Categories
Attitude Basics Entrepeneurship

9 Things to Know About Starting a Business

Deep in your heart, you might be dreaming of starting your own business. It could be eCommerce, Handmade Crafts, a repair business, or a store on the corner. Doesn’t matter.

There some things you should know.

Books and YouTube Aren’t Enough

You can learn a lot by reading, researching, and buying courses on starting a business. But you won’t learn it all.

When your business hits reality, you’ll find you didn’t know about THAT!

No problem.

You are now learning from experience, and that’s a good thing. Experience makes knowledge stick.

You Are in It for the Long Term

There is no such thing as instant success. Sure, you can get really lucky and hit a home run early on, but that’s not a realistic expectation.

You will more likely spend hours and hours, and weeks, months and years building and running your business.

Expect obstacles, failures, and general missed goals, and you’ll be better prepared when they arrive.

I don’t mean to take on a negative attitude, rather just know that something will come up, and you’ll have to deal with it.

You Are Your Own Boss

That’s one of the great appeals of being in business for yourself. You get to decide how your business works.

You get to choose your own hours, and only have to work half-days. This means you get to choose which 12 hours you get to work.

You also get to make all the decisions. The results depend on you.

You Are Also the Empoyee

Unless you have employees (which I discourage early) YOU will be doing the work the Boss decides needing done.

You have to have great work ethic so what needs doing gets done — on time, and under budget.

Some have said they have lazy employees and a jerk for a boss.

That shouldn’t be you.

You Will Need Others to Succeed

A Sole Proprietor is a lonely business. As Boss/Employee, your only companionship might be talking to yourself.

You need to build relationships for social interaction, but also for business success.

I don’t mean “networking,” although some focused effort is OK.

I mean getting to know your various suppliers and service vendors. If you have physical products, you have to get them or their raw materials somewhere. Building a relationship with them will make getting “deals” more likely.

Business Money Isn’t Your Money

Sure, you put personal money at risk to get started, and in the early stages might need to invest more.

What I mean is that keeping Business money/credit/bills separate from your personal and family finances is crucial. Separate Checking and Credit accounts helps with this.

If your business starts generating a fair bit of cash, it will be very tempting to use some of that for your personal needs.

Don’t!

Your business needs to be financially secure in order to thrive and grow. PLAN how you will personally withdraw cash from your business. Don’t get enthralled with the shiny piles of cash.

You Will Need a Strong “Why”

You will face the inevitable obstacles, problems, and failures along the way. They can overwhelm you with despair unless you LOVE the reason you started the business in the first place.

And it can’t just be about the money.

I know that you might have started wanting a side income to help with bills.

But, unless you LOVE the work, it will become a J O B and you will get discouraged.

People Will Scoff

If you are starting your business to get love and respect from others, you will be sorely disappointed.

Your know-it-all brother-in-law will tell you a thousand ways you’re going to fail. Your parents might think you are being stupid. Your spouse might even actively object or refuse to support you.

Back to the Why and the Love.

The best revenge is to be successful.

You Will Likely Fail

The odds are against a new business. Failure within 5 years is more likely than success.

That doesn’t mean that you won’t be successful.

It just means that if you don’t remain focused, don’t maintain persistence, don’t consistently do what needs to be done, you are likely to get discouraged and stop, quit, or fail.

Final Thoughts

I have failed at business, and I have succeeded. The difference was paying attention to some of the small things that lead to success.

Plan your business. Plan your years. Plan your days.

Stay focused on the most important things without losing sight of potential problems.

Stay positive.

Categories
Management

Inventory — The Overlooked Asset

I’m not an attorney nor a CPA, but here are some facts I’ve learned over the years about the Business aspects of Inventory.

It doesn’t really matter what your CPA requires or suggests about your Inventory for your taxes, (they are probably right). Certainly follow their advice and be consistent from year to year.

But, your Inventory is the largest asset your business will likely have. You really should be tracking as much about your inventory and its performance as you can. If it’s just sitting around, its like cash in the mattress.

What is your Inventory ROI? (Gross Profit for a period divided by the average value of your Inventory). A higher return is better use of your cash (or credit.)

What is its turnover rate? (COGS for a period divided by Average Inventory value for the period.) This how many times your Inventory turns over or is consumed and replaced during the period. Higher turnover is better use of your cash (or credit).

What are you doing to improve each of these measures?

As for taxes, IRS Schedule C asks if you have inventory, then requires you do the calculation for COGS. The Small Business Taxpayer threshold for inventory exemption is $25M, not $1M. But, the inventory is only exempted from reporting if you class it as “incidental”. If you are doing anything retail, online, Amazon, or eBay, then your inventory is Not incidental, and must be properly accounted for.

(If you want to change how you do accounting to the IRS from prior years, then you need to submit a form 3115.)

