What do you wish someone had told you

Ninn · #1 05/01/09, 09:58 AM

BEFORE you started setting up your home business? I've decided to focus my energies on my crochet business. (Thank you, WIHH!) Since I primarily crochet for children, the business is called Baby's Britches. The website is still under construction, using free hosting until I get all the bugs out. I'm taking all new pictures of the items I already have in stock, and finding public domain pictures for items I can and do make regularly. I've applied for my business license and tax id numbers. I'm working up a business card that can also be used as a price tag on items. I've downloaded quickbooks and purchased a separate file box for business related receipts. (yay! yarn shopping is now a tax deductible expense!) My paypal is up and running, and takes credit cards. I'm in contact with my local SBA office, as well as SCORE.

What did you wish you knew before you started? What did you find out on the journey that will help me not to lose my mind as I try to get this business off the ground? Any and all help is appreciated!

mistletoad · #2 05/01/09, 10:12 AM

I used to have a custom knitting and design business back in the '80s and one thing that made life much easier was sticking to a few good yarn suppliers. Labeling laws are very strict and having to get new labels made each time you find a new yarn is a huge expense.

Ninn · #3 05/01/09, 11:33 AM

Mistletoad-labelling laws? Nearly everything I make is pretty much a custom order. The client determines the yarn type. While most is acrylic, some are natural fibers due to allergies or personal preference. How should I handle this? Do care and content inserts count as labels?

mistletoad · #4 05/01/09, 02:59 PM

It's been almost 20 years since I last looked up the laws, but there are plenty of them and they probably haven't become any less strict. Used to need a permanent affixed label showing the yarn content by percentage (anything over 5% had to be included), along with the country of origin of the yarn, washing instructions and the manufacturer's name. There may be more, the full info is on the FTC site at:
http://www.ftc.gov/bcp/edu/pubs/busi...1.shtm#covered

Tracy Rimmer · #5 05/01/09, 04:15 PM

Two things I've learned that I tell every person I know who mentions starting a business:

1) NEVER go into business with friends. Ever. Just don't. If you do, kiss the friendship or any money you invest in the business goodbye -- probably both.

and 2) Deal with ALL mail (especially government stuff) THE DAY IT ARRIVES. Deal with it, file it and be DONE with it.

Cassie · #6 05/02/09, 01:13 PM

Well, we were young...guess that's my excuse. But I wish we'd known more about taxes. That ss tax, aka self-employment tax, is HEFTY. We got into a lot of trouble with taxes and it took us years to pay it off. They will always take more than you think. If you forget a quarterly payment (because you just don't have it) you get slammed with a penalty--on top of NOT having the money in the first place. We have thought about self-employment again and here's our prerequisites before doing so:
1) NO debt. (Finally there)
2) Healthy savings account for those bad months you WILL have when self-employed. (Working on it)
3) Livable income while building the business. (He has to hold on to that crappy job until he can re-build his appraisal business)

In the last three years I've studied marketing and advertising. I've read every book I could get a hold of and taken two copywriting courses. NOT KNOWING ANYTHING ABOUT MARKETING WAS OUR BIGGEST MISTAKE!

Sweet Tator · #7 05/02/09, 06:08 PM

Quote:

Originally Posted by Ninn

BEFORE you started setting up your home business? I've decided to focus my energies on my crochet business. (Thank you, WIHH!) Since I primarily crochet for children, the business is called Baby's Britches. The website is still under construction, using free hosting until I get all the bugs out. I'm taking all new pictures of the items I already have in stock, and finding public domain pictures for items I can and do make regularly. I've applied for my business license and tax id numbers. I'm working up a business card that can also be used as a price tag on items. I've downloaded quickbooks and purchased a separate file box for business related receipts. (yay! yarn shopping is now a tax deductible expense!) My paypal is up and running, and takes credit cards. I'm in contact with my local SBA office, as well as SCORE.

What did you wish you knew before you started? What did you find out on the journey that will help me not to lose my mind as I try to get this business off the ground? Any and all help is appreciated!

The best (and cheapest place around for business cards is www.vistaprint.com I just checked and they have cards (I think it's around 250 for $3.99.) These are not custom cards, those cost more. But they have dozens of designs, and I'm sure you could find a cute one for kids and just put your company info on top, and leave the body of it blank if you want to use it as a "price tag". Then you could splurge another $3.99 and make up a batch with the rest of your business info on it to use as a real business card.

