THE PURE JAKE NEWSLETTER
Volume 1, Number 2 - March, 20011
PURE JAKE Home

• ake's Thought For Today
• Breaking News: Jake's Books and Videos
• Is The Price of Gas Pricing You Out of Business?
• Doing Business in Hard Times
• A Great Class From The Impressionator
• I Like These Links

Your chances of failing in any endeavor are directly proportional to your fear that you can't make it work. If you believe you can't you wont If you believe you can and work hard - you can. Thomas Edison said: "Success is 10% inspiration and 90% perspiration!" I don't know who said this but I find it relevant: "The only time you cannot afford to fail is the last time you try!"

--Jake Jakubuwski

A good network of like-minded locksmiths can help you weather tough times. Last month I mentioned that Clearstar ( www.clearstar.com ) was offering a trial membership and if you signed up for a regular membership and mentioned the PURE JAKE newsletter, Jay Long would give you $15.00 off your first year's membership. Tell Jay, "Jake told me to email you!"

I had the March Pure Jake newsletter all ready to go in a new format with a new name. In fact, I was going to send it out this weekend. Then a couple of things happened that made me change my plans.

First, my son, Kelly, found a script that we've been looking for that will allow me to put all of my books, CDs PowerPoints and videos on line as instantly downloadable files. It is still a work in progress in that it is taking us a bit of time to convert all the files we need to convert so that we can offer this new way for you to purchase my books, etc. at unbelievable prices that will save you BIG bucks.

For example, my book; Aluminum Stile Door Service and Repair was priced at $199.00 in a print version. At that price, one fairly minor aluminum stile door job would more then pay for the book. Then I offered it in a CD version for $39.00.

Now that same book, along with others, is being offered as an instantly downloadable E-BOOK - complete and unabridged, in a PDF format - for ? this is no joke! ? only $9.99!

To find out more about my books and videos go to Pure Jake and click on "Marketplace".

On the drop down menu that appears on the left, click on E-Books. There will be more added as time goes on until all of my books are offered. You can also click on "Videos" to preview my video offerings. Also for $9.99 each!

Also, in the Marketplace you fill find at least one FREE book, at least one FREE video and a number of FREE articles.

Here's the deal: The free stuff is actually free and you don't have to buy anything else to get the freebies. If you do order one of the other books, videos, PowerPoints, etc. when you push the "Add To Cart" button, you will be directed to PAYPAL. There you can make your payment with a PAYPAL card, credit card, etc. Soon after your payment has cleared, you will get an email thanking you for your order and giving you a link t your purchase. Depending on web traffic that could take up to an hour, or longer. Once you receive confirmation of your order via email (NOT the PayPal receipt) You will have 24 hours to download from the link. The file will go directly to your hard drive, or wherever you want it to be stored.

No shipping and handling, no waiting days, or weeks. No lost in the mail - just instant gratification as quick as your computer can deliver it. If you have any problems with the process, email me.

It could if you let it. I've spoken to, and read of, locksmiths who have "cut back" on their service area. Or, in a knee jerk reaction, added five or ten dollars to their service call or trip charge.

No question that if your fuel costs you more, you have to recoup that cost somehow. I believe you have to learn to look at fuel as a cost of doing business just like you consider buying locksets and panic bars as a cost of doing business.

I also believe that you have to make a profit on the gas you use, just like you do on the hardware you sell or the profit you make on the labor of your employees.

Figuring out how to charge for the fuel you use is relatively simple. Total up all of the service calls you have run in the last three months. Figure out how many miles you traveled to cover those calls. Then determine how much mileage you get from your vehicle. Then figure out how much gas (fuel) it took to run those calls. If you come up with 14 miles per gallon then you have to take your current cost per gallon and double it! Yes! Double it. That's your profit on the fuel you use.

And you're going to have to pass that on to your customers in the form of a 'FUEL SURCHAGE'. Why not? UPS does it. FEDEX does it. U-HAUL does it. And, the grocer that you shop with adds their increased freight costs to every danged item they sell. Why should you be any different?

