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An Operational Guide for Home-Based and Micro-Sized Businesses with Limited Budgets
By Janet Attard
While some books, such as The Entrepreneurial Mindset and my own Thinking Like An Entrepreneur, are great at providing philosophical guidance and strategic insight into becoming an entrepreneur, other books are great at providing practical, hands-on information for dealing with specific, small business situations. Business Know-How: An Operational Guide for Home-Based and Micro-Sized Businesses with Limited Budgets provides excellent, hands-on information which will help you run your small or home business.
Business Know-How: An Operational Guide for Home-Based and Micro-Sized Businesses with Limited Budgets is jam-packed with hints, tips, resources, and suggestions for saving money, growing your sales, and running your business more effectively. The lessons are particularly useful to small and home-based businesses.
Half of U.S. small businesses are home-based. Attard says that although hard work and good products are necessary to succeed in small business, hard work and good products alone aren't enough. Attard writes: "To be successful, you need to know how to do business. You need to know the best ways to find customers, to sell to them, to use technology, to cut costs, and to deal with problems that inevitably arise. And you need to know how to do it all on a shoestring."
The First Chapter, Finding the Real Opportunities, will help you generate ideas for a new business. Attard suggests: "Businesses don't just happen. They are made... your success relies on what you bring to the business. If you love what you do, your passion for the business will drive you to be knowledgeable, creative, and persistent."
One of Attard's recommendations is "Look for Avalanches" which will help carry you in a successful direction. As an example, Attard discusses Cheyenne Software, which jumped on the Local Area Network trend by developing enhancements to Novell LANs. She also discusses demographic trends and points out a few particularly lucrative areas, such as corporate training. We learn that corporate training is a $50 billion market.
We also learn that African Americans represented a $300 billion market by 1994. Attard advises: "The secret to successfully targeting these and other cultural markets is to pay attention to your audience's heritage and lifestyle. Don't just replace pictures of white people with pictures of African Americans or Latinos, and don't translate English word for word into any other language. Your marketing efforts will fail if you do. Instead, tailor the sales literature or ads to accurately reflect the lifestyle of the targeted market."
But, your business doesn't need to be earth shattering or target a huge market. One of Attard's first businesses was making beanbags shaped like frogs. Attard writes: "I filled them with birdseed instead of beans to make them pliable and less lumpy to the touch. ... I could produce them quickly and kept my costs low by making the frogs from inexpensive fabric remains." Plus, if they don't sell, you can cut them open and toss them on the lawn. J
Attard's also suggests considering "Mundane Moneymakers," such as home cleaning or plumbing for your start-up business. Attard writes: "The key to making money with the mundane is to sell something your customers can't do, don't want to do, don't have the time to do, or can't get done elsewhere."
As a great example of a mundane, but potentially profitable, business, Attard tells us about a doggy do-do clean-up business which cleans up doggy dirt and dog waste in dog owners' back yards. Now, there's a good example of an unromantic business! After a few years, the founding entrepreneur sold the company for a quarter of a million dollars.
(Passion for doggy clean-up probably doesn't last too long. Attard doesn't say how big a market doggy do-do clean-up represents. But with the help of her outstanding chapter on business research, you probably could make a fairly good estimate. Exercise for Entrepreneurship students: Estimate the market size of the doggy do-do business. Extra credit: Measure the market size in Kibbels N' Bits.)
But Business Know-How: An Operational Guide for Home-Based and Micro-Sized Businesses with Limited Budgets isn't about starting a business. It's about operating your business effectively.
For suppliers, among a score of resources listed, Attard mentions the Thomas Register, ThomasRegister.com. Attard says you must "keep your eye on the hidden cost of purchases. ... In addition to any direct cost expense, your cost includes the cost of time spent making the purchase." If it takes too much time, finding a bargain is no bargain.
Selling your products and services to other businesses is a possibility. Attard says to target businesses which can afford your services. She writes: "If you do sell to home-based businesses and small businesses, focus your efforts on high-income professionals who have been in business for a year or more. ... To close the sale, remind top earners that, based on their hourly billing rate, it's cheaper to hire you than to do the work themselves."
One money saving tip from Business Know-How's Chapter, Keeping the Tax Collector at Bay, is "Employ Your Spouse and Deduct the Entire Amount of Your Medical Insurance Premiums."
Because there are limitations on the tax deductibility of medical insurance premiums providing coverage to sole proprietors and S-corporation owners who hold more than 2% of the corporate shares, but no such deductibility limits on health insurance coverage provided to your other employees, Attard suggests employing your spouse.
Attard writes: "There are no such limitations on the deductibility of medical insurance premiums you make on behalf of your employees, however. If your spouse is an employee of your business, the business can pay for (and deduct the cost of) his or her medical insurance. Your spouse would then add you as a dependent on his or her policy. This would make the entire premium deductible by your business as a business expense. If you don't have employees other than your spouse, and don't have any other good source of health insurance, this strategy offers significant tax savings by converting a personal expense to a [tax deductible] business expense."
Attard notes one important caveat. If you have other employees, you might be required by law to provide them the same health care coverage as your spouse.
Business Know-How: An Operational Guide for Home-Based and Micro-Sized Businesses with Limited Budgets has outstanding chapters about conducting business research, finding suppliers, shoestring marketing, getting publicity, selling to the government, home office equipment, and dealing with taxation of your home-based business. A primary focus of the book is saving money and reducing your costs, which is crucial to success. The book also provides a wealth of referrals to gather more information.
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