I have about a dozen different business cards (all Vistaprint) for every facet of my business, (speaking, consulting, etc.) and a separate one for each book (I'm a book publisher).

Spend the extra dollar or so to get them glossy. The difference between the flat and glossy is world's apart, and the glossies are really classy.

Anyway, look over their site and I'll bet under the kid designs, you can find one that will work.

Good luck on your business. It sounds really labor intensive. I hope you can make it pay. Sweet Tator

Sonshine · #8 05/02/09, 06:53 PM

That as your own boss you don't get breaks and days off and you work longer hours than anyone else.

Cassie · #9 05/02/09, 07:15 PM

Quote:

Originally Posted by Sonshine

That as your own boss you don't get breaks and days off and you work longer hours than anyone else.

Ooooh, that is so true and it reminded me of something else. When you work from your home some people won't take your business seriously. They'll think they can just drop over or that you can run errands or commit to things because you don't really "work". People always thought I could babysit for them and I had to explain that during the weekdays our home is a place of business and it's not professional to be on the phone with screaming kids in the background.

Harry Chickpea · #10 05/03/09, 10:35 AM

It really pays to set up as a sub-chapter S corporation and have a good CPA. Yes, there are corporate costs, but you will more than make those back if your CPA knows all the legalities. There is simply no way that an individual can learn and understand the ramifications of all the tax laws and run a proper business at the same time. Remember that the government has been lobbied HEAVILY by corporations for years to get tax breaks. Why shouldn't you take advantage of those breaks? The single proprietor of a business is the most likely person to have an excessive tax burden.

Other major advice is:
1. Get into something you already know - I knew how to program computers and I knew my market before I started my business that was based on a computer program I made. Learning curves are hard enough without having to start at the bottom.

2. Have a repeatable product. Gillette gave away razors and sold the blades. If you can find a market like that, jump on it. You can't make consistent money jumping from one product to another.

3. Constantly evaluate the time spent and where you are heading. Be realistic. On a previous business, I invested about all of my free money, and determined within 3 months that it wasn't working. I cut my (substantial) losses, went back to working for someone else, recouped, and later was able to start out in a different area.

4. Find the lowest costs to you for your raw material. A major part of my business has been a specialized printed product. I priced it from a huge number of different printers before I found one that could do it at a cost where I could make a profit. I got a non-compete agreement from that printer. When competitors and customers tried to undercut me, most of them found it was impossible.

5. Be prepared to have ideas stolen. If you succeed, it will happen. Understand that up-front and be prepared to deal with it. Unless that thief has deep pockets and more drive than you, you have the advantage and will outlast them.

6. CYA. Make sure you aren't on the hook for major liabilities. Keep customers OUT of your home, insure yourself if your product has any possibility of being dangerous. Write your standard terms of sale to your advantage and print them on every invoice. Don't ever give a sleeze customer the chance of saying "I expected that..."

7. Limit the credit you extend. If a customer drops off the face of the earth, you have to be able to cover your losses.

8. Whenever someone wants something shipped "Right away! It is an emergency!" know that 99.9% of the time they have absolutely no intention of paying you. The reason for the rush is to break down your normal barriers of caution and not give you time to think. In those cases you MUST get payment up-front, by whatever means, be it wire transfer or Paypal or cash in hand. Do not accept bank checks, cashier checks, or credit cards in those cases. Those will bounce or be charge-backs.

9. Oh yeah. Don't be afraid to fire customers. There are 1% of customers that cause 90% of the aggravation. Even if they bring in a lot of cash, consider dumping them. They aren't worth it in the long run. While you are at it, NEVER set yourself up so that one customer becomes more than 30% of your cash flow. If they leave, your business may not recover. If they push you, you'll have no option but to acquiesce.

pinemead · #11 05/04/09, 01:44 PM

Do not accept bank checks, cashier checks, or credit cards in those cases.

Please explain why a cashier check is risky. I always thought they were like cash. What am I missing?

EarthSheltered · #12 05/04/09, 03:33 PM

Quote:

Originally Posted by Harry Chickpea

It really pays to set up as a sub-chapter S corporation and have a good CPA. Yes, there are corporate costs, but you will more than make those back if your CPA knows all the legalities. There is simply no way that an individual can learn and understand the ramifications of all the tax laws and run a proper business at the same time. Remember that the government has been lobbied HEAVILY by corporations for years to get tax breaks. Why shouldn't you take advantage of those breaks? The single proprietor of a business is the most likely person to have an excessive tax burden.

{SNIP}
5. Be prepared to have ideas stolen. If you succeed, it will happen. Understand that up-front and be prepared to deal with it. Unless that thief has deep pockets and more drive than you, you have the advantage and will outlast them.

7. Limit the credit you extend. If a customer drops off the face of the earth, you have to be able to cover your losses.

8. Whenever someone wants something shipped "Right away! It is an emergency!" know that 99.9% of the time they have absolutely no intention of paying you. The reason for the rush is to break down your normal barriers of caution and not give you time to think. In those cases you MUST get payment up-front, by whatever means, be it wire transfer or Paypal or cash in hand. Do not accept bank checks, cashier checks, or credit cards in those cases. Those will bounce or be charge-backs.

9. Oh yeah. Don't be afraid to fire customers. There are 1% of customers that cause 90% of the aggravation. Even if they bring in a lot of cash, consider dumping them. They aren't worth it in the long run. While you are at it, NEVER set yourself up so that one customer becomes more than 30% of your cash flow. If they leave, your business may not recover. If they push you, you'll have no option but to acquiesce.

These 4 points listed above really hit home for me. I started an fairly unique equine related business ten years ago, there was only one other in the US at that time. While I knew if I was successful, there would be 'copycats'. I did not mind that, as long as they did it well. What I do mind is all the time I spent answering the phone and e-mails from 'potential customers', who turned out to be competitors. Took me a while to catch on, you tend to take people at face value, if you are an honest person yourself. What really burned

my chaps were those who started the same business, then proceeded to bad mouth me in the relatively small equine community that can afford this service. They never met me, never visited my farm, never had me do this service for them. Just bad mouthed me so they could get the business.

Thankfully, time has proven that if you provide a good, honest service, your customers will return. I haven't had to advertise in years.

I have had three deadbeats in this business, all three of them had the warning signs listed above. I had to do this ASAP!! It was important that I said yes, we would iron out the details later...they intended to pay, but their mother/sister/brother/son'/daughter/husband was just diagnosed with cancer/aids/heart disease, etc. Clearly, I am a sucker. I let my DH deal with these people, he is not a sucker. We ended up asking all three to leave, the last one is still bashing me on equine bulletin boards. I've learned its better to ignore it, then respond, as they are a member of the 'wealthy equine community' and I am not. It is depressing when stuff like this happens to you, you just want to do your job honestly, and to the best of your ability, and not deal with the fruitcakes. I no longer take 'walk in' customers, they all have to be referred by my good customers, or I won't do it without a credit check.

Get used to people making rude remarks about how nice it is to work from home, making money hand over fist

I used to respond that yes it was great to be working seven days a week, 12-14 hours a day, with no paid sick days, vacations or health insurance. But people don't believe you anyway. Having your own business, and being successful at it (and both DH and I are successful at our respective non-related businesses) shows you just who are your friends, and who are just jealous aquaintances. Those are the same people who will show up when the SHTF because you have so much, surely you won't mind sharing? (geez, starting to sound bitter, aren't I?) But they never look at all the things we have had to give up to get to where we are today...

Anyway, certified bank checks can be made on a computer nowadays, as I found out when burned by one of my deadbeats above. I ended up setting up an account just for people like that to wire money into, which immediately got taken out, and put elsewhere.

That said, I have met a lot of great people in my business, a few of which have become friends. I do something I enjoy, and while all the work is mine to do, so are all the profits. I can go to lunch with my dad, and go plant shopping for their garden afterwards, with no reprecussions. On a beautiful day, I'm either working in my gardens, or riding my horses

I live in a beautiful spot, which we own outright, thanks to the hard work of DH and myself.

foxtrapper · #13 05/06/09, 06:24 AM

Quote:

Originally Posted by Ninn

BEFORE you started setting up your home business?...What did you wish you knew before you started? What did you find out on the journey that will help me not to lose my mind as I try to get this business off the ground?

How easy articles of incorporation are to draft and submit.

How easy the IRS is to deal with as a small business, especially as a small corporation (and even as a sole proprietership).

How difficult it is to get the advertising right, so customers will find my product, want my product and buy my product.

How little money I will make for the hours I will work when compared to even slinging fries at McDonalds.

How useless and illegal most of the claimed benefits of owning a business are, particularly the write-offs.

How important a commitment and a fire in the belly are.

How destructive to a passion making the change from a hobby to a business venture can be.

Ninn · #14 05/06/09, 08:06 AM

Quote:

Originally Posted by foxtrapper

How destructive to a passion making the change from a hobby to a business venture can be.

This one actually has me quite worried. I love to crochet, but I never wanted to look at it as work. Now, I'm worried that I will cringe when I look at my hooks and books! Currently, new projects and ideas still excite me. However, I don't want my favorite hobby to turn into something I resent. How do I avoid this?

foxtrapper · #15 05/07/09, 05:47 AM

Quote:

Originally Posted by Ninn

This one actually has me quite worried. I love to crochet, but I never wanted to look at it as work. Now, I'm worried that I will cringe when I look at my hooks and books! Currently, new projects and ideas still excite me. However, I don't want my favorite hobby to turn into something I resent. How do I avoid this?

Many years ago I read a thing in Readers Digest about two salesmen who were working together one day. Typical long day on the road. One of them was exhausted at the end of the day, the other was quite chipper. The exhausted one asked the chipper one what was his secret. The chipper one replied that while his exhausted friend had been driving for work all day, he, the chipper one, had instead been out for a drive all day.

mtnest · #16 05/09/09, 10:27 AM

Quote:

Originally Posted by Ninn

This one actually has me quite worried. I love to crochet, but I never wanted to look at it as work. Now, I'm worried that I will cringe when I look at my hooks and books! Currently, new projects and ideas still excite me. However, I don't want my favorite hobby to turn into something I resent. How do I avoid this?

Setting a specific "line" will provide you with items you will be able to "do in your sleep" and that's going to be your money maker... those things you will find yourself making over and over and over. Make them as simple or as detailed as you like but those are the things you will be relying on to bring in the money so time yourself (at a comfortable working rate with no pressure) and see how long each of them will take you and if your hands,elbow,back etc can handle the possibility of spending many hours doing the process.
Keeping yourself from becoming overwhelmed by orders and losing the joy of doing your hobby and eleviating the frustration of your hobby now being "work" will come from intigrating "limited time only" or seasonal designs that will give you an outlet for your creative side and keep things fresh amidst the "business" side of things.
Anytime a person takes their passion from hobby to business they face the reality of burn out at some point. Plan ahead for this by sitting down and making a list of "special" items you want to offer for each month of the year. You can make them seasonally appropriate or just whatever floats YOUR boat. Specialty items should give YOU the opportunity to explore and have fun, don't ever let your customers dictate what you decide to do to stimulate your creative side. Keeping your passion for what you are doing is IMPERATIVE to maintaining your sanity and keeping your product line fresh and new for your customers.

Just my thoughts as I am in the planning stage of re-opening my soap business again. Lots of "not gonna do THAT this time around" thoughts lol

livefrugal · #17 06/02/09, 02:06 PM

Testimonials! Get these as soon as possible.

This is a tip I got from my Dad who runs a business teaching other small business owners about marketing:

When you are designing your business cards, make sure to put a testimonial on the front. For example, you would have your business name

"Baby's Britches" at the top
A picture of one of your cutest pieces
and a quote from a customer, something like "So cute! My daughter loves her Baby's Britches mittens!" -Teresa S., Scranton, N.J.

Having testimonials on your business card and website lets people know that other people have bought your products and makes them feel more confident purchasing.

How do you get testimonials? Simply ask for them. If you have friends or family you have already done work for, ask them if they will write something down about your products that you can use.

Elie May · #18 06/03/09, 04:24 PM

1) Don't bend your rules for any reason-If you require a deposit then demand you get it. The ones that you let slide are the ones that will teach you a lesson.
2) Never work for family or friends-they want it all for free and then they ask for too much of your time.
3) Learn to say no-if your gut says that person is going to be a PITA-then don't take the project. My past experience has always proven that gut feeling to be right!

MorrisonCorner · #19 06/05/09, 06:43 AM

Take advantage of modern technology: Twitter, Facebook, Blogging, to build a community and added value to your business.

Set up a specific time during the day to work your business.. don't be haphazard about it. I do my best work between coffee and feeding the animals, usually in my pajamas, but when I knuckle down to the serious work of the day I am dressed for "office." For two reasons: one, dressing for success helps keep me focused. And two: if I suddenly have to run out and meet with a client I am prepared for it. I learned very quickly that showing up in blue jeans and a sweater does not have the same impact as showing up in a business attire.

crtreedude · #20 06/20/09, 08:06 PM

Build your company assuming you will be successful. We did that, but we weren't ready for HOW successful, so I just got done rewriting all the systems, again.

Lots of successful companies are a total disaster when it comes to their financial and record keeping.