An increase in the price of fuel, at the pump, doesn't just hit us in the wallet when we buy fuel, it hits us in the wallet every time we buy anything; because virtually every ting we buy is shipped in by truck, train, plane and parcel post! The only way to fight back is to realist-ically, and logically add a fuel surcharge to your invoices.

You might want to set your service area up in zones. Zone 1 your surcharge might be 2% to your service call or trip charge. Zone 2, might be 5%. Zone 3, might be 10%. And anything beyond that would be a buck-and-a-half per mile. You add that charge as a separate line item and let the customer know before you even book the job that the charge will be levied. Just make sure you determine how much it costs you in fuel to service each of those areas…

Is the increase in fuel prices going to cost us money? Certainly. It will cost us money because we will lose people who can no longer afford to pay for our services because too much of their income is being spent on fuel and the higher ancillary costs that I mentioned earlier.

If we position ourselves to make a profit - even during though times - we can still make money. We will make more money because in the long run there will be fewer 'competitors' that we have to contend with. We may lose money we'd normally make from car openings because the car owner will use a brick, rather then call a locksmith. But that can give you more time to devote to the more profitable jobs that do come your way.

If ain't gonna be easy but it is doable as long as you don't throw in the towel.

Fuel prices are going to continue to rise and continue to negatively impact our economy and affect our business model. If you want to stay viable, you ABSOLUTELY must take the initiative.

I read once that the best way to keep from being hunted was to become the hunter. More than ever, it is imperative that we hunt for more ways and creative means of coping with a radically changing market.

The following link will give you an idea of where gas prices are going: Gas prices headed toward $4 a gallon.

I wrote the following article about two-an-a-half years ago, just as were diving into the current economic debacle. It thought that it would be appropriate to repeat it here.

Doing Business During Hard Times Without Losing Your Shirt
By: Jake Jakubuwski

It wasn't too long ago, I wrote about dealing with the ups and downs of a roller-coaster economy. One day business seemed to be great and the next it was a struggle to make the truck payment.

Today, it looks as if that roller coaster is on a long, downward-plunging, breath-taking, credit-crunching drop from the time, just a few months ago, when Uncle Sugar and the financial pundits assured us that everything was "good" and the economy was "robust" in spite of a "few credit problems".

Now we see the stock market lose a big chunk of its value in under a week. A week that capped a financial free-fall of over thirty percent of the market's value from last October. Steven Oberbeck in a article in a Salt Lake Tribune on October 11, 2008, said, " Since hitting a record close of 14,164.53 a year ago, the widely followed stock market index has fallen nearly 35 percent in a deep bear market."

Fueling the losses are financial institutions collapsing under a burden of bad mortgages and jobs drying up like a mud puddle on a hot, August, day. Economically, good times have suddenly turned to grim times. Prices for everything from pharmaceuticals to peanut butter have skyrocketed.

Now, we're being told that in spite of governmental efforts to curb a "chaotic depression" we will be experiencing some "adjustments" before the economy "stabilizes". Let me tell you the way I see it.

I'm not an economist, a financial wizard or even a good bookkeeper. I'm just another guy who has, by dint of working for himself for about forty years, learned a few lessons along the way about money that, like the framers of the Constitution said, are truths that I "hold to be self-evident".

First off, I don't believe we can spend our way out of debt. That translates to me believing that the bail-out plan that both Senate and House foisted off on us is not going to do much to help the small business person or working stiff.

Secondly, I believe that if you spend more then you earn, you're going to go in the hole. The amount of world-wide credit debt is proof of that. In America alone, credit card debt is pushing, or may have exceeded, a Trillion dollars by now! That's a "1" with twelve zeros behind it!

A Federal Reserve report said that total US consumer revolving debt reached $904 Billion in June 2007, up from $879 billion at the end of 2006. That's money that the debtors do not have and the creditors may not be able to collect.

The really scary part, as far as I can see, is that credit card debt is likely to be the next financial crisis for the banks and a hammer blow to an already thoroughly banged up stock market. As jobs dry up, as stocks lose value and income dwindles, folks will, in greater numbers then ever, become delinquent with payments and even default on their credit card balances and other instruments of debt (cars, student loans and mortgages). In fact a lot of them might do what has become know as a "strategic default". In plain language that means that they simply walk away from their debt.

