… In which we discover we can make money by selling other peoples’ stuff but we also realize we don’t have to buy it.

A NEW SPECIES

As much of the book so far has been about avoiding risk, it is probably worth bringing into the equation a new sub-species that can either be coffee table or taxi depending on the level of risk they are prepared to expose themselves to. These are the merchants, which include shops, mobile sales and caterers, or maybe restaurants, agents and bureaus. Strangely enough, in most of life’s rich pageant increased risk can bring increased reward, but in the case of merchants this doesn’t really happen, and risk can be a bit daft and should be avoided. For instance, you may wish to open a shop selling coffee tables, let’s call it ‘Cappuccino on Legs’. There was a really great horror film from the 1950s where the baddy could conjure up a horrid flesh-rending demon with a curse written on a bit of paper. Whoever was carrying the paper would meet the demon at the appointed time, a sort of infernal pass the parcel. Now shop stock can be a bit like this. Remember, our friend who makes the coffee tables thinks that work is going to the shed and making more and more coffee tables. A bit like the Magic Porridge Pot, that person is stuck with the fatal curse of tons of unsold coffee tables. You, the proprietor of ‘Cappuccino on Legs’, take the curse from them by buying the coffee tables. Or do you?

TAKE IT EASY

You may well be considering becoming a merchant, as many people do. I want you to become my friend, I want you to like me and see me as helpful so please forgive me and don’t feel that I am being harsh when I say that being a merchant can be the lazy, and therefore dangerous, option. What is the perfect business? Making things can be tough and expensive, mending stuff demands expertise and special tools, being an expert can mean not getting paid and too much travel. Hey, I know what, it would be great to let someone else make stuff, we could put it in a room, and people would come to us and give us cash to take the stuff away.

More of this later, because of course it is not that easy as the thousands of boarded-up shops testify, but for now, do you really need to own the coffee tables? The coffee table maker is desperate; by buying the stupid things you could ruin two peoples’ lives. Yours, because you end up with tons of coffee tables you can’t sell, the coffee table maker’s because you have convinced the poor sap that the things do sell so he makes even more, leaving you both with coffee tables you can’t sell. Why not go to this desperate person and scrounge a free coffee table to put in your show area, then see if you can take orders for them. By doing this, you are letting your supplier take the risk of holding the stock.

For some time, I wrote a column in The Grocer magazine about various successful and not so successful convenience stores. The size of these places or the affluence of the surrounding area didn’t seem to affect income as much as the shrewdness of the owner. The smallest and most successful one I visited was in a tiny triangular store, no bigger than the average bathroom. There was no room for stock and little room for customers either The only real advantage for this micro-shop was that it was on the approach to a busy railway station, a great place for papers, sweets, snacks and, best of all, sandwiches, but there was nowhere to store or prepare them. There were a few delicious-looking sandwiches in a nice variety of the best flavours – and strangely, the owner of this store never ever seemed to run out, however big the demand. The turnover of sandwiches ran into hundreds and hundreds a day and yet there never seemed to be more than one or two of each flavour. The secret was that when they ran low, they whipped 50 yards up the road to the not so well placed sandwich shop and bought more at a considerable pre-negotiated discount. They bought so many that they even had the cheek to arrange with the less well located store to have their own custom labels put on them. The point is, that by only buying as many as they sold and by avoiding waste they were able to outsource the risk of holding stock – a dream for any merchant.

FAIR SHARES

You could outsource risk but there is a price to pay and someone has to pay it. They say that when the shit hits the fan it doesn’t get evenly distributed and this is the same with the profit and loss of being a merchant. If you make something that is stocked by a merchant we have to consider a few things, such as whether the merchant’s key skills are marketing and selling in a way that you are unable or unwilling to do. If we make coffee tables in, say, Scotland, a merchant may be able to corner the whole Mongolian coffee table market for us. Without the merchant, it would be very unlikely that Mongolia would be open to us. We would have the problems of distance and culture to combat, therefore best to let the merchant take on Ulan Bator. What we must understand is that the merchant shares our money. If it costs us in time, effort and raw materials £50 to make a table that has a sale price of £100, that £50 profit has to be shared (that’s why ‘direct to the public’ type ads are supposed to attract us with thoughts of bargains). This bit of simple arithmetic is not as facile as it seems because if you are a coffee table merchant you have two tough negotiating jobs to do: one is to push the price from your supplier down, and the other is to push the customer’s price up. The power of charisma to increase margins is something most merchants lack in spades.

