As I mentioned in my previous entry, I'm going into business with my best friend. This is not something we do lightly. We realize that more than just our investment is at stake here. This could very well end our friendship.
But we also believe that it doesn't need to be that way. The first step, we believe, is to acknowledge the possibility and plan for ways to mitigate that risk. Before we agreed to go ahead we had a lengthy discussion about our concerns. Here are some of what we came up with.
- We find we can't work as partners.
- What if there becomes a real or perceived imbalance in the division of labor?
- What if one of us runs into financial difficulties? Would this put pressure on the other to help them out by splitting the take more in their favor for awhile?
- We may end up knowing too much about each others' personal finances.
- What if we can't make enough to support either family, let alone both?
- We realize unexpected success and can't agree on what to do with the money? (nice problem to have, but sometimes phenomenal success can be just as deadly to a business as phenomenal failure).
- We just get on each others' nerves.
- Conflicting goals for the business.
- We find success, but can't maintain it.
- Personality dynamic leads to one partner always giving in to the other one.
- One of us decides we want out, even if it means killing the business.
- Making sure we establish criteria for valuing the company should one of us want to buy out the other.
- What if one of us wants to bring in another partner against the other's wishes?
- What if we find ourselves being competitive with one another?
It's not exactly an exercise in positive mental attitude, but if friends are going to be partners, I think these and many more questions should be considered first. In our case we both agreed that our friendship is more important than our business, and that we're willing to chloroform the whole thing if it starts to come between us. But we were also able to discuss all of the above points rationally. In some cases we just agreed that they could become a problem and we just have to trust each other to act responsibly and work it out. In other cases, though, we were able to discuss concrete plans for dealing with the risk should it occur.
Has anyone else gone through a similar process in forming a business partnership with a friend? What was your experience? What things were important to you? Drop me a comment and tell me about it!
Sunday, October 18, 2009
Taking the plunge
This blog has languished for awhile now, as I'd largely reconciled myself to the idea that I'm not ready to start a business. For one thing, I've lacked capital. For another I've lacked time and drive.
Well, times change, and desperate times call for desperate measures. Recently a good friend of mine also go laid off. This is the friend of whom I've often said that if I had about $50,000 to put him in business with I'd do it. Well, instead we found an opportunity that can put us in business for about $6,000. I don't think either of us would have the guts to do it alone, but together we've convinced each other to give it a try.
This is a serious endeavor. We've registered a company with the state, got our tax ID, and plunked down some significant cash. We're currently going through the steps to select a product line and find suppliers. If everything goes well, we'll be Internet retailers by the end of the month.
Are we crazy? Quite possibly. But one advantage of having a partner is diluted risk. Though we still lose money if this fails, neither of us loses as much. And if we succeed, we'll at the very least have a revenue stream that will help us both avoid the poor house that much longer while we find real jobs. But our goal/dream is to turn this into our real jobs. We hope by the end of the year to be making enough to be able to stop looking.
Well, times change, and desperate times call for desperate measures. Recently a good friend of mine also go laid off. This is the friend of whom I've often said that if I had about $50,000 to put him in business with I'd do it. Well, instead we found an opportunity that can put us in business for about $6,000. I don't think either of us would have the guts to do it alone, but together we've convinced each other to give it a try.
This is a serious endeavor. We've registered a company with the state, got our tax ID, and plunked down some significant cash. We're currently going through the steps to select a product line and find suppliers. If everything goes well, we'll be Internet retailers by the end of the month.
Are we crazy? Quite possibly. But one advantage of having a partner is diluted risk. Though we still lose money if this fails, neither of us loses as much. And if we succeed, we'll at the very least have a revenue stream that will help us both avoid the poor house that much longer while we find real jobs. But our goal/dream is to turn this into our real jobs. We hope by the end of the year to be making enough to be able to stop looking.
Tuesday, June 2, 2009
Putting the "service" in government service
Last week we created a business entity so my wife could get a sales tax certificate to sell her crafts at a local craft show/fundraiser. I remember seeing something online, so I went onto the Secretary of State's site and found the Idaho Business Resources site. They have an automated system there that walks you through the entire process of setting up a business entity with the state, including wizards to help you determine what licenses you may need. Very cool system.
