Running your own wee business

[Animal]

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?

Hell no, absolutely not! If the job you're doing is not worth charging for, it's not worth doing at all. Remember... no free lunches.

Here's a known fact that I'm sure every other self-employed member would confirm: Customers never take the cheapest quote. There is a kind of psychological taboo about going to the guy with the cheapest price, as you have to wonder WHY he has the cheapest price? Shit workmanship, shit service, shit quality, another unspecified reason? The guy might very well be completely legitimate and has possibly undervalued his services. The fact remains, customers avoid the cheapest price because of the perceived risk of it all turning to shit. Remember the expression "goedkoop is duurkoop"? (Rough translation: Penny wise, pound foolish.)

When i started my CAD business, I actually used to feel guilty about what I perceived as a high hourly rate, and basically accepted whatever my clients were prepared to pay me. Experience and confidence soon taught me that it's okay to insist on what you're worth, and it's okay to walk away from someone who want's you to work for less than you're worth.

Trumpy has said, discounting is a pain in the arse and entirely pointless. I had quite a number of unsold hours in my diary, and was on the point of discounting my rate to try to attract new business. On the advice of a veteran businessman, I doubled my prices instead - and more than trebled my business! Nowadays, I don't apologise for my prices, and I don't discount or negotiate. The quality of my work and the satisfaction of my clients justifies my price.

So, working for free? Absolutely never!

[KATWYN]

If you're prepared to give up your nights, weekends, stat holidays, lifestyle - and that includes riding - but be comitted to putting in months of 120-hour weeks, it will eventually become self-sustaining. Don't let anyone tell you it's an easy life, and that the money falls into your lap. It's exactly the opposite to that!

.

Yep aint that the truth. My husband and I did 7 day weeks for approx 10-12
months (NOT recommended if you want to remain sane! ) thereafter 5 years of 24 hours per day 5 days per week actually living on the job. Now very normal hours (for us personally).

Business so far has taken ten years to establish and we feel pretty comfortable
with where we are at. But never assume you are sweet in a business and that nothing can "take you out" even with I's dotted and T's crossed there are some very unethical customers (businesses) out there; and laws in this country don't protect our businesses from "theft" - do your research and cover your backside in everything you do and everybody you deal with (if they are credit customers that is).

What kinda business are you looking at ? can I ask ?

[Street Gerbil]

I used to run a one man CNC shop in USA. Wouldn't survive on profits but they made a nice addition to the day job salary. Like someone already suggested, take baby steps. It takes approx three years for an average business to become viable.

[DingDong]

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?

Give competitive quotes to new customers, build a genuine relationship... not a desperate to sell relationship... when you feel, give them a unbeatable deal... (not free tho.) create loyalty through friendship.

[BarBender]

What kinda business are you looking at ? can I ask ?

Thats a bloody good question.

Some great comments. All I would add is that you find yourself a good bank or leverage your current banking relationship as much as you can if its a good one. Find a good branch manager or business realtionship manager, ideally someone who knows their products and services and can find the best business solution to fit your needs. Dont assume that your banks know much about small business. They dont.
I'd also spend some time building your financial acumen. Being able to understand basic cashflow, reading P&L's and Balance Sheets etc... will help you in the long run.

Good luck

[degrom]

Give competitive quotes to new customers, build a genuine relationship... not a desperate to sell relationship... when you feel, give them a unbeatable deal... (not free tho.) create loyalty through friendship.

Thanks all!!! We received a few really important tips...

Okay, so no free lunches and a bit of extra effort with jobs/contract will keep you on top. Keeping account also makes it easyer for you and your accountant!

Any strategies for getting into the market place? Would love to hear how you all started out....

Thanks all!!

[SwanTiger]

Any strategies for getting into the market place? Would love to hear how you all started out.

I remember the first "business" I ever had was with my friend/neighbour (we were kids, about 8 or 9). We collected, chopped and sold boxes of fire wood for $3 each and my friends mum managed the money.

We use to ring places and annoy them until they gave in, always worked.

When I had an ISP I would go around to the local stores and annoy the owners (made 40% more from business customers than residential and businesses caused less problems).

Strategies: If you are at the bottom and offering a service, put it in peoples face, don't let them forget. Annoy the shit out of them. Its free and works. No different to hearing the Mad Butcher winging on a TV advert, just change the medium.

I like to read about serial killers and other predator type criminals, it is good to adapt their mindset for business. Opportunities are everywhere. A serial killer/predator is someone who is often methodical, intelligent and take the right opportunities when given to them. They do what many will not, they take huge risks and are rewarded (in their case, with sick pleasure, in business, you are rewarded with success) where others will not even dare. Like a rapist, they have a desire and the good serial rapist will follow those desires methodically and plan and learn from mistakes, sit back and study. While others might have the same desires to go and rape a woman for whatever reason, only the rapist will take the calculated risk.

That doesn't mean the customer is your victim, it is just a good way of looking at opportunities and dealing with the challenges that you will face.

I hope that makes sense.

Just my 10 cents.

[Virago]

There's been some great advice in this thread, but it is difficult to give you specific advice without knowing specifics of what you're planning.