So if you are thinking, like many, of becoming a merchant, you must become truly adept and brilliant at selling. Better than you are now, better than you have ever been, better than your customers, better than your suppliers. Your brilliance at selling yourself and your enterprise will bring you great riches, but if you are not up for that please, please have a rethink.

THE EMPIRE STRIKES BACK

Now let’s make things really confusing, because you can be a coffee table maker and a merchant. Let’s say that, against all odds, the demand for coffee tables is huge. As a self-employed person you have reached a very important crossroads. The whole point of this book is to show the individual how they can enjoy prosperity by employing themselves. What I have been referring to throughout this book is ‘the enterprise’ because I have been studiously and intentionally trying to avoid the word ‘business’. Businesses are monsters (sometimes benign) that, by virtue of their design, grow. They grow and grow until they employ you and you’ve got a proper job again. Therefore, when the coffee table boom occurs, you have to make a choice between two options – one of which will waft you away from my tender care in this book. You could start employing people to help you make the coffee tables; this is the start of a business. With that you must assume responsibility for those peoples’ place of work, their mortgages, their welfare, and when the coffee table crisis hits, you must take responsibility for those people and their problems as well as your own.

The alternative or second choice is to become a merchant on top of being a coffee table maker.

Master and Commander

Let me explain this as carefully as I can because this is the key to success in the whole self-employed thing. Taxi driver, coffee table maker or, yes, even burglar, if we can truly master the art of merchanting we can almost guarantee success. What bothers me is that so few people do actually MASTER the art. At the heart of this whole book is the concept of achieving our true value or, better still, more than our true value – and by that I mean our value in cash terms, to be paid as much as we are worth or even more than we are worth. We may feel that it is outrageous that professional soccer players are paid £200,000 per week. “No one is worth that,” we cry, but if someone is prepared to pay them that, then that IS what they are worth. They have found a customer (someone who pays them) who will pay that much for their work (the activity that they get paid for). What the true and skilful merchant can do is to find work for themselves and others. They can achieve the best possible payment for their and others’ work.

I have a friend who really is a taxi driver; I pay him to drive us about to our jobs but, more than that, he is very skilful at finding taxi work where others can’t. Therefore he finds more work than his own taxi can handle. This means that he is able to be a taxi merchant and any work he can’t handle he farms out to other taxis. Of course, he keeps the best jobs, and if work is short he is the last one to stop getting it.

It is a strange thought but if you are a merchant you will be providing others with work and you will be achieving their value for them. If you have a shop full of other peoples’ coffee tables and you are achieving a good price and you have created a high demand for them, the people who made those coffee tables will be achieving their value through your efforts.

EVERY BURGLAR NEEDS A FENCE

Even our friend the burglar needs a fence, a person who can launder their money or sell their stolen goods. If you consider the character Fagin in Oliver Twist as a merchant, he motivated the activities of his whole gang.

So now you have some tough decisions to make. Whatever enterprise you may be considering you will have to assess your potential as a merchant. If you feel that this is not for you then you must find someone who can merchant your work. You may have had one in the past; it is just that we tend to call them employers! There is nothing wrong in the idea of having someone who can merchant your work; in fact, at the very start of this book we identified that the key problem of being self-employed is finding enough work. The problem, as you may have already discovered if you are here through redundancy, is that the merchant can also withdraw the work. They make their money from the difference between what they can get paid and what they can get away with paying you. If they can get the work done cheaper elsewhere you could be in trouble, like when the big employer merchant moves their work to the Far East.

Then, on top of all that, there is always the problem that they might not be any good at being a merchant either. So if you need to use a merchant make sure that you stay vigilant about what they are achieving for you that you currently feel you can’t achieve for yourself.

GET OUT AND DO IT

What scares me are the people who set up as merchants in the shape of shops, coffee shops, garages or agents, and who have no skill or inclination as merchants whatsoever. A merchant is someone who, through the force of their skill or personality, makes things happen, who can conjure demand for work by their own driving mental effort. Although I have used this many times I think it all can be summed up with a tee-shirt I had when I was a hippy. On the tee-shirt are two vultures. One vulture is saying to the other vulture, “Patience, my arse! I’m going to go out and kill something!”

The other day I walked past a sandwich bar that had been open for a few months and, despite being what should have been the busy lunch period, the place was deserted. The people inside were standing around like very sad and very lonely vultures indeed, waiting quietly and patiently for the customers that would never come and the doom that surely would. I felt like getting in amongst them and shouting “Get out there and make it happen.” How, you may ask? The skill of merchanting ourselves is one we need to aquire – this skill will help us to choose our enterprise, to place it geographically, to price it, to market it, and to drive it upwards.