We registered her as a sole proprietorship, however, so I don't know how well it works for more complicated entities that require a registration fee. I'll let you know when I register my business entity later this year.
We registered her as a sole proprietorship, however, so I don't know how well it works for more complicated entities that require a registration fee. I'll let you know when I register my business entity later this year.
Friday, May 22, 2009
Conflicting priorities: the bane of excellence or savior of "good enough"?
Since I lack the funding to just dive in and work my new business to the exclusion of everything else that brings in money, I find I have to slip my business efforts in when I can. As a result, the business is progressing slowly and, truth be told, the quality is not what it could be. I find myself settling for what I can get done in the time slot available rather than taking the time to get everything just right.
This may not be a bad thing. I am a bit of a perfectionist, and if I thought I had the time to get things perfect I may slip into paralysis by analysis and get even less done. The thought that there is one right solution tends to make me want to find it, even though there really is no way of knowing if I do.
I'm finding that I have a better chance of getting things right, however, if I take the time to create a plan. It's easier to know where I left off on something and where I was heading with it if I have something written down I can refer back to. Of course planning takes time, too, and the temptation is always there to skip planning and "actually get something done".
That's where discipline comes in. That's also where I have room for improvement. My goal for today is to take some time this afternoon before I knock off work for the week to plan where I'm going with my business (and everything else I've got going on) and break out some short-term objectives to pursue next week. That way when I come in on Monday morning I'll be able to pick up where I left off, knowing exactly where I'm headed.
This may not be a bad thing. I am a bit of a perfectionist, and if I thought I had the time to get things perfect I may slip into paralysis by analysis and get even less done. The thought that there is one right solution tends to make me want to find it, even though there really is no way of knowing if I do.
I'm finding that I have a better chance of getting things right, however, if I take the time to create a plan. It's easier to know where I left off on something and where I was heading with it if I have something written down I can refer back to. Of course planning takes time, too, and the temptation is always there to skip planning and "actually get something done".
That's where discipline comes in. That's also where I have room for improvement. My goal for today is to take some time this afternoon before I knock off work for the week to plan where I'm going with my business (and everything else I've got going on) and break out some short-term objectives to pursue next week. That way when I come in on Monday morning I'll be able to pick up where I left off, knowing exactly where I'm headed.
Thursday, May 14, 2009
When do you give up and hire a pro?
Yesterday my computer told me it was time to upgrade to Internet Explorer 8. I did. I hate it. And my web sites look all messed up now. So I finally made the break to Firefox, hoping it was just a IE8 thing. Nope. My sites are messed up there, too (and probably have been from the beginning).
So today I spent a few hours cleaning up me CSS to deal with the problems. Everything is ironed out now...mostly. There's still something funky going on with IE8.
If I had the money it would be tempting to let a pro handle this. I should be working more on my content right now instead of tweaking style sheets. On the other hand, hiring a pro would probably wipe out any profits I may make this year. I admit I have no idea how much a pro would even cost, but I suspect it's not cheap.
As they say, it takes money to make money. But I'm determined to succeed in spite of that obstacle.
So today I spent a few hours cleaning up me CSS to deal with the problems. Everything is ironed out now...mostly. There's still something funky going on with IE8.
If I had the money it would be tempting to let a pro handle this. I should be working more on my content right now instead of tweaking style sheets. On the other hand, hiring a pro would probably wipe out any profits I may make this year. I admit I have no idea how much a pro would even cost, but I suspect it's not cheap.
As they say, it takes money to make money. But I'm determined to succeed in spite of that obstacle.
Monday, May 4, 2009
The MetroMom puts on a great teleseminar
My recent foray into Twitter (http://twitter.com/thomstrat) has opened up a new source of information for me. But perhaps the best was a teleseminer I sneaked into over the weekend. The MetroMom, Kim DeYoung, runs a business supporting mothers running their own businesses from home. As part of this effort, she put together a teleseminer with 18 different experts in various aspects of running an online business. But, as her target audience is busy moms, she added a helpful twist.