If you haven’t already done so, Calculate your Ending Inventory value.

For Amazon Sellers, Run an Amazon Report / Fulfillment / Inventory / Monthly Inventory History for December for your ending FBA Inventory. Then physically count any of your inventory stored and stashed at home or your warehouse.

Add it all up times the cost of each – This is your Ending Inventory for last year, AND it is the Beginning Inventory value you will use for next. year

The COGS (Cost Of Goods Sold) calculation is very simple.

The value of your Beginning Inventory PLUS the value of your Purchases (of new inventory purchased during the period) MINUS the value of your Ending Inventory is the value of the COST of Goods Sold for section 3 of IRS Schedule C.

Watching your Inventory performance is just as important as managing your expenses, but gets less attention. Stale inventory doesn’t sell well. Paying too much for inventory makes it difficult to be profitable against lower-cost competitors. Inventory in your garage can’t sell. Money invested in inventory can’t be used for anything else.

Inventory is a Big Deal.

What questions do you have about Inventory?
John L

Categories
Entrepeneurship Goals Planning

Focus On the ONE Thing

As a management consultant, I spent much of my consulting time helping clients discover and focus on the most important aspects of their business. They were often overwhelmed with tasks and projects that had little to do with overall success.

That’s where I helped them define their ONE Thing.

A business needs to make a profit, and have positive cashflow. Without both, they will eventually die.

But, the ingredients for these two essentials range all over the map, and depending on the business, might not apply – right now. Customer acquisition, sales process, followup, expense control, inventory control, customer care, vendor relations, banking — just some of the areas of concern.

The management task is to identify the obstacles and bottlenecks to success, and work out plans and procedures to overcome.

Here is how I’ve helped clients. I’ve given them a checklist or roadmap for making progress.

  • Of all the things that need to be done, what is that ONE Thing you need to Focus on – right now – for success?
  • Can you Define it, Describe it, Picture it?
  • What are the obstacles you need to overcome?
  • What resources do you have, or need?
  • Make a plan. Create Processes and Procedures to support this ONE Thing.
  • Focus, Aim, Zero-in, Prioritize, Measure.
  • Remove distractions. Shed the minutiae. Focus of the ONE Thing.
  • Work, work, work on the ONE Thing until you’ve conquered it. Then move on to the Next ONE Thing.
  • Track progress. Reflect. Evaluate. Refine.

I don’t know what your ONE Thing is. I do know you have one, and that it’s probably languishing and begging for attention. If you’re like me, it’s easy to procrastinate on the important stuff – because it might seem too hard.

Buck up! It’s the most important thing you can be working on.

Get. It. Done!

John L

 

 

Categories
Amazon FBA Attitude eCommerce Planning

Making the Most of the Cold and Dark of Winter

Baby, It’s COLD Outside!

Here in NW Oregon, it rarely gets below freezing, and even more rarely, it snows. Generally, we can expect snow every few years. That’s one reason we get “snow days” with the falling of a single snowflake.

So, we bundle up and light a fire, brew the hot chocolate, and burrow in for the cold fronts.

It’s time to reflect and narrow down our actions for the coming year.

Our Amazon FBA business ended 2016 about 20% ahead of 2015. Pretty darn good. We hope for the same for 2017.

Unfortunately, our best selling category is dwindling in inventory and availability. We found them in closeout and discontinued stock from various brokers. We’ve sold tens of thousands of them for an average NET Profit of $5.

But, we’ve probably found them all, and they’re nearly gone.

We’re contemplating Private Label manufacturing. Sandi found her China importer, and we’ll consult with her to evaluate feasibility.

And, we’ll branch out to find new categories of products we can source and re-sell for a profit. This is the continuing task for an Amazon Seller, or for anyone working in retail ecommerce .

It’s good to have our bundled warmth to give us comfort. The future is unknown. But we can predict with enough data.

Plan our Work. Work our Plan.

John L

Categories
eCommerce Entrepeneurship

Rhythms of the Farm

We bought a farm back in Oct 2015, and moved in during Feb 2016. We have had a beautiful time moving and getting accustomed to life in a rural setting.

It is Heaven on Earth.

What we’ve known for all our lives is that there is a season for everything.

The farm is a living example of these seasons.

For example, we plant in Spring. We cultivate in Summer. We harvest in Fall. We regenerate in Winter.

What we have to do is to work our daily activities into these seasons so we can take advantage of the time of year for maximum advantage. Trying to plant seeds in the Fall normally is asking for crop failure. Cultivating in Winter here in Oregon just gets the garden onto a sloppy bog.

Do the right things at the right times.

So, too with business.

Sell what’s already selling. Sell during the seasons that your products usually sell in.

Control expenses to have a profit at the end of business.

Don’t try to change human behavior. Work with it instead.

Make work schedules that fit into the flow of your business.

Do the work.

JL