addresses.  MailChimp, the service I use offers up to 2,000 email subscribers and 12,000 emails can be sent per month.

Remote desktop computer access programs are also free and very useful for my business.  Some examples are LogMeIn, GoToMyPC, Microsoft’s Remote Desktop and others.  They enable you to work on a computer remotely saving travel time and opening up your market area to the entire world or anywhere the internet is available.

There are other areas besides technology where the cost of services or products have been made possible by big business leading the way.  So hats off to small business this Christmas season but let’s not forget to thank the big businesses as well.

Have a great week.