I've been running my own small business for three years - no regrets. Started of with just myself, now three people employed.

Business structure needs to be considered. Sole trader is the easiest option, but offers little protection of your assets if things go wrong. Limited Liability Company involves more compliance paperwork, but gives better protection for you and your dependants. It also indicates to clients a degree of dependability and longevity.

Initial cashflow requirements may surprise you, but better be surprised now rather than when the shit hits the fan. A good rule of thumb - work out how much money you think you might need to get things up and running, then double it.

There is no shortage of people who can help you with advice and assistance. Talk to your bank first, they will put you in touch with other support people.

Do a business plan. It may seem hard, but a bank will need to see some projected figures.

If your planned business is in direct competition with your current employer, be very careful that you don't end up in hot water. Most employment agreements have Restraint of Trade clauses these days.

Whatever you do, have faith in yourself. Good luck.

[Brian d marge]

I go with the business plan, I cant count the number of times I have made a business plan , With computors you can get an idea , type something loose down , use a spreadsheet to nut out the first year, ( this will help understand things like contribution ratio /margins , mark up etc..all those business type words )
Then ONCE ( it costs NOTHING to run a business on paper!!) Once it looks good and feels right ,,,,, try it , see if there is any demand for your product at that price ..

For me , I have started a while back , BUT as I have a cruisey nite job ,,I am in no hurry or financial pressure ( apart from the wife) ....

Now I also have VERY Low overheads , but I was amazed at the amount I finally had to charge for the product, If I wanted to reduce the final cost I had to sell more ! catcha22 uzarian !

So Again I made a spreadsheet, with all the info in it , and if I see a product I think would work ,,,pow , type it into the pda ,,,pop ,,it tells me what I need to charge ,,,and lets just say I havent found the perfect product

Thats where I am at now , I sell the odd bike or two, it pays for my racing , I am happy , the wife can eat ...so she is sorta happy...
but I get gaps ,,,like I need to sell this bike , to pay for the new Engine, I am building ..the bike isnt selling ..so Mongo ere aint racing


Also I need to reduce the clutch lever pressure to cope with the new tracks ...and while the design is coming along ...its getting to the point where I will need to get it made .... more money ....

Finally the three businesses I like

Hamburger carts
Prostitution
and Politics

All high cash turn over businesses , freefrom the tax man ,,,

trouble is my cooking is terrible

Stephen

[APPLE]

me'n roosta are directors,of picasso.we hav a charted accountant who does the books,tax's and all that jazz,all we do,is ride our iron steeds''......

[degrom]

Does anyone have a few tips for doing market research? I am a bit sceptical about just jumping into a thing with out being prepared for it...

Any tips are welcome.
I understand that there are always risks involved in starting a business but I am sure that lots of start-up business fail because they have the "I like it,so you will also like it" attitude.

[Timber020]

I have been running my business for 4 years, I survived by paying myself 1/5 of what I got working for others and spending all the money on gear for the first 2 years. I have my bike as a business expence, but I legitimately put 150-200kms on it a week with work.

There are some real advantages to owning a business, you can buy lots of stuff and tell your GF "it wasnt me, my business brought it". Its getting a little tired after a fireblade, rf900, welder, tool cabinet, couple of gsxrs etc.
Your the boss, but if crap goes wrong, its all on you.
Im currently working 7 days a week and generally busting my ass so I can take a week off next month.
Sometimes theres not much work, things slow down, if you have employees you cant just say "sorry guys, im making no money right now, so you dont get any."
I did some study in accounting at uni, but found that it was just another PITA that I couldnt do as well. My accountant saves me several times what he costs me. I still do the PAYE but otherwise hes got it sorted.

I do free work, for plunkets, kindergartens etc, well I do ask they mention me in there next newsletter. Goes down well.

As a boss, the good times are better but the bad times are ALOT worse.

Know your market, access your risks, learn from others mistakes.

[Finn]

Here's a known fact that I'm sure every other self-employed member would confirm: Customers never take the cheapest quote.

Yes they do, especially when working with specialised products and services when not a lot is known about them. Happens all the time. Local Bodies are a classic example, exagerated by the fact that they are full of stupid people.

[jonbuoy]

Accountants and money men always seem to go for the cheapest quote. I don't always if its my money - depends though. - Pay peanuts get monkeys.

It will be just my labour and expenses I'm charging out to start with so I don't need big bank loans. I don't really want to be busting my ass off 24/7 for less than I'm on now - Ok doing that to get things moving for 18 months or so but not long term. I'm hoping if I'm busy I will be making money, If I'm not I'll be spending more time at home so should be a win win - or am I dreaming?

[KATWYN]

I don't really want to be busting my ass off 24/7 for less than I'm on now - Ok doing that to get things moving for 18 months or so but not long term. ?

I remember years ago an experienced businessman said to me "Own your own business and you are guaranteed at least a 20% return on your investment"

I never forgot that - it certainly made a lot of difference during those times when we really felt like giving up. (and believe me...theres a lot of THOSE times)

Obviously the time it takes for this sort of return would depend on what sort of business you are in and the outlay of plant etc (if any).