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SUPPLEMENTARY READING

The Court’s Cassis de Dijon principle

Financial Times, April 2010

Cassis de Dijon is a blackcurrant liqueur, commonly drunk with white wine. It was lawfully produced in France and contained 15 to 20% alcohol by volume. German law precluded the sale of any spirits of the category into which cassis fell unless they were of at least 32% alcohol content. A prospective importer was consequently advised by the German authorities that although there was no objection to the importation of cassis into Germany from France, it could not be marketed there. The importer initiated proceedings before the German courts to establish the incompatibility of the German rule relating to alcohol strength with Article 30 of the Treaty.

The rule was not discriminatory. It applied to all fruit liqueurs marketed in Germany without making any distinction according to origin. It was an indistinctly applicable technical rule. However, the subject-matter of the case was ample demonstration that the rule restricted free trade across national frontiers within the common market. A product lawfully produced in France was excluded from the German market simply because the rules in Germany differed from the rules in France. An obstacle to trade that led to the partitioning of the common market arose as a result of the different traditions of two member states. As might have been expected in the light of the Dassonville formula, the Court was persuaded by the fact that the German rule exerted a restrictive effect on trade that Article 28 was indeed capable of applying. However, the Court established a principle in Cassis de Dijon that represented an important new initiative in its Article 30 jurisprudence:

Obstacles to movement in the Community resulting from disparities between the national laws relating to the marketing of the products in question must be accepted in so far as those provisions may be recognized as being necessary in order to satisfy mandatory requirements relating in particular to the effectiveness of fiscal supervision, the protection of public health, the fairness of commercial transactions and the defense of the consumer.

The Court further emphasized that any measure taken to protect a ‘mandatory requirement’ must be proportionate to that end and must be the least restrictive of trade available. These principles are closely analogous to those that the Court has developed on the basis of the second sentence of Article 30. The Court therefore indicated that where the alleged objective could be achieved by a less burdensome rule – for example, a requirement that drinks be labelled clearly to show their alcohol strength instead of the imposition of an outright ban – then a state is not entitled to maintain its unduly onerous rule.

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Start-up capital Financial Times, April 2010

The capital is there, but an aversion to risk and bureaucracy is preventing it being channeled to Europe’s entrepreneurs

The vision of European Union countries being at the forefront of the Internet revolution is exactly that – a vision. In fact, high-tech entrepreneurs are being left unfinanced, ideas are going begging and talent is going overseas. That, at least, was the message that made listeners sit up at a seminar in a dreary conference room in Monte Carlo. They paid even more attention when the figures backing the message up were brought out.

Jacques Michel, vice-president of the European Patent Office, said the amount of early stage capital available in the US and the EU was broadly similar – about $ 9,4 billion last year in the US and $ 8,5 billion in the EU. “In the US, 50% of this is allocated to the information technology sector. In the EU, it is seven per cent. The difference is allocation is startling. The US has a head start, and in this business it is first come, first served”, he said.

Mr. Michel was speaking at this month’s European Inventions Competition, an annual event designed to celebrate Europe’s ability to generate ideas, finance them and take them to market.

But this year, a disturbing message emerged. The life blood o the Internet economy – small, start-up, innovative, high-tech companies at the leading edge of the industry – are being stillborn through lack of capital. Participants at the seminar all told the same story – Europe is risk-averse; there are barriers to investment; the seed capital market is immature, research is left unfunded, and the EU’s place in the new economy is being undermined.

In a report, the commission offers ambitious targets and promises to overhaul the way seed capital finds its way to entrepreneurs. It says it will “propose innovative forms of capital rising, including public-private partnerships coupled with refocusing some Community spending”. The commission’s plans have fuelled the long-running debate about its role in the European risk-capital field.

James Dobree, chief executive of Zygon, an Internet software company based in London, and also an adviser to the commission, said the commission was going about things completely the wrong way. Using public money or reallocating EU spending were ideas that smacked of bureaucracy and centralized control, he said. “The fact that they think public money will help indicates how behind the times they are. No Internet entrepreneur is going to try and access public money – it comes with too much baggage”.

