Opening Your Own Business

A note from Phil:

 Every week, I am asked questions by my dear customers about opening their own home business...how to do it, what to do, what to sell, how to gain a market, and so many other questions. Although I love talking to all of you, I just plain old no longer have the time, for Rhinestone Guy has become a major force in the Rhinestone world. Therefore, I am writing the basics of what I have found to work, and what I have found to not work...trial and error, the old fashioned way. For those of you who are interested, there is a 10 page section on Opening and Running a home business in the Ball Gown Manual.

I will try to highlight the issues of a home business below:

• The very first thing you must decide - Do you really want to do this? Keep in mind that once you have a running business in your home, you will never be away from it, PERIOD! Your phone will ring day and night, when and if you have "rest time," you will be thinking and working on your business, for you are still at the "office." IF you do take time for yourself, you will feel guilty that you aren't working, for you are still at the "office."
• OK, you didn't listen to step # 1. You are determined to break free of the "work for someone else" bull that has you depressed, irritated, and, in general, an unhappy camper. You are determined that you will make it on your own. DETERMINATION...the first requirement for a successful business. Know that you will spend 15 hours per day during the first year to make it work. You will have many surprises along the way, some of them pleasant.
• Don't Quit Your Day Job! At first, you will have inordinate financial demands that will not be met by your business. This is called "Speculation" or "Spec Expenditure." You must be willing to literally throw away the money you spend on firing up this business, for you may well be doing that.  Here is where tremendous DETERMINATION will come into play.
• Don't listen to everyone who will be poo-pooing your ideas. If your ideas are sound and excite you, then charge ahead. I strongly suggest sitting on any idea for about 1 month...don't forget the idea, don't put it out of your mind...think about it, SERIOUSLY think about it. Think of all the down sides, the up sides, the sideways sides. Think of the money requirements. If, after one month, you are still fired up, then begin to move towards the goal of your own business.
• Don't turn a hobby into a business...that is a sure way to have no interest in your hobby ever again. Of course, your hobby may lead to your business, but trust that it will no longer be fun and games, it will be, forever more, WORK! And if you are still thinking that it will be as enjoyable as it is as a hobby, you are barking up the wrong tree! From here on out, know that if you enjoy applying rhinestones to a cell phone at your leisure, it will not be leisurely when you have to produce 20 phones in one day just to answer orders. (Clients really hate it when you come up with excuses as to why their phone is not ready when you said it would be...they just have NO understanding, what so ever).

I see you have decided to ignore all my warnings and plunge, head first, into your own business.....GOOD FOR YOU! We all cannot be bosses, but there is a significant number of us who can be, and you are one of them. Just know now, that as your own boss, you will be told what to do, when to do it, and how to do it, NOT just by one boss, but by your employees (if it comes to that) and by all your clients...over and over again. Do not think that having your own business is a way to achieve emotional independence. The reverse is often true. BUT, with success, you can achieve financial independence of some kind. OF course, you will also achieve financial terror, for there will be no one to hand you a pay check. Therefore, if you are faint of heart, cannot withstand the financial ups and downs, a business of your own may not be in your best interests. I am just telling it like it is. I would rather you be well prepared for the ups and downs than wander into this blindly, thinking that all your problems will be solved with one stroke of genius...opening your own business.

If you are still reading this drivel, you have decided to ignore me once again. So, here goes:

1. Decide the scope of the business and what it will do. Do not lock into this decision, for as time passes, the scope will change to fit the demand, and you may decide to broaden your business appeal
2. Decide the budget for getting the business off the ground.
3. Decide the steps necessary to produce a business that is viable
4. Decide how much time you have to donate to this business...whatever you decide, it will not be enough.
5. Decide how much space the business will require
6. Decide what sacrifices you are willing to make to get the business running.
7. Study your labor market. If you are lucky, your business will grow and you will need help.

The single most important decision you will make is the first decision you will make...NAMING YOUR BUSINESS. This costs nothing, but requires serious thought on your part. And, when I say it is important, trust that it is important.

• Your business's name should imply what your business does.
• Avoid cute names, as they wear thin quickly
• Avoid cute names, for they imply silliness and irresponsibility as a business. (it is no accident that almost all banks use the words, "Security," "Federal,"  "Institution," "US," "First Bank," etc. These words denote trust and security. You would not invest your money in a bank that named itself "Dolly's Dollahs." You will rarely do something that is a custom job without a down payment. Make sure that your customer has no problem giving you the money for something not received as of yet.
• Your business will be on the Internet in this day and age. I would start by going to Networksolutions.com and typing in names that you like as a .com name. You must determine it the name is available. It probably won't be, so have a serious list of names that you like before starting this adventure. You want a site whose name is short enough to easily type into a computer address line, contains the name of your business (rhinestoneguy.com is the name I arrived at after several attempts), and is memorable.
• Be sure to pass your list of names by those you trust, by those you know who have successful businesses. Don't be too quick to dump what you consider good, but listen to others and their opinions. It cannot hurt to get other's input, and it is often wise, for they are not connected to the name as you will be. Their first impressions can give you a lot of information.
• If you find a name you like, and IF that name is available as a .com, grab it then and there. Do not wait, do not hesitate, for if you do, it is quite likely the name will be gone by the time you get around to it. Plan on spending about $50.00 to lock up your bisoness name.
• You might want to register your site and open a web page immediately, even if you do not have any information to load into it yet. Just make sure that, when you need it, it is ready to go.