See what I mean about the economy going from "Good" to "Grim"?

I am not smart enough to know whether we are going to fall into a severe recession or a "chaotic depression". What I do know is that in spite of all the bland euphemisms like "Illiquidity", "Write-Down", "Reserve Diversification" and "Non-allocated expenses" that everyone seems to be using to make us feel warm and fuzzy about what's going on - we are definitely facing some tough economic times.

Which brings me to some "What-Can-We-Do-About-It?" ideas that might help us counteract the "downsizing" of our "profit position" created by a bunch of marauding financial finaglers who plundered the market and should, in my opinion, be going to jail rather then being bailed out by Uncle Sugar.

We have to recognize that as locksmiths and security professionals the tighter times grow to be; the more necessary our services become.

Why? Because criminal activity of all sorts increases as more and more people try to survive. The more crime there is, the greater the need for personal security becomes.

In my mind, that translates to opportunity by creating a niche that needs to be filled. But! In the meantime how do we keep our businesses solvent so we can make money in the hard times that are predicted for our future?

Here are some ideas that I believe will help you weather the financial squeeze that is already here and help prepare you for the greater credit crunching that is coming to a bank near you.

1. Take A Good Hard Look At Your Business And Your Business Practices

Make sure your business is truly profitable and that you are not operating on money you haven't made yet. Using credit leveraging to float receivables and make payroll may not be the best route to take with banks failing and credit tightening up.

"Cash" should be your watchword and the more cash you can generate, the more chance you have of surviving tough times.

2. When You Examine Your Operation's Profitability Make Sure You Do It "By The Book"

Profits are the fuel that your business engine needs to keep running and generating money. Borrowing against future earnings is okay as long as you're future earnings are certain and secure.

With the economy in sad disarray (Archie Bunker would have said "…it's in the terlit") there are no guarantees that you will have any future earnings to pay back the loans that you make today.

So when you set out to determine the profitability of your business do it with a super critical eye. If you can't be impartial -and it is hard to be-regarding your business' profitability and liquidity, get some help from your accountant, bookkeeper, priest or mother-in-law. Get a second, or third, opinion from someone who can be objective.

The absolute best, most reliable, financial information in the world regarding your business will not be worth one red cent if you don't act on it.

The only way you will beat the tough times is to be tougher by being proactive, rather then reactive. You have to take the initiative to make the good things happen.

3. Closely Examine Your Overhead

Rent, utilities, transportation, office supplies, unnecessary help and equipment, fuel, insurance and a few dozen other expenses are all a part of your overhead. That is; they all add up to what it costs you to operate your business on a daily basis-even if you don't open your shop, crank up your truck or turn a dollar's worth of sales.

4. Get Rid Of What You Don't Need

That includes accountants, bookkeepers, priests, mothers-in-law, non-productive employees, unnecessary managers, unneeded vehicles, useless real estate and any other "assets" that are really liabilities.

If you're going to get lean and mean, you can't do it with a lot of dead weight in your wagon.

Sell off equipment, inventory and other non-essentials that are taking up space and costing you money through depreciation or maintenance, record keeping and inflation.

If you have inventory that is not moving, have a yard sale, or deeply discount it to get rid of it. That merchandise is not going to make you any money sitting on a shelf.

If it's an item you figure you'll need someday, sell it anyway and order one when you need it. Slow movers and "no" movers have no place in your inventory-get rid of them.

The more money (cash or otherwise) you tie up in inventory the more you spend for taxes, interest, inventory control, record keeping and lose through depreciation and pilferage.

Keep only the fast moving stuff on your shelves. Each time you "turn" your inventory, you make money. Every item that sits on your shelves for months costs you money.

Use what you save to invest in faster moving inventory or machinery and equipment that will increase your productivity.

5. Stop Financing Your Customer's Maintenance Or Capital Expenditures

If you install a $3,000 electronic access control system, or a $6,000 safe or a $150 deadbolt and you bill the customer, they are using your money to further their financial agenda.

Require deposits. Don't be afraid to ask for up-front money and make sure any payment terms are clearly spelled out.