Instead, Mr. Dobree restated growing calls to empower the private sector by reducing the tax it pays on capital gains. In the US, capital gains tax is 20%, much lower than any of the varying rates across Europe. In the UK, the tax is 40%. “In Europe, this money gets creamed off by the government. Instead, it should be kept in the hands of the people who can make things happen”, he said.

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Customer’s loyalty Financial Times, January 2104

Organizations with successful customer-responsive strategies are alike in a number of ways. There is a willingness to serve customers differently, with the best customers getting the best treatment. The airline industry, for example, has created multi-level frequent-flyer programmers, with dedicated reservation lines, priority upgrades, and rapid check-in privileges and so on to recognize the best customer.

Decisions are based on detailed information about customer. Databases pull key data from internal operating systems (such as a retailer’s transaction system) and merge it with information from external sources. This enables database marketing and “micromarketing” campaigns.

A “have it your way” attitude prevails. This can range from tailoring messages in the US, which is customized according to the age of the buyer’s children to Nordstrom’s department store allowing its clerks to go through the entire store to put together clothing ensembles for their customers.

A customer-responsive strategy is likely to gain an advantage if it:

–delivers superior customer value by personalising the interaction;

–demonstrates trustworthiness;

–tightens connections with customers.

Too often, these are only traditional mass-marketing efforts that overwhelm consumers with too many products, message and appeals for personal information. Often they are badly designed, as when a bank’s “privileged” customers were sent of special credit-card raters that were normally available only to new customers. A lot of money has been wasted on short-term rewards through gifts or one-time reductions foe loyal customers. These are nice to receive but do nothing to strengthen the relationship.

There was a time when there were no loyalty schemes in the UK grocery market (with the exception of Co-op’s stamp scheme), but once Tesco started its scheme, all the others were forced to do the same. No doubt Tesco benefited because it was first, but for the rest, the frequency rewards became a costly burden. Once everyone has a programme, most customers are able to obtain points with whichever shop they use and loyalty patterns remain unchanged.

The difference between repeat behavior and loyalty is that the former is for sale while the other is earned. This sums up why gifts and other one-time rewards have little lasting impact – they demonstrate neither more benefits nor lower costs that the competition.

Guarantees, by contrast, build trust by symbolising a company’s commitment to fair play with its customers. They also maintain the pressure on the entire organisation to continue to improve performance in order to avoid the costs and conflicts created by frequent payouts and replacements. Guarantees can also put intolerable pressure on competitors if they cannot match the terms. Xerox

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gained 4,5 percentage points of the office copier market when it introduced a

“no questions asked” guarantee whereby customers could decide they wanted the copier replaced.

SUPPLEMENTARY READING FOR RENDERING

Money Rules You Should Break

Roger Sorensen

When it comes to learning fiscal knowledge, some lessons result in better memories than others. One of the most satisfying lessons I have ever learned is that there are rules simply made to be broken.

Rules that produce benefits for everyone are not what I am talking about.

These “good” rules include not cutting in line at the grocery store, at a 4-way stop the driver on the right has the right-of-way, and paying your taxes on time keeps the government operating. These are all good rules and should never be broken.

You, as a consumer, are must discern what type of rules are critical to be break. These rules are created by commercial businesses for their own benefit. The enterprise isn’t trying to help you with their regulations; they are looking out for themselves. This kind of thinking survives because we, the consumer, are intimidated when told “That’s against our rules. You can not do that”.

All consumers can benefit by learning to question the statement of “You can’t do that”. Once you learn how to do it, you might find it an enjoyable, and profitable, experience.

Rule #1: You Break It, You Bought It

Some time ago I passed the time in an airport gift shop waiting for a friend. Startled by the sound of breaking glass, I turned around to see an active youngster standing next to a shattered glass vase. The stern faced store owner pointed to a sign reading “YOU BREAK IT, YOU BOUGHT IT”. He then had the audacity to demand $49.95 for the vase. The young mother, clearly distraught, stood her ground and said “No”.

By the time I left, the woman and her child had left, the store owner was cleaning up the glass and I was amazed that someone else knew the truth about business. The truth is, accidents are apart of doing business and breakage is a legitimate tax deduction.

I suggest that if you do accidentally break something in a store, earnestly apologize and keep your wallet firmly in hand. If you want to pay to ease your conscience about being a bumble-bottom, fine. But only pay for the actual cost of the item as verified by the invoice, never allow the store owner to make a profit on your accident.