Prepare the SPACE your business will reside in. Do not consider a space shared by your family...the dining room is not a viable consideration! But a spare bedroom is, a basement is, and a garage that can be confiscated is. Consider that many of you will need to heat the space for some part of the year.

• The space should be used ONLY for your business
• This is not a space that can be considered as part of the home
• This space should be OFF LIMITS to anyone in the household who is not involved in the business...this is your OFFICE, not part of your home
• The space should have a locking door to its access. You do not want members of the household thinking it is their space also.
• The space should be clean, free of clutter, and kept that way. You will not want to go to work if the space is objectionable.
• The space must contain your work space and office. The best place to purchase any furniture you need is a used- office furniture store. Desks, tables, chairs and what have you can be had for a song.  Which leads us to...................

Do not spend one cent more than necessary to produce an adequate space and inventory you absolutely must have during the fire up period.

• If you are spoiled and think that you deserve the best, get over it NOW!   Or, at least, save it for the homestead, not the office. This is your money, not a gift for an unknown benefactor. Every penny you spend should have the final goal of making you money, not satisfying your ego.
• Buy only the equipment you absolutely must have to operate the business at a start up level. Used equipment, if available, is just fine. If you must buy new equipment, budget your money carefully. Keep in mind the return on the money spent. Do your calculations carefully without any "pie in the sky" thinking. When the business gets off the ground, and when you see that a better tool will make more money, that is the time to purchase it, not NOW.
• IF you need tables or platform work spaces, it may be less expensive to build them than to purchase them, but only if the tables, etc., require special shapes or sizes. You cannot build a table for $25.00. But, you can cut the legs of a table to achieve a good height for your work.
• Make sure the lighting is better than satisfactory. Nothing is worse than straining to see your work. Lighting is cheap.
• If you are working alone for long periods of time, an inexpensive stereo and/or a TV will help make the days more enjoyable. Just make sure you can work to maximum efficiency if these units are on. This bars a TV if you are easily distracted.
• You will need a computer for your office work. Its requirements are minimal. A used computer will do just fine, a donated computer will be good. You will need a computer that can do Internet and run a spread sheet or accounting soft wear package. More than that is a waste and belongs in the home, not the office.
• You will need a phone in your work space. Ideally, it will be a separate line with its own phone number. It probably need have only local service, but that will depend upon the scope of your business. Assume your business is going to explode! You cannot answer the home lines during work hours. You are not going to be a home assistant to take messages for the household. YOU ARE AT WORK when you are in your space, make no bones about it to the members of the household. You cannot be available to the family if you are working, or it won't work, PERIOD!

YOU WILL HAVE TO HAVE A SERIOUS DISCUSSION WITH ALL MEMBERS OF THE HOUSEHOLD BEFORE ANY OF THIS HAPPENS. THEY MUST COME TO AN AGREEMENT AS TO YOUR POSITION IN THE HOUSEHOLD IF YOU ARE WORKING. ALL MUST AGREE THAT YOU WILL NOT BE AVAILABLE FOR TRIVIAL MATTERS DURING YOUR OFFICE HOURS. THAT DOES NOT PRECLUDE EMERGENCIES, BUT SOME 'EMERGENCIES' AREN'T.

Trust that ALL members of the household will have a difficult time understanding the position you are in. There will be times that all members will think "you are at home playing like you are working." If you are wise, you will set the ground rules earlier, not later. Otherwise, no one will take you seriously. If others do not take you seriously, you won't either. And without the commitment, you will fail. Opening a business and spending money on its opening is not a game, not a hobby, not a junket. This is serious stuff and must be regarded as such by everyone concerned, and your household members will be concerned, trust that this is, and will be, true.

With luck and determination, you will be successful monetarily. Therefore, you will need to separate your money from your business money...from the very start. You will have a difficult time explaining to the IRS how this money or that money is a recognized deduction as a business expense. I strongly suggest opening a bank account in your business name, or a  DBA account (Doing Business As). If your bank requires a business license to do this, now is the time to go to city hall and get one. This is very easy to do. The cost is minimal, state a low dollar expected profit and the cost is minimal. I do not suggest trying to operate the business as an illegal intitiy. Know that the IRS is very clever. Very few people have fooled this "organization" for long, and when the ax falls, it can be severe. Best advice here is "PLAY BY THE RULES."

IF you are accepting down payments, I strongly suggest a separate escrow bank account. Please put your down payment money into this account. Use this account to purchase the required stock to answer specific order's requirements. If you do not do this, you will have a tendency to feel "rich" and go on a buying spree that will leave you high and dry. Never 'rob Peter to pay Paul' in this business, for there will come a day when money is not available to pay Paul. And that can be very embarrassing. This has caused more businesses to fail than any single reason. Don't be caught in the trap, regardless of your intentions.

And, while we are on the subject, unless you have a partner(s), do not discuss your bank balance with ANYONE! The quickest way to have your account raided is to tell members of the household your balance. They may not sign a check, but they will bully you into signing, and in doing so, strip you of operating capital. The best way to handle the situation is to claim poverty for the foreseeable future. Surprise them with a 'bonus' check when you can afford it.

DO NOT buy any stock on credit. Pay as you go and accumulate no debts. Make this a policy. If you start opening vendor accounts, there will come a day when you will not be able to pay. You will, at the least, loose a valuable vendor, and, at worst, be sued. Your credit rating will be ruined for years and years. Credit ratings are more valuable than you think in this day and age. And know that vendors have their own little circles of information. You may think you can turn around and go to another vendor, but word gets out fast and you may find yourself with no source of materials you need to continue doing business. THEREFORE, get a company credit card and order on that card. The card provides good records for your tax returns. You can order COD, but COD charges really bite into your profits, where every penny counts.  AGAIN, keep all business money separate from personal money from the start. If you use your own money to fire up your business, do it in the form of a loan to the business and pay yourself back. Make sure you type up a loan document and sign it when you loan money to your business-self.

You will have to come up with a method of getting yourself out there...to let others know you are in business and what you do. So, you are going to need some business cards. Keep the card simple, straight forward, with your phone, address, and Internet address/email on it. The best advertisement I can think of is ...wear it your self, use it yourself...in public! When you are complimented, don't say, "Thank You," hand them a business card instead! Supermarkets, hair salons, etc., all have bulletin boards... pin your card up. Get yourself out there. Do the flea market thing. Display where ever you can. Word of mouth works better than anything, but unfortunately, it is always slower than you want. Register your Web Site with search engines...here, get some help from a knowledgeable source if you have one. If you don't, you may consider hiring someone who knows what they are doing. The Internet is a powerful marketing tool. 

You will have to have samples of your work. This must be included in your fire up money. 

Once you have your business really going, you will be successful in mail order ONLY IF you can take credit cards on the Internet or by phone. That will require the use of your computer and a bank account to deposit the money into. Be very careful of Credit Card fraud. Mail nothing that is stock if the order is an emergency and must be over-nighted, especially if the order is big! This is a sure sign of fraud! It will be you that is out the money, not the card holder. Always ask for the CCV number on the back of the card and record it. The card holder must have the card in hand to find the number. It usually does not show up on receipts. Do all that you can to avoid fraud, but realize that you will be stung occasionally. This is part of your business expense, unpleasant as it may seem. The merchant has no recourse in the fraud game. Make sure that you know whom you are talking to. 

Price your items correctly. You are not in business to have fun. Hopefully, you will have fun, but the primary responsibility to your business is making money. IF you are giving your labor away, there will come a time you resent the business. And it will happen sooner than you think. Realize that all people perceive an item's value by what they pay for it. If you charge too little, the item will be perceived as valueless. If you charge too much, the market will not bear it. A happy in-between is what you want to aim for. You also have to decide what your time is worth and stick to it. Know that, as a business owner, you will be approached by every friend you have ever had as to 'free items...samples, etc.' They will promise to show it for you, to hand out your cards, but believe me, when complimented, they will say "Thanks" and be on their way. This business is up to you, and you alone. When a 'friend' hints that they want one just like yours, hand them a card! The hint is strong without being rude. IF you are giving a friend one of your products, make sure it is a present for a recognized event...birthday, Christmas, etc. Your friend will value the gift by the known price tag on it. A haphazard gift will have no value by the recipient if the item's value is unknown. After all, you MADE it, therefore, it couldn't be bought, therefore it has no value. A true friend will not ask for such 'freebies,' and a true friend is rarer than a good lover. Honor the friendship with a gift, but not as a 'freebie.' 

I cannot advise you as to what to market. That is your baby. I will tell you that, no matter what you think, you will sell either less or a lot more than you imagined. Hopefully, you will sell a lot more. But I am not so sure that is a blessing, for if you cannot deliver, you will be up a tree. Therefore, accept orders for only what you can deliver. Always give estimates of when the order will be done, and stick to it. Obviously, we all bend over backwards to please a customer, but the customer will not be pleased with an unrealistic supply date and then have that extended. Do the best you can in these situations. And, remember, emergency customer orders are NOT your emergencies. They usually result from the customer forgetting to order the item in a timely manner, then putting pressure on you to cover their butts. If you cannot deliver the item as ordered and in the time frame the customer wants, tell them up front what the timing will be. It is better to lose an order than get a bad rap.

I hope this has been helpful.   I could write a book, but then I love to talk, especially when I can't be disagreed with :-)

I you have questions I can help with, call me on YOUR DIME at (714) 435-9925. (My phone bill is far to big as it is!) If I have time, I will certainly help you in any way I can.

Phil Brandt

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