It's a whole lot easier to get deposits and negotiate terms in the beginning, before you do the work, then it is to try to run down payments and collect money after the fact.

Quid pro quo literally means "What for from". More commonly, it means "this for that".

Regardless, the point is; what will you get from your customer for what you do for them. A clear understanding of who pays for what and when is not only necessary in today's climate of business failures and cutbacks … it is crucial.

Keep this in mind: You can't buy entertainment, food, cars, tires, tools or trinkets without paying in cash, by credit card, personal or business check; or by having an "open account" with the entity you're doing business with.

Therefore, why should you sell "on credit" to the very businesses that won't sell to you on credit? Overly simplistic? Maybe. But I go back to "Quid pro quo". I believe, setting aside fixed assets such as real estate, that the true value of any business is the present value of its cash flow.

6. Contain, Control And Collect Your Receivables

The simplistic translation is this: "Never extend more credit than you can afford to lose."

But when you do extend credit contain it within dollar limits, or parameters, that you are most comfortable with.

When you do extend credit make sure the customer understands the terms and conditions that the credit sale is predicated on.

Monitor your accounts receivable daily to make sure the receivables are staying within confines that you feel most comfortable with and aggressively pursue any accounts that are lagging behind their payment schedule.

Your customer's business could fail or go into receivership at any time. Either scenario would cause you to lose money.

Failure to contain, control and collect your receivables will not only cause you financial hardship and send you to the banks for "interim" financing-if you can get it. Inattention to, and passive controls, regarding the collection of receivables could cause you to lose your business.

7. Credit Checks And Gut Feelings

Don't hesitate to predicate requests for open accounts on the results of a credit check.

If the customer wants the work done before the credit check is complete-tell them you will do the work but they have to pay for it in cash, with a company, or personal check or with a personal or company credit card.

If they are reluctant to do that or tell you that they only hire vendors through purchase orders, etc. and "blah" … seriously consider thanking them for their interest and then suggest they might be happier if they sought the services of another vendor.

If the customer's credit rating is not satisfactory then don't extend them credit. If they're not paying other vendors in a timely fashion what makes you think you will get preferential treatment?

Even if the credit check is satisfactory and your instincts tell you to walk away … pay attention to your instincts.

Also, never be afraid to do business on a C.O.D. basis.

Over the years and through the various businesses that I have owned and operated, I have never been shy about telling a customer that I got paid when I got finished.

Cash, check or credit card. It didn't matter, as long as I got paid when I finished the job.

Today, checks and credit cards may not be the best methods of payment. That will depend on the customer, his bank and your gut instincts. If you have any doubts at all, insist on cash.

A long time ago, I sold used cars. When someone tried to finagle a lower price our credo was: "Money talks and b.s. walks". Not a bad idea in today's marketplace.

8. Negotiate Longer Terms With Your Suppliers

One way you can "sweeten" your cash-on-hand position is to seek more favorable terms and payment schedules from your suppliers.

Requesting 30-60-90 payment schedules without interest or fees might be one option.

Let's face it, the longer you can hold on to your cash, the better your cash position becomes.

It never hurts to ask for a better deal then you're currently getting. My grandfather often said that you only get what you negotiate for.

9. Take Advantage Of Discounts And Specials

Volume discounts, special pricing and guaranteed purchases are all ways to improve your liquidity.

Never buy larger quantities simply to satisfy your desire to "deal". Especially when you're trying to maintain inventory levels that help you save money. But, never disregard quantity pricing when the products are items that you can move quickly and profitably.

If you only sell two or three Sargent 8888 panic exit devices a year, it does not make any sense to buy six of them simply because the supplier will give you an extra ten or even fifteen percent off.

On the other hand if you're selling several cases of deadbolts each month and you can negotiate an extra ten percent discount by buying ten cases, that could be a good deal. Also look for other supply sources outside of normal channels.

Occasionally, you can find exciting buys on deeply discounted door hardware at Lowes, Home Depot and even Ace Hardware.

If one of the big box boys are offering Kwikset Tylos cheaper than you can buy them from your regular supplier-buy them. Again, don't buy simply because it's a good deal unless you know you can move the item within your normal "turn over" schedules.