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Rule #2: A CD Grace Period is set in Stone

Banks are extremely skilled at intimidating their clientele. They are also good at maximizing their profits. I allowed a CD to automatically roll over at a large bank instead of bothering to actually go to the bank and take care of it myself. In my defense, I mistakenly assumed the interest rate would be the same as the expiring rate.

Unfortunately, by the time I bothered to look at the paperwork and discover the rate was less than half of what I had been earning, the grace period of changes was over. When I called, the customer service person told me “Once the grace period is over, there is nothing I can do.” Nothing he could do, but I politely asked to speak with a supervisor. Within a couple minutes I was granted a

“promotional” rate equal to the one I had been earning on the expired CD.

A lesson can be found here about the trustworthiness of banks. As quickly as they adjusted my CD rate made me wonder how many other patron were letting the bank dip their fingers into their cookie jar.

Rule #3: The Insurance Agent Always Knows Best

People selling insurance are imaginative creators of rules to help themselves make a larger commission and the companies they work for are no better. An example here is “dwelling coverage”. This amount is what the insurance company will pay if your house burns down or is destroyed somehow necessitating you to rebuild.

If you try looking for more information in your policy, there isn’t much. Inquire of your agent how they arrive at the replacement value of your home and the premium you pay and you might get an answer similar to “The computers calculate that automatically, it works the same for everyone”. In my case, the last premium notice I received had the replacement value of my home considerably higher than its market value. I called my agent again. He explained if my home was destroyed the insurance company would rebuild it for me, which would cost more than buying an existing home.

Good sound bite, but I would still have to pay a higher premium to buy coverage insurance my home for more than it’s actual worth. While on the phone, I lowered the coverage to the market value and saved nearly $100 immediately. I know if something happens, I will only receive market value for my house. However, that will be enough for me to buy an existing house and not have to go through the headaches of building one.

Rule #4: Warranty Cards are Mandatory

I used to thing I wouldn’t have any warranty coverage on my stuff if I failed to return the little card manufacturers enclose with any new product. Do you still think that? It’s what manufacturers want us to believe.

Their reason is simple – the manufacturers use these cards to gather marketing data about their consumers: age, income, where they shop, etc. Plus, if there is ever a recall on the product, they have a name and address to contact you.

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That is the only reason I ever fill out and return one of those cards, and then only with my name, address and product serial number filled in. I know there is still warranty coverage even without the card, so why spend my time helping the manufacturer gather marketing data for free?

Rule #5: Social Security Number Requirement

Lately, the crime of identity theft has been increasing in coverage on the news. Identity theft is when a crook obtains enough information about you to make credit purchases in your name, leaving you to explain that you have never flown to Australia. What information do the crooks need to know about you? Your Social Security number and name is all. That’s why it is important to never divulge this information to anyone unnecessarily. In fact, the only reason you have to give it to anyone is because the government wants information about you. Your employer needs it to report earnings, banks and financial institutions need it to report earnings, and the IRS wants to collect their taxes on your earnings.

Lately, insurance companies want to run a credit check on you, and credit issuing companies want to run a credit check on you, and for this they need your Social Security number. Federal law prohibits credit grantors from denying you credit without telling you the reason – if you ask. So be sure to ask, and always shred any document with your personal information like name and/or Social Security number before throwing it in the trash. It is up to you to take as many precautions to protect your number as you can.

Rule #6: Contractors Are Paid Up Front

Some questionable rules are created by individuals. Remodelers such as carpenters, housepainters, roofers and drive-way repair persons have an interesting rule they want you to believe is etched in stone. This rule says “You are required to pay 1/3 of the project costs up when you sign the contract”.

I’ve learned that with contractors it is easy for them to be sidetracked when a more profitable job comes along. To counteract this understandable issue, I change their rule to “I’ll pay 1/3 after the materials are delivered and the job started”.

All legitimate contactors will agree, in my experience, once you politely explain to them why you are doing it this way. He may still get sidetracked, but at least he won’t be using your money before starting your project.

Rule #7: Sign on the Dotted Line

Never sign any contract without reading it carefully. This includes all the fine print, so take a magnifying glass with you.

