Running your own wee business

[Mom]

No PT - my buell is my company vehicle. Fully deductable. Tbird is for private use.

Seems you have had some good advice

[Finn]

No PT - my buell is my company vehicle. Fully deductable. Tbird is for private use.

Yeah, my business has 3 courier motorbikes and nothing to deliver. Helen paid the GST back and pays for insurance, gas, tires & servicing. She's good like that.

[Motu]

DT - Diagnostic Tester.....

[Beemer]

Been self-employed for four years now and I love it. The lifestyle benefits are great - if it's sunny and I feel like going for a ride, I do! If it's in the middle of winter and pouring with rain I don't have to go out to work, I just wander into the study in my possum fur slippers and warmest (but not necessarily fashionable!) clothes. No travelling time and I can have a cup of tea/snack/pee any time I like without anyone commenting on how long I am away from my desk! I can work the hours I want - as long as the work gets done (with regards to editing rather than going out to interview someone at an event for instance), my clients don't give a stuff when I do it - 9am or 9pm makes no difference when you're on an hourly rate.

I got an accountant for the first year, cost me $600-odd and I got $87 back. Now I do my own tax returns because mine are pretty straightforward. I am thinking of getting a new accountant for the next tax year though as I've heard good things about a woman a friend pays to do her tax.

The first few years were hard, until I got established and enough work came in, but I just did some temping work to make some extra money. Last year I earned more than I had done in my last couple of jobs - and considering I usually only work one or two days a week, that's not bad! Sometimes I can be quite stressed out when I have a lot of work on, but I have always managed to get it all done by the deadline - when it's a matter of not finishing it and not getting paid, somehow it all fits into place.

This year I am studying almost fulltime but still working as well - and I am managing to fit it all in. I rarely work weekends (except for photography jobs) or evenings unless it's a rush job and the only downside is not getting much work over Christmas and New Year - but we survive!

I always said I wouldn't work on my birthday either, but 2004 and 2006 I had to work as I was doing short-term contracts on that date, but last year I did manage to have the day off - and next year it's on a Saturday so I'm definitely not working!

I find it incredibly rewarding and I am far more relaxed than I was when I had a boss. I do the work, I get paid, I get more work from the same people - very satisfying. I sometimes miss having workmates but email is great and that's what friends are for! I met one for lunch today and it was nice not to have to watch the clock.

I'd say go for it, you'll more than likely enjoy it a great deal and wish you'd done it years ago!

[trumpy]

Had my own business now for 19 years and despite the ups and downs I would never go back (....realistically I am probably unemployable anyway thanks to what I have learned and the habits, good and bad, that I have picked up on the way).

Go to www.yourbiz.co.nz - lots of help available there.
Once your business picks up a bit invest in MYOB (small business accounting package). We use it for everything: quotes, jobs, invoices, inventory, profit and loss etc, etc. Really easy to use and you you don't have to use it as a full accrual accounting program, works equally well as a cashbook only. It leaves very little for our accountants to do and saves us a great deal of money each year. More importantly, you can track the progress of your business virtually on a moment to moment basis which allows you react to things IMMEDIATELY rather than at the end of the financial year when your accountant tells you you HAD a problem and you are now in deep shit! Very important ability for a new business (and old ones too!)

If you have a passion for what you want to do, go for it and good luck.

[DingDong]

I've been running a signwritting business for a year now... work a day job 55hrs a week, do signs at night and on weekends, it's hard work.

I dont actively go looking for jobs, I try to build relationships with businesses that have a higher need for sign writting... house sales, car clubs etc... I make their signs and charge a minimal labour fee... they love me and I love them back... my theory is that when I think the business can support me finacially I'll kick it into another gear already having a large and loyal (if theres such a thing) customer base.

Most of my work comes by "word of mouth" and thats enough... for now. the longer I wait, the better my chance...

[jonbuoy]

Hey thanks everyone for your inputs. I've been working for a small company for a while now which has been good training. Just gotta grow some balls and take the jump!

[Winston001]

Running your own business isn't for the faint hearted. Expect that some people simply won't pay you. It hurts but you learn. Expect to spend a fair bit of time fending off advertisers, salesmen, and all sorts of other timewasters.

Apart from that you'll need to spend time keeping your books straight. The easiest way is something like MYOB but there are other, even free accounting packages. I think Cashmanager is free for personal use. The most common problem for small business is bad records. Lots of guys love their work but forget to bill it.

Using an accountant costs money but you get the benefit of business advice. You also get an aura of legitimacy if an accountant files your annual accounts. IRD don't tend to look quite so hard as compared with folk who do their own accounts and thus are more likely to have dodgy returns.

Self-employment is wonderful despite the risks. My advice is to start out slowly - don't give up your day job. Dingdongs example is a very good way to start. Do a good job and rely on word of mouth and build up loyalty.