Even good deals can get expensive if you overstock buying specials simply because you can't turn down a deal. Money tied up in inventory that doesn't move is money that you are losing to depreciation and inflation.

10. Hold Tight To Your Wallet

"Holdin' Tight To Your Wallet!" was the title of one chapter in my book "How To Jumpstart Your Business-Or Ten Ways To Increase Your Shekel Intake".

That chapter explained that there are a lot of folks our there who want a piece of your action (whether you're making a profit, or not).

There are the advertising sales folks that will try to convince you that the quickest way to make money is to advertise with them.

There are the customers that want you to provide unrealistic insurance coverage at your expense to hold them harmless from product failures or subsequent litigation that may or may not be your fault (That's usually requested under the heading of "Additional Insured").

Then, of course, there's the tax man, the Workman's Compensation folks, your banker and his new fee schedule, friends of relatives that need jobs and a myriad of others that one way or the other are going to try to scare, scam or fast talk you out of your hard won cash.

Don't spend what you don't need to spend.

Do you need a Yellow Page ad? Maybe. Do you need a full page Yellow Page Ad? Probably not.

Do you need an insurance rider on your service vehicle that will provide 100% repair, replacement and a check for $10,000 if your van is destroyed by falling space junk? Not likely!

In short, when it comes to sharing what's in your wallet with anyone; do it sensibly and with restraint.

Conclusion

We have no control over the economic roller coaster that I mentioned earlier. We can control what we do and how we react to the economic pressures that we are facing now and certainly will be facing in the future.

If we fall for the line being handed to us by Uncle Sugar, the banks and the hustlers on Wall Street, we're definitely lost because we cannot pay our debt by creating more debt. We cannot spend our way to prosperity.

I truly believe, that as individuals, the less debt we assume and the less credit we extend, the better off we will be.

Many of our businesses will not survive the coming financial crunch. For the most part the government, the banks and the investment brokers are not looking for ways to insure our survival; they're looking for ways to ensure theirs.

So it is up to each of us to make sure we have enough cash to work our way through the turbulent times ahead. We can do that by making "Cash" our watchword.

For those of you that have been waiting for the most truly realistic hands-on impressioning training possible, it's happening this month in Winston- Salem, NC. If impressioning is a skill that you haven't developed, or you wish to take it to the next level, this class is the one for you.

Half of the class will be held at a nearby meeting room, but the bulk of the hands on part of the class will be taking part in a Pull-A-Part Salvage Yards, working on real cars - in virtually actual field conditions! This professionally kept and groomed site is akin to working on cars at a local used car lot.

This isn't Bubba's Junk and Trash Yard. The ground is crushed gravel so there are no weeds, nests, etc. All fluids and hazardous materials such as batteries have already been removed. These locks will mimic, in every way, the locks you will actually find on cars in the field.

No more "I can do it on the vise at home, but not when it's still on the car" excuses after this one! No more using the same locks as other students, everyone can choose their own car.

There will be project tables set up for High Security classes, courtesy of Strattec, if you tire of impressioning, or get done at one station ahead of the class. We have the new Ford and Chevy side milled locks for you to play with. We also have Tom Tusing's Determinator's Guide to High Security Manual, so if you want to try out some of your tools here before risking damage to a customer's car, this class is for you.

This, the first of these classes, (with more to be held at many of the 23 Pull-A-Part Salvage Yards in 10 states) will be held on Wednesday March 16 in Winston Salem. It will be from 9-5 with an hour break for you to grab your own lunch. Rain Date will be Wednesday March 23. This is an all day outdoor event, so dress accordingly.

The cost is $169 for 7 CEU hours. Bring the tools you use in the field. We have extras, but using what you use in the field gets the best results. Call 877 636 8384 or email theimpressionator@yahoo.com is limited to 15 students.

Looking forward to seeing you there…

--The Impressionator
--A/k/a Derek Hooker

If you find any broken links, please let me know

That's all for now, see you next month! -- Jake

THE PURE JAKE NEWSLETTER is a FREE newsletter for professional locksmiths, professional door installers, architectural specifiers, hardware purchasing agents, facilities management personnel, security professionals, door and door hardware distributors and other interested parties.

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