You say you never sign contracts without reading them? Good for you. Does this include everything you affix your signature to? You know the lease, bill of sale, rental agreements or credit card slip all constitute a contract. Once you sign, you have agreed to all the terms of the contract, even the ones you don’t understand or think are e “unfair”.

When you start calling attention to provision of contracts you don’t like, you may be told “That’s our standard contract. We can’t change it”. Wrong, they

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can and most will if it means the difference between making a sale or you walking away.

Leases are good examples of changing contracts. If you are a desirable renter, the landlord may make certain improvements instead of renting “as is”. If you find clauses undesirable, and the landlord won’t remove them you would probably be better off renting elsewhere anyway.

The time to check over a contract is before you sign, not after you have signed it and are home again. A friend of mine leases things like cars and office equipment for his business and he claims to have never signed a lease without changing at least one phrase.

Go ahead and try being a rule breaker. You might like it and it could save you headaches and money, too.

Easy Ways To Organize Your Business Finances

Mike Peterson, the Vice President of American Credit Foundation

Whether you are a new entrepreneur or a more experienced business owner, taking control of your finances can feel like a part-time job. Some simple tips can help you streamline your time, organize your finances and reduce the stress of business money matters.

1. Keep Your Bills in One Place

When the mail comes, make sure it goes in one place. Misplaced bills can be the cause of unwanted late fees and can damage your credit rating. Whether it’s a drawer, a box, or a file, be consistent. Size is also important. If you get a lot of mail, use an area that won’t get filled up too quickly.

2. Pay Your Bills on Schedule

Bill paying can be simplified if it’s done at scheduled times during the month. Depending on how many bills you receive, you can establish set times each month when none of your bills will be late. If you’re paying bills as you receive them, chances are you’re spending too much time in front of the checkbook. Although bills may state “Payable Upon Receipt”, there’s always a grace period. Call the creditor to find out when they need to receive payment before the bill is considered late.

3. Read Your Credit Card Statements

Most people take advantage of low interest credit card offers but never read their statements when paying the bill. Credit cards are notorious for using low interest as bait for new customers then switching to higher rates after a few months. Make a habit of looking at your statement carefully to see what interest rate you are paying each month and if any transaction fees have been applied. If the rate increases or a transaction fee appears on your statement, a simple call to the credit card company can oftentimes be beneficial in resolving the matter. If not, try to switch your money to a more favorable rate.

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4. Take Advantage of Automatic Payments

Most banks offer a way to automatically deduct money from your account to pay creditors. In addition, the creditors usually offer a lower interest rate when you sign up for this payment option because they get their money faster and on-time. Consider it as one fewer check to write, envelope to lick and stamp to buy. Just make sure you record the deduction when the automatic payment is scheduled or you run the risk of bouncing other checks.

5. Computerize Your Checkbook

Using a software program is a handy way to organize your finances. Whether it’s Quicken(r), Microsoft Money(r) or another package, these easy-to- use programs make bill paying and bank reconciliation a cinch. Computer checks can be ordered almost anywhere and fit right into most printers. Once the checks are printed, all of the information is automatically recorded in your electronic checkbook. Furthermore, many banks have direct downloads into these software packages so when money is deposited or withdrawn, the transaction is entered immediately onto your computer. And, when it comes time to do taxes, it couldn’t be easier.

6. Get Overdraft Protection

Most banks have a service where, if you run the risk of bouncing a check, the money will come from another source. For a nominal fee, the bank will link your checking account to either a savings, money market, or credit card so the embarrassment of bouncing a check will be avoided. Call or visit your bank to learn about this convenient feature.

7. Cancel Unused Accounts

Whether it’s a credit card or bank account, write a letter requesting that the account is formally closed. Not only will this improve your credit score, it is a useful way to avoid money from being scattered all over the place. Don’t let department stores and credit card companies lure you into opening new accounts by offering favorable interest rates and purchase discounts. It’s easy for credit to get out of hand by taking advantage of every credit offer that comes your way.

