Business Advice

Business Advice was Originally Posted on June 22, 2014 by lavarock

I participate in the forums on a consumer advocate site (ClarkHoward.Com). Recently, someone asked the following:

I am writing to ask if there are people out there that can give me an honest answer as to would you do online work{surveys, marketing or etc.} or would you just start you own business. I ask this because I am a person that has a decent educational background as well as years in the business sector, with that being said I feel that I with the number of talents I have behind me I want to look into starting my own business. I am looking at starting this business from my home as an online and local business before I take a step to open a store. My talent/crafts are in sewing, jewelry making, crocheting and cooking/baking, I’m just simply looking for a few open minded suggestions.
 Here was my reply. I started my own business (actually businesses) after being retired from a large computer company who downsized.

My situation is somewhat unique, but the steps I took can be used by anyone. I decided to move to Hawaii and buy a farm. Now it would have been easier had I actually had farming experience, but that did not stop me. I found a farm that was a foreclosure. The most common crop here is coffee, Kona Coffee in fact, which almost sells itself because of its reputation. The average farm is a couple of acres but large farms could be 25 or more acres. So I would be a slightly larger than average farm if I planted 6 acres or so in coffee.

I asked the real estate agent if a farmer can really make a living at coffee. It seemed easy enough, watering, fertilizing, hiring pickers and having it processes, etc. He said that if a farmer has hundreds of bags of coffee in the basement and nobody knows about it, no, you won’t make a living off coffee. Thus started the investigation. It is similar to answering the question what computer to buy, which cellphone to get, etc. It depends upon what you want to do with that computer and where you will be using that cellphone. You need to look at the opposite end of the list of questions that most people do.

To make a living off a crop like coffee, I had to first look at whether I could sell coffee. If I was a good salesman, I could sell it. Then the next step was to look at the financials and see what my costs would be vrs expenses. Then I had to look at what classes were available to me to learn the farming side of things.

Rather than first buying the farm, I set up a website, designed a label and bought unroasted green bean coffee. I had it roasted, put it in bags and sold it. This allowed me to start a business with only perhaps $500 investment. If I got a lot more orders, I would just buy more raw coffee beans. There was no way I could over extend myself or lose money.

Since I was moving to a new location, I had to compare utility prices and shopping costs. I was lucky in that owning a farm meant that I could write off many items towards the business that might not be write offs in other endeavors. Thus the tax laws for a farmer are better than say for someone with Schedule C (self business). Because thsi is a farm, I also can grow many food items which I would normally have to go buy.

Anyway, by testing my marketing and sales skills first, I determined that I could proceed. I found that I was able to be trained for free by my neighbors and the non-profit groups out here. Within a couple years I helped form a farmers group for coffee (Kona Coffee Farmers Association) and won a prize for my coffee.

Now I help other farmers get websites so that they can compete on a more level playing field.

As Clark says, don’t buy a franchise until you have worked at one and seen how things work. Don’t start a business unless you know the inputs and controls. That computer company where I previously worked, encouraged us to spread our wings and try new things. It also taught us not to make the same mistake twice. We learned to try new ideas but to monitor and evaluate them with data (sales or customers comments or whatever).

Knowing that you are a self-starter is important if you decide to start your own business. Also, being innovative and being able to work out problems and make decisions is useful.

Just don’t expect to make a product, put it on a website and expect to be rich. It might happen but may not.

With that said and without seeing the items you would make, my guess is that you would not make a living baking and selling jewelry online. Unless items were very unique, there is a lot of competition out there. Just browse Ebay or Amazon for jewelry. Cooking and baking may require a certified kitchen and health inspectors. MY neighbors also sell coffee and baked goods and jellies at farmers markets but since they are there every week, I have to assume they have not struck it rich yet. By the way, I run websites for many of them, so I DO know what kind of sales they are making

Just having a website does not guarantee sales. My sister makes soap and a local artist makes pottery and neither has yet promoted their site to generate sales. They don’t realize that they need to spread the word, otherwise they are a fancy store on a dirt road with no signs nor traffic. I personally write a blog about farming and also write about other topics in the news. Some of my customers have come from internet searches for keywords that have also appeared in my blog about daily life. Luckily it is not a huge stretch to write about tsunamis, lava flows, the Mars lander, astronauts, coffee, earthquakes and ocean voyagers to name a few of the recent blog and Facebook postings.

If yo decide to sell online, there are ways to accept credit cards. When first starting out I used an expensive credit card processor and paid dearly in charges. There were months when I spent more to accept cards than I collected. Later I switched to PayPal and WePay and accepted checks, etc. However, at the start, I needed to accept credit cards, knew I was paying a price to do that but used that time to find better and more cost-effective ways to accept cards. I am also considering Costo’s service Elavon which looks like it will beat Paypal and WePay’s prices. I set up a neighbor with that service and await their report on actual charges vrs costs.

I created numerous discount codes which allow me to track which groups are buying my products. One code was for employees I used to work with. I don’t care if they give that code to a neighbor who gives it to their hairdresser. I know what channel started that sale and I would continue to support those I worked with because they in turn became a salesman for me in a way. The sale started with them and I will continue to offer them and those that follow a discount.

I try not to just sell to someone, but to engage them when possible. When customers ask questions, I go out of my way to answer them. I have reviewed my customers purchases and sent the best ones a gift at Christmas time. I have included unordered items in their shipments and personally sign the shipping receipt that goes in the box. I have run to the store to include a card (at my expense) when I realize the item is a gift and the buyer has included a message to the recipient.

Some of these things may seem minor, yet I have some customers who have been with me for 10 years. One gentleman requested a special roast which I have to do by hand. He buys 8 pounds four times a year and although it takes me a couple days to fill his orders, he gets personalized attention and tells others. It is not my place to ask him how he can drink that much coffee

So, knowing the business you want to start, knowing where and how you will find customers, knowing how to market and price things, knowing how much time you need to put into it, knowing any regulations or problems you will have with logistics, knowing how to treat customers and track sales and how and when to offer discounts are all important for small business people.

You might take a job and try doing a small business in your spare time. If that business takes off you can always quit.

Some ideas might include something unique. If you have lots of people in your area with pets, perhaps invest in a embroider that allows you to stitch owners phone numbers on dog collars. Locally a couple of girls started a soap business. Although the soap is not really unique, their marketing is “filthy farmgirl” and has become quite popular. Sometimes a simple product becomes more desirable because of circumstances or marketing.

Good luck and I hope that I gave you some ideas and thoughts.