[JimO]

i have been a self employed tradesman for over 20 years and like some of the others i couldnt go back to working for someone else (at least not in my trade) the up sides are you can please yourself regarding hours and what jobs you take on, i dont miss any of my boys sporting things during work time i knock off early or plan my day around things. The downside is that you are depending on the clients paying to survive so it pays to be selective dont work for people who give you the gut feeling or that you know are slow payers. i have a good accountant and have stuck with him since i started,. i know guys who change accountants every couple of years and their always in a mess regarding getting books done and tax issues. Remember that the profit that the tax man knows about doesnt have to be high why work your arse off and owe the ird 40k when you can take it easy and owe them 10k and have a healthy cash flow , if you know what i mean

[Edbear]

Started my own business from scratch when I was unemployed, back in '92,. We were so broke at the time my wife and I argued whether we could afford the $7, yes, $7! to fill up the CNG tank of our Morris Marina and trip around with a boot full of borrowed stock from a Hamilton shop.

Ran the business for 6 years until I got really sick - would up in a wheelchair and thought I was dying, which I probably was at the time according to the Docs. (Long story I'd be happy to bore anyone to tears with).

Increased turnover 4-fold in 5 years and was expanding way faster than I could keep up with. Fortunately was a cash business dealing with mainly Dairy farmers who could afford to buy whatever they liked despite their moaning about money all the time... so had no or very few debtors. Used an Accountant and I wish I'd listened to him more! He said I needed a 33% GP or I wasn't viable. I wound up with a 47% GP and increasing.

Gradually bypassed wholesaler's getting stock direct ex-factory or NZ importer and was doing very well. Miss the perks but not the stress! Would do it differently now!

Currently I am employed on a Salary+commission and we're encouraged to run it like it's our own business. I think it's the best of both worlds, but having said that I now have a couple of opportunities to start businesses that will grow for future income.

[Big Dave]

Seems you have had some good advice

Aye - always been good to my mum.

[Brian d marge]

its been good reading other people experiences about running a business , am of the start slowly camp , getting everything in place building up sales , etc ..I work in the evenings at a job which isnt very stressful,

The day job is interesting , and is why I actually get out of bed ! ..it can be busy or completely slackarsed like today ...Spent 5 hours in the hardware super store and bought 4 6mm studs . now I am going to watch a bit of telly and carry on with this clutch

Money , we would like a little more comming in , but not much more .. We dont own a house , but everything else is paid for ...

I doubt I will ever work in a big company again , doing the 9 to 5 thing ,,As I doubt they would put up with me disappearing to Test the bike ,,,,,for the 3rd time in a week !!

Stephen

plan , give it a go , dont burn the money bridge and see how it goes ...

[degrom]

I've been running a signwritting business for a year now... work a day job 55hrs a week, do signs at night and on weekends, it's hard work.

I dont actively go looking for jobs, I try to build relationships with businesses that have a higher need for sign writting... house sales, car clubs etc... I make their signs and charge a minimal labour fee... they love me and I love them back... my theory is that when I think the business can support me finacially I'll kick it into another gear already having a large and loyal (if theres such a thing) customer base.

Most of my work comes by "word of mouth" and thats enough... for now. the longer I wait, the better my chance...

Sounds like you are heading for success!!! I have a few things that I would like to do as a business but I am still finding it hard to get into the market. Do you think it's wise to do a few "FREE" jobs to generate contacts and getting the word out that you are good at what you do?

[trumpy]

Do you think it's wise to do a few "FREE" jobs to generate contacts and getting the word out that you are good at what you do?

No. Value yourself or other people won't.

In some circumstances we have had more sales by increasing the cost/value of our service than lowering it. Discounting has been nothing but a pain in the ar@se and has not increased sales one bit. Once you start doing things for "free" getting the price up to where it should be to deliver you an acceptable profit will be a huge uphill battle and most of those you provided a "free" service to will never be seen again. They will just move to the next person trying to use the same strategy. Been there, done that. "Loss leaders" are a myth (at least for small businesses). They are simply a loss that you will have to recover somewhere else in your business.

Give good value at a fair price, promise less and deliver more and the customers will come.

[geoffm]

Watch the cashflow - it is what kills small businesses dead. For that reason, be tough on overdue accounts - they are costing you money, which is why they are stringing you out and not paying. Big companies are some of the worst. Make sure you have any account holders on a watertight contract that lets you charge recovery costs, and make it clear that at 45 days or whatever, it is off to the debt collectors. Talk to them - our ones had contract terms that they had us use with our accunt holders, and they had a discount collection fee for debts less than 60 days old. Collecting anything over 60 days is hard, and 90 days impossible usually. Bad debt ratios depend on the industry - 2.5% is common. Typically half pay on time, 45% are a month late, 2.5% longer than that and 2.5% won't pay at all. You have to allow for this.
My next business is going to be a cahs business I reckon. No wonder there are so many bakeries around - cash up front, good margins, and th etaxman cannot be exactly sure how much actually makes it into the till...
Geoff