8. Consolidate Your Accounts

If you have several credit card accounts with outstanding balances, try to consolidate them into one. Be careful and check the balance transfer interest rates and one-time fees. Also, make a list of all your open Money Markets, Savings, CDs, IRAs, Mutual Funds, and other accounts to see if any consolidation can be done. Keeping your money in fewer places eliminates all of the guesswork involved and reduces errors.

9. Establish Automatic Savings

Create a link from your checking account into a savings account that will not be touched. This can usually be done through the banks and automatic

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amounts will be transferred over each month. Most people will not put money into a savings account on a regular basis. They may wait until a large tax refund check arrives or some other event to actually deposit money into savings, retirement or other accounts. If you establish an automatic savings deposit every month, your accounts will begin accumulating money faster than you think.

10. Clean up Your Files

Make sure your paid bills are organized in a filing cabinet. Keep individual files for paid bills. Go through your files at the end of each year and throw out bills and receipts no longer needed for auditing purposes. Contact your local IRS office to see how long records need to be kept for audits. Usually federal tax return audits can be done three years back but cancelled checks may need to be kept for seven. Consult the Internet for auditing and records-keeping procedures for your state or region.

Fast, Cheap & Easy Marketing Tools to Generate More Clients

Connie Scholl

There are countless low-cost things you can do to promote your business. Here’s ten of my favorite:

1.Always be prepared with an “elevator speech”. When you meet new people talk about the benefits associated with the service you provideNOT the actual process of how you achieve these benefits. In a nutshell, let prospective clients know how your service can solve their biggest problem.

2.Network and set goals. When attending events, workshops or meetings, don’t sit by people you know. Hello? The point is to meet new people! Make a goal of meeting 3–5 new people at each event. Be interested in others, get their business cards and ask lots of questions. The more you know about their challenges, the better you can position yourself to help them.

3.Joining various clubs or groups is another way to promote your business. Every community has organizations such as a Chamber of Commerce, Rotary, BNI (Business Network International). These are excellent places to meet people and talk about what you do. But don’t join if you are not going to participate. Simply being on a group’s mailing list will not help you build the kind of relationships that will generate clients or interest in your business.

4.A great way to meet people is to volunteer in your community. Besides the great feeling you’ll get by giving to others, other volunteers will generally ask what you do. Wearing a shirt or hat with your business name will be a reminder of the type of services you provide.

5.Teach a class through the local community education program.

Community education programs attract people throughout your local ser-

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vice area. Teaching a workshop will help you make new contacts and also establish you as an expert in your field.

6.Ask for referrals! There is nothing wrong with asking your current clients if they know of others who might benefit from your services. In turn, you should be interested in their business if they have one, and be sure to promote them when the appropriate situation arises.

7.Create strategic alliances with other professionals with noncompeting businesses. As a professional service provider, it’s important to develop relationships with non-competing professionals so you can comarket and pass referrals. For example, if you’re a massage therapist, a perfect strategic alliance for you would be a personal trainer and/or a chiropractor.

8.Write a press release and announce things that are happening in your business. New location, advanced certification, anniversary, etc. Most newspapers will print announcements/stories on local small businesses in their business section.

9.Take advantage of e-mail. You never know where you emails are going to end up. Make sure to include a signature line in your e-mail that includes your business name, website (if you have one) and a line or two about your business.

10.Establish a website presence. Today people surf the web for information on almost all the products and services they buy. You can post a tremendous amount of information about your services, background and expertise on a basic website. If you don’t have one, GET ONE!

10 STEPS TO PROMOTE YOUR BUSINESS

Jo Hill

1.Word of mouth is the most cost-effective, powerful form of promotion. Write a list of 50 people you know but don’t see regularly – relatives, friends, ex-colleagues etc. Send each of them a friendly email or postcard to let them know what you’re up to. Ask them for feedback, advice or contacts of anyone who might be interested in hearing about your business. Don’t be shy! People love to help.

2.Networking may seem intimidating but there are ways to make it less scary. Don’t feel you have to sell, sell, sell – the number one rule of networking is to listen. It’s about building relationships – go to a networking event looking for opportunities to help others. Ask questions, gather information, offer contacts and advice – people will remember you for it. Networking PLUS is Business Link’s popular monthly speed-networking event.

3.Business cards need to stand out from the crowd. Get a new batch printed on unusual material – textured card, plastic, wood – or make it an unusu-

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