Business Opportunities Weblog

Jeff Cornwall:

My years in the health care industry taught me many lessons. One that I often stress to new entrepreneurs is to remember that the same changes in the market that give you an opportunity can just as quickly take it away.

BizJournals.com offers a entrepreneur’s story of having to make a drastic shift in target markets. Veicon, Inc. had provided Internet access to hotel guests until 9/11 all but ended that market. So they quickly shifted to public access terminals in libraries and hospitals.

Entrepreneurs, by definition, operate in what my former colleague Peter Vaill calls permanent white water. That often requires quick and decisive changes in direction to avoid complete disaster. Someone once told me these words of wisdom; “Never get ‘married’ to your customers.”

Entrepreneur:

From a personal perspective, you need to ask yourself if you’re really the type of person who wants to own and run a bar. Of course, you don’t have to run it if you own it, but you’d better make sure you have a team of good, trustworthy managers working for you if you plan to be “hands off.” In the beginning, you will probably have to be greatly involved no matter whether or not you plan to be an active owner. If you’re the kind of person who would rather deal with paperwork or sit in an office where you don’t have to talk to people, this business is not for you. You will need to be out there talking to people and shaking hands. Getting to know your patrons, even if it’s just to say “Hi” can go a long way for your customer service.

Another thing you should consider is the time commitment and time of day. If you’re an early riser, you might not enjoy having to work until 3 or 4 a.m. at your bar. If you have a family, you need to discuss how owning a bar will affect them and your personal situation. Many times you will have to be at your bar from the time you wake up–say, around 10 or 11 a.m.–to the time you go to sleep–say, around 4 or 5 a.m. As you can see, this could take its toll on your family life. Eventually, you’ll probably be able to have a saner schedule, once your managers and staff are well-trained, but it may take six months to a year to reach that point. If this could cause problems for you or your family, you may want to reconsider the idea of owning a bar.

From a business standpoint, however, a bar can provide an excellent return on investment. The federal government receives a large portion of its tax revenues from the sale of alcohol, and it’s not much for risky ventures (well, maybe sometimes, but it doesn’t mean to be).

WSJ:

To build an audience, blogs don’t have to be edgy, provocative or funny, says blog coach Griff Wigley, of Wigley and Associates, Northfield, Minn., who has helped several dozen small companies start online journals. But they do have to be authentic and provide useful information. The personal touch helps build relationships with customers, something particularly important to small companies catering to local communities.

via Small Business Blogging.

AuctionBytes:

It’s important to look not only at other seller’s prices, but to look at the price trend of a product over the past 30 days. Has the price been holding steady? If so, the supply is probably in equilibrium with the demand. But if prices are falling, look at how many listings there are. Have the number of individual sellers and the number of listings increased over the past 30 days? Are there more Dutch Auctions for the product? (Dutch auctions are a favorite way for eBay sellers to dump inventory quickly.)

Let’s say your research shows that 300 units of Tommy Hilfiger polo shirts were listed on eBay in the past month. You calculate the average selling price (ASP) of the shirts to be $35. What is going to happen if you buy a pallet load of 500 shirts and start listing them on eBay? You will have more than doubled the supply. A supply increase of this magnitude could drive the price down to below $25. If you paid over $15 each for the shirts, this is a pretty small margin. Worse yet, as the other competitors see the prices drop, they may start dumping their shirts to get out of unprofitable inventory, thereby accelerating the price decline.

You should always be aware of what your competitors are doing. But, sometimes you have to be careful not to compete with yourself. If you are the cause of too much supply, you can drive prices down all by yourself, lowering yours, and everyone else’s margins in the process.

Fortune Small Business:

Jennifer Sarihan, a 34-year-old mother of three in Springfield, Ohio. In early 2003, Sarihan decided to take a stab at inventing a plastic cutting device that could remove bread crusts and halve sandwiches in one motion. But she was, she says, “kind of at a loss with what to do” with Good Bites, the implement she devised. Sarihan then learned of Mom Inventors, a California company that licenses mom-made inventions and sells them over the web and through a network of stores. Mom Inventors founder Tamara Monosoff, 39, licensed the product from Sarihan for a standard licensing royalty of around 5%, and predicts that the product, together with two others Monosoff has signed up, will bring in at least $1.7 million this year.

Home Business Magazine: “Eating at a restaurant might be a tastier proposition for home-based businesses these days. That’s because small incorporated firms benefit up to seven times more from the meals and entertainment tax deduction than larger firms. According to a study released by the U.S. Small Business Administration’s Office of Advocacy, small firms that take advantage of this deduction reduce their effective tax rate by 0.75 percent on average, while larger firms only reduce their effective tax rate by 0.11 percent.”