The entire seminar was prerecorded and made available to participants at any time during the two days. Attendees could read the session descriptions and pick which sessions they wanted to attend at the time they could actually attend. Fantastic idea!
Though the seminar was promoted as "for women" I signed up anyway, as the majority of the topics were things I'm interested in with my current business plans. Fortunately it's easy to go "in drag" on the internet. Actually, it didn't matter. My Twitter avatar is very obviously male, and I tweeted about many of the sessions I attended. I got persona responses from DeYoung and several presenters, and no one said anything.
I was very impressed. This was a high-quality seminar--for free! DeYoung is a great interviewer, and her experts were...well, expert. There was a lot of good information given. Yet I could see how the seminar could have been so much less than it was if DeYoung hadn't worked hard to provide substance. As it was, the seminar reflected very well on all who presented, and even more so on DeYoung.
Great concept, great execution. I give it two thumbs up.
The entire seminar was prerecorded and made available to participants at any time during the two days. Attendees could read the session descriptions and pick which sessions they wanted to attend at the time they could actually attend. Fantastic idea!
Though the seminar was promoted as "for women" I signed up anyway, as the majority of the topics were things I'm interested in with my current business plans. Fortunately it's easy to go "in drag" on the internet. Actually, it didn't matter. My Twitter avatar is very obviously male, and I tweeted about many of the sessions I attended. I got persona responses from DeYoung and several presenters, and no one said anything.
I was very impressed. This was a high-quality seminar--for free! DeYoung is a great interviewer, and her experts were...well, expert. There was a lot of good information given. Yet I could see how the seminar could have been so much less than it was if DeYoung hadn't worked hard to provide substance. As it was, the seminar reflected very well on all who presented, and even more so on DeYoung.
Great concept, great execution. I give it two thumbs up.
Tuesday, April 14, 2009
Time management for starting a business
Many people who are successes at business just dived in feet first. The rest of us hang on to their normal 9-to-5 while they try to get things up and running. For most of us that probably won't work. To quote Yoda from The Empire Strikes Back, "That is why you fail".
And yet it's not necessarily bad to try and get as far as you can before taking the leap the rest of the way. It's just most of us lack focus. We have good intentions of building up our business on the side, but we never seem to get it done. Why is that?
I suggest it's because we lack the discipline. Other things come first (and often they should), or when we do have the time we forget that we're supposed to be doing something with our business plan. We don't readily remember what the next key step is, so we push it aside and go do something clearer and more pressing.
The solution, I believe, is to treat your business like a project. Project managers know that you eat an elephant a bite at a time. But they also know you need to know where to bite next. So how do project managers tackle a project? The move from the big to the small as follows:
Start at the top: Jot down a quick list of things that must be done before your business can start operations. Keep it broad and general, like "secure inventory", or "set up accounts". Don't attempt to define any of these yet, just get them down on paper. Go until you run out of ideas, but be prepare to add more as they occur to you.
Pick a top-level item and break it down: Take one of the items you just recorded, preferably the one you feel is the most immediate need. Think about the various things that need to be done to accomplish that step and write them down. For example, if you wrote an item for "set up bookkeeping" then ask yourself what would you need to do to complete that task. Your answers may look something like:
Once you've completed this step you should prioritize them based on what steps absolutely need to happen before the others. Obviously you can't configure software you do not yet have, but defining you account list could maybe be done at any point prior to configuring the software. You should complete this step with a list in chronological order of what you need to do and when.
Break items down further as needed: Depending on how organized and disciplined you are, or on how large blocks of time you expect to have, this may be as detailed as you need to go. But for others of us, we need to break each step down further. For example, we could break down "compare bookkeeping software packages" further as follows:
It's not a long list, but it's much more detailed. When you know exactly what your next step is, it's much easier to remember next time you have ten free minutes that this would be a good time to Google "accounting software small business" and see what packages come up. You can do that easily in ten minutes, and once you're done you are that much closer to your goal. You may even feel a surge of satisfaction knowing that you actually made progress toward your dream.