Don Alm:

I spoke to the Manager in January about the possibility of having a “By Owner Car Lot” in this area. It would be available ONLY on Sat & Sun. I would be charging people to park their vehicles there so I felt I should pay Wal-Mart for the space.

The guy floored me when he said my program would probably bring in more people to his store. (Car Buyers could shop for a car THEN…shop in his store) So…he thought $250 a weekend would be acceptable. He thought his insurance would cover MY “Car Lot”.

I told him I would put Markers around the area where the “for sale cars” would be parked AND I would have a 8ft by 8ft sign on the back of the space so people would know what was going on.

I would run some ads for the first 2 or 3 wks and, after that I think the word-of-mouth would keep the place filled.

I plan on charging $25 a day or $40 for both days… the space can fit 60 cars…

via Chuck Huckaby.

Reuters: “Complicated U.S. tax rules burden and distract small businesses, but the government makes matters worse by constantly changing or updating them, experts on Tuesday told a panel seeking to simplify the tax code.”

Building Your Solo Business to Outgrow You

Small Business Brief:

The critical component in preparing your business to grow is to make a habit of developing documented and well organized systems. If you use the same documents regularly, turn them into templates to use repeatedly. Better yet, have them turned into Microsoft Word forms you can fill out quickly on the computer. Take the time to write important documents like policy or privacy statements, and save a copy on your computer hard drive and a printed copy in a book. One of the best ways to formalize and organize your business is to get a large 3 ring binder, buy some page protectors, and start creating a corporate book. It might seem like overkill now while you are “it,” but will be extremely useful when you bring on your first employee.

In this corporate book, you can store contract templates, forms, terms of service, government certificates such as your DBA statement - plus anything else that supports the past, present and future of your business. Keep a copy of your business and marketing plan there as well.

As you develop the business, keep a Word document handy on your desktop called “Standard Operating Procedures.” Every time you find yourself doing something repetitive, or routine, pop open the document and jot down some notes about what it is and how you did it. You can flesh the details out later, but when the time comes to off load some of the tedium of running your business to someone else, you will have a terrific starting point for which “hats” someone else can wear. Your first new employee will be able to quickly get up to speed and provide the same level of service you have been providing, armed with a document like this.

Nolo:

Let’s assume that you’ve concluded it would be advantageous to operate your small business through an entity that limits the personal liability of all the owners — even if following this strategy involves a bit more paperwork, complexity and possible expense. You have two main choices — either the tried and true corporation or the new and streamlined limited liability company (LLC). Which is better? There’s no answer to this question that applies to every business.

For the majority of small businesses, the relative simplicity and flexibility of the LLC makes it the better choice. This is especially true if your business will hold property, such as real estate, that’s likely to increase in value. That’s because regular corporations (sometimes called C corporations) and their shareholders are subject to a double tax (both the corporation and the shareholders are taxed) on the increased value of the property when the property is sold or the corporation is liquidated. By contrast, LLC owners (called members) avoid this double taxation because the business’s tax liabilities are passed through to them; the LLC itself does not pay a tax on its income.

StartupJournal:

For 20 years, Linda and Vaughn Harker got up early every morning, put on their Army uniforms and followed whatever orders came their way. Today they may get up a little later, but they still dress in uniforms and follow procedures. Only these are set out in the operating manual that came with the UPS Store franchise they opened in July in Titusville, Fla.

Linda, 49, and Vaughn, 51, are among the 250 military veterans benefiting from a program that provides discounts on franchise fees to honorably discharged members of the armed services. The program, called the Veterans Transition Franchise Initiative (VetFran), offers discounts of 10% to 25% off the franchise fees of 150 participating franchise systems. According to the International Franchise Association (IFA), which is sponsoring the program, 130 more sales are pending.

Inc.:

Many psychologists believe that entrepreneurs have a greater potential for happiness than the average person. That’s because they can set challenges for themselves in their jobs that best suit their own skills and goals, explains Mihaly Csikszentmihalyi, a psychology professor at Claremont University and author of Good Business: Leadership, Flow, and the Making of Meaning. “Clearly,” he writes, “entrepreneurial leaders find as much satisfaction in their jobs as any person can hope to achieve.” For entrepreneurs, this sort of job satisfaction carries a lot of weight, says Kelly Shaver, a William & Mary psychology professor. He has found that it’s often the sense of accomplishment that makes an entrepreneur truly happy in life — not the monetary rewards those accomplishments bring.

…

In other words, says Csikszentmihalyi, to achieve happiness, you must enjoy doing your best while contributing to something beyond yourself. This can take many forms. To set goals that will be meaningful to you, he says, you must begin by defining your priorities — the things you believe make life worth living.

via Rob Hyndman.

This week’s Carnival of the Capitalists is up at Blogcritics.org.

I’m back from the show, and am going to decompress and catch up on some work around here for a bit, so posting will be light today.

I promise to answer everyone’s questions soon.

This is how our booth looked Saturday morning before the crowds arrived at the National Franchise and Business Opportunities Show in Sacramento, CA.

We’re between a pre paid legal company and a security system business opportunity.

The show runs through 5PM Sunday at the Sacramento Convention Center.

→ handyman-network.com

The demand for small to medium sized home repairs and improvements is booming, and yet underserved in almost every major market of the United States including yours. Handyman Network has created a unique franchise that provides homeowners with a professional and reliable service that is always needed, in every home.

Their franchise owners don’t need to be handy… you won’t be fixing toilets! They have created a unique Handyman Franchise service business that does not require investments in specialized equipment, vehicles or tools. Their Handyman Franchise is solely based on service, people, systems, and technology. As a Handyman Network Franchise owner your success will depend on your skills as a manager of people and their proprietary systems. They’ll teach you how to effectively market and grow your Handyman Franchise using proven marketing and business development strategies.

Steve Pilgrim:

Others have said that a thorough reading and re-reading of Warren Buffett’s letters to shareholders from 1977 to now is a better education than two years in business school.

Tomorrow, at 9:00a.m. EST, we get another instalment in this great body of work. The annual report (and letter) for Berkshire Hathaway is due to be posted on the web. You can find it be visiting the company’s web site here.

NPR:

n the last decade, an increasing number of American companies have been radically cutting costs by sending manufacturing and customer service jobs overseas, where labor costs can be dramatically lower. Some of those jobs were the mainstay of rural U.S. communities, where low rent and wages first attracted outsourcing work away from higher-priced cities.

Now there’s an attempt to bring outsourcing jobs back to smaller cities and towns. NPR’s Howard Berkes recently visited the Arkansas town of Magnolia — home to about 10,000 people, near the southwest corner of the state — where some say there aren’t enough jobs in local timber, oil, farming and manufacturing industries to keep local kids at home.

Law & Entrepreneurship News: “The SBA Office of Advocacy has established a website that provides a plethora of small business statistics and data.”

Just a reminder that I’ll be at the National Franchise and Business Opportunities Show, in Sacramento, California, at the The Sacramento Convention Center, on March 5th and 6th.

Admission is $8 and the show runs from 11 AM to 5 PM on both Saturday and Sunday. This will be the show’s only stop in Northern California this year.

Online Business Opportunity:

No, not THOSE MP3s — ones you create ourself, not illegal music downloads. Do a search for “free mp3 recorder”, download it, hook up your microphone, and start recording. What you record is up to you, and will determine your income from that project. Some ideas are spoken business lessons, “how to” products, motivational talks, and current sales and marketing news. Sell these mp3s as downloads from your site, and you suddenly have several products where you get to keep nearly 100% of the income generated and the product creation cost is nearly zero.

Dr. Jeffrey Cornwall, on the effects of eBay’s recent fee increases: “Over reliance on a single customer, a single supplier, or in this case a single source of distribution puts any small business at risk.”

Barry Moltz: “Another installment of the VC Radio show that I host where we talk about building entrepreneurial friendly communities. I talk with Tom Walker of i2e and Trish Costello of The Kauffman Foundation.”

Entrepreneur:

Whether your start-up costs total $5,000 or $500,000, you’ll need solid numbers. The challenge is finding information that’s credible and reliable. The good news: You can get hard data, plus valuable insight, from a variety of sources. Here are eight places to explore:

• People in the business
• Sources of supplies
• Trade associations
• SCORE. The Service Corps of Retired Executives
• Business start-up guides
• Franchise organizations
• Business start-up articles
• Business consultants

via BizzBangBuzz.

Entrepreneur:

An entrepreneur who hires a parent is often looking to tap the older person’s skills and expertise. “They’re usually being brought in for some specific competency they have,” says Andrew D. Keyt, executive director of the Family Business Center at Loyola University Chicago. Frequently, however, a parent who has retired from a working career is looking for something new and different, which can lead to frustration on both sides.

Adam Kohn, vice chair of Cleveland executive search firm Christian & Timbers, says it’s more common for the job to be seen as something primarily intended to help the parent, either by providing income or by giving a retiree something useful to do.

Either way, it’s important to treat a parent employee like any other employee. Be sure to have a complete job description outlining what you want the parent to do, and don’t expect parental employees to come cheap. Experts say it would be a mistake to pay parents any less–or more–than the market rate.

Also, don’t forget to include an exit strategy. Specify under what circumstances the parent’s employment will end. While it may be easier to hope that such an emotionally charged eventuality won’t occur than to talk about it, a little planning can save a lot of pain. “I have a couple of situations I know of [where the entrepreneur] would like to get rid of the parent, and it’s difficult,” Kohn says.