Continue and repeat as needed: Break each item and step down until you've done so for all your work items. Look for dependencies between the separate work items and subordinate steps. Start making a list of the "first steps" in each area; items that other steps are dependent on, quick wins, or other small tasks that would help move things along. Take the top ten and keep the list handy.
Whenever you have free time pull out your list and see if any of the top ten can be done just then. If so, do them. If not, relax knowing that you're not doing anything because you can't at the moment. As you complete several items on your list return to your master list and "refill".
Make sure you cross off completed items on your master list. Take a few moments to note just how many tasks you've completed. You are making progress! Doesn't it feel good?! Celebrate your progress!
It may take a considerable amount of time to get organized initially, but once you've got the master list you're most of the way there. Ten minutes a day or half an hour a week is all you need to stay up to date. Add new items to your master list as they occur to you. Look over your list to see if your priorities or dependencies have changed. Refill your Top Ten list if you haven't already done so. Boom! You're on your way again.
Organization and time management can be the key to getting your business from dream to the reality. Don't just sit around wishing you could get things done. Take charge, get organized, and get things done!
Update: Havi, at The Fluent Self, has a related post. Do just one thing.
And yet it's not necessarily bad to try and get as far as you can before taking the leap the rest of the way. It's just most of us lack focus. We have good intentions of building up our business on the side, but we never seem to get it done. Why is that?
I suggest it's because we lack the discipline. Other things come first (and often they should), or when we do have the time we forget that we're supposed to be doing something with our business plan. We don't readily remember what the next key step is, so we push it aside and go do something clearer and more pressing.
The solution, I believe, is to treat your business like a project. Project managers know that you eat an elephant a bite at a time. But they also know you need to know where to bite next. So how do project managers tackle a project? The move from the big to the small as follows:
Start at the top: Jot down a quick list of things that must be done before your business can start operations. Keep it broad and general, like "secure inventory", or "set up accounts". Don't attempt to define any of these yet, just get them down on paper. Go until you run out of ideas, but be prepare to add more as they occur to you.
Pick a top-level item and break it down: Take one of the items you just recorded, preferably the one you feel is the most immediate need. Think about the various things that need to be done to accomplish that step and write them down. For example, if you wrote an item for "set up bookkeeping" then ask yourself what would you need to do to complete that task. Your answers may look something like:
- Compare bookkeeping software packages
- Select bookkeeping software
- Compare prices for selected software from different vendors
- Purchase software
- Define account list
- Install and configure software
- Complete setup of accounts in software
Once you've completed this step you should prioritize them based on what steps absolutely need to happen before the others. Obviously you can't configure software you do not yet have, but defining you account list could maybe be done at any point prior to configuring the software. You should complete this step with a list in chronological order of what you need to do and when.
Break items down further as needed: Depending on how organized and disciplined you are, or on how large blocks of time you expect to have, this may be as detailed as you need to go. But for others of us, we need to break each step down further. For example, we could break down "compare bookkeeping software packages" further as follows:
- Google or Amazon.com search to find out the main packages
- Read reviews of each package to determine what key considerations might be
- Create your own list of key criteria for evaluating software
It's not a long list, but it's much more detailed. When you know exactly what your next step is, it's much easier to remember next time you have ten free minutes that this would be a good time to Google "accounting software small business" and see what packages come up. You can do that easily in ten minutes, and once you're done you are that much closer to your goal. You may even feel a surge of satisfaction knowing that you actually made progress toward your dream.
Continue and repeat as needed: Break each item and step down until you've done so for all your work items. Look for dependencies between the separate work items and subordinate steps. Start making a list of the "first steps" in each area; items that other steps are dependent on, quick wins, or other small tasks that would help move things along. Take the top ten and keep the list handy.
Whenever you have free time pull out your list and see if any of the top ten can be done just then. If so, do them. If not, relax knowing that you're not doing anything because you can't at the moment. As you complete several items on your list return to your master list and "refill".
Make sure you cross off completed items on your master list. Take a few moments to note just how many tasks you've completed. You are making progress! Doesn't it feel good?! Celebrate your progress!
It may take a considerable amount of time to get organized initially, but once you've got the master list you're most of the way there. Ten minutes a day or half an hour a week is all you need to stay up to date. Add new items to your master list as they occur to you. Look over your list to see if your priorities or dependencies have changed. Refill your Top Ten list if you haven't already done so. Boom! You're on your way again.
Organization and time management can be the key to getting your business from dream to the reality. Don't just sit around wishing you could get things done. Take charge, get organized, and get things done!
Update: Havi, at The Fluent Self, has a related post. Do just one thing.
Wednesday, April 8, 2009
New Writing Gig: Examiner.com
Examiner.com is a Clarity Media Group venture that leverages local writers in 60 major markets across the US to provide local, expert content. I've applied and been accepted as the Boise Business Strategies Examiner.
My debut article can be found here. Most Boiseans are familiar with Metro Express Car Wash by now, but I look a little deeper into how they use their electronic sign as an entry point to get people into their online marketing.
So take a look if you like. I should be posting something every few days.
My debut article can be found here. Most Boiseans are familiar with Metro Express Car Wash by now, but I look a little deeper into how they use their electronic sign as an entry point to get people into their online marketing.
So take a look if you like. I should be posting something every few days.
Tuesday, April 7, 2009
Building a Personal Brand
Dan Schawbel has a new book out, Me 2.0: Build A Powerful Brand to Achieve Career Success. Branding as a business concept is nothing new. But in the Internet age when it's becoming increasingly possible for individuals to stand out, people really need to pay attention to their "personal brand". Companies aren't interested in retaining employees for life anymore. If anything the trend is toward companies being one day run by an army of independent contractors. There are already virtual companies out there made up of a group contractors working together on a project.
Add to that mix the current economic situation. People are losing their jobs and trying to find new ones among incredibly stiff competition. It's not enough any more to just qualify for a job. You have to market yourself for it.
I've not had a chance to read Schawble's book, but if this article is a sample, it should be good reading indeed. Plus there's likely the added bonus of dual application. If it works for the individual, many of the strategies should work for businesses too.
Here's an excerpt from the article in which he discusses conducting situational analysis:
I may have to add this book to my list of reading.
Add to that mix the current economic situation. People are losing their jobs and trying to find new ones among incredibly stiff competition. It's not enough any more to just qualify for a job. You have to market yourself for it.
I've not had a chance to read Schawble's book, but if this article is a sample, it should be good reading indeed. Plus there's likely the added bonus of dual application. If it works for the individual, many of the strategies should work for businesses too.
Here's an excerpt from the article in which he discusses conducting situational analysis:
You can’t leverage social media for career success unless you know where you stand today. This includes taking a good look at your life, what your current responsibilities are, the amount of resources you currently have and your career position. For instance, if you have two children and a full-time job (two children is probably another full-time job), you won’t be able to spend ten hours a day building a community using social media tools. If you’re twenty years old and your parents are wealthy, then you will have more time to invest in your online brand and you may have extra cash to help market yourself. Also, you may have a strong or a weak professional network, which can either support your brand or hinder it moving forward.
When it comes to your career, you need to decide if you’re looking to go to graduate school, start a company, or get a full-time job at a company and climb that corporate ladder. These decisions will impact how you use tools to communicate what you do, who you serve, and how you want to be positioned relative to everyone else, along with your goals and mission.
I may have to add this book to my list of reading.
Monday, April 6, 2009
When Free Stuff Doesn't Help
Havi at The Fluent Self has an interesting post about the hazards of giving things away for free: People tend to save "free" things up for when they really need it.
In her example it's a free massage. The massage was offered to employees so that they'd know how that masseuse works and can recommend them to customers. The opposite happened--the employees save up their free massages for a time when they really need them.
The writer then goes on to ask the employees who aren't using their free massages what their response would be if the massages were offered for $12. The common response was along the lines of "that's a good price, I'd get one today". So offering things for free in this case produces results contrary to the intent, whereas the perception of a spectacular-but-limited-time deal would have worked.
Sometimes less is more, but too much "less" becomes...less.
In her example it's a free massage. The massage was offered to employees so that they'd know how that masseuse works and can recommend them to customers. The opposite happened--the employees save up their free massages for a time when they really need them.
The writer then goes on to ask the employees who aren't using their free massages what their response would be if the massages were offered for $12. The common response was along the lines of "that's a good price, I'd get one today". So offering things for free in this case produces results contrary to the intent, whereas the perception of a spectacular-but-limited-time deal would have worked.
Sometimes less is more, but too much "less" becomes...less.
Wednesday, April 1, 2009
More Progress in Self-Publishing
(Via @gretchenrubin on Twitter)
Hewlett-Packard has developed printing service that can print magazines on demand at 20 cents per page. A bit pricey for a magazine, perhaps, but making progress.
Hewlett-Packard has developed printing service that can print magazines on demand at 20 cents per page. A bit pricey for a magazine, perhaps, but making progress.
Monday, March 23, 2009
Social Media and the Modern Business
My germinating business will be an internet endeavor, so I can't afford to ignore social media. But even "brick-n-mortar" organizations probably should be paying attention. Here are couple of articles of interest I got from David Cracknell, Director of Big Tent Communications. (David is following my tweets, for reasons I cannot begin to guess. If it was to get me to read his stuff, it's working--and I'm grateful):
10 Ways to Ensure Social Media Success
10 Twitter tips from The Dog Whisperer (kind of)
10 Ways to Ensure Social Media Success
10 Twitter tips from The Dog Whisperer (kind of)
Thursday, March 19, 2009
Author, Publish Thyself!
One aspect of my business I've been researching lately is publishing. Sooner or later I'm going to need to publish a book or two. Fortunately I didn't fall for the myriad of "vanity publishers" out there and instead found www.selfpublishing.com. I downloaded a copy of their book "Publishing Basics" and was offered a free hard copy as well. Bonus!
I much prefer hard copies to electronic copies. I did my MBA program with ebooks for texts, and if it weren't for a kind employer who let me print them out at work for free I'd have gone blind.
Anyway, I digress. My copy came in the mail this week. The book is short, but packed with information. Yes, it's also a marketing tool for their services, but it's an effective one. They also do a good job of convincing you that publishing is both difficult and possible. They're not building false hope, but they make it clear that there are rewards if you can pull it off.
Almost they convinceth me to become a publisher. But this is, as most things, a case of "you have to spend money to make money" and at this point in time I don't have the money to spend. So publishing will have to come later on in the business plan. But I'm pretty sure it will come.
I much prefer hard copies to electronic copies. I did my MBA program with ebooks for texts, and if it weren't for a kind employer who let me print them out at work for free I'd have gone blind.
Anyway, I digress. My copy came in the mail this week. The book is short, but packed with information. Yes, it's also a marketing tool for their services, but it's an effective one. They also do a good job of convincing you that publishing is both difficult and possible. They're not building false hope, but they make it clear that there are rewards if you can pull it off.
Almost they convinceth me to become a publisher. But this is, as most things, a case of "you have to spend money to make money" and at this point in time I don't have the money to spend. So publishing will have to come later on in the business plan. But I'm pretty sure it will come.
Friday, March 13, 2009
Side Tripped
Sometimes life and necessity take a hand and change your plans. I'm still working toward The Business, but I've spent much of this week getting another business up and running. Circumstances have pushed me toward becoming a consultant, or at least offering myself as one. It's not my first choice of employment, but at this point it would be a welcome alternative to unemployment.
I'm also brancing out into writing. More on that later, perhaps.
With the economy the way it is, I think I need to have as many lines in the pond as I can. The more options I have the more likely something will pay off. And so for the moment my business plans are not necessarily on hold, but not the main priority, either.
I'm also brancing out into writing. More on that later, perhaps.
With the economy the way it is, I think I need to have as many lines in the pond as I can. The more options I have the more likely something will pay off. And so for the moment my business plans are not necessarily on hold, but not the main priority, either.
Wednesday, March 4, 2009
Higher Taxes May Discourage Entrepreneurship
James Manzi in City Journal discusses how the new administration's proposed taxes increases may actually discourage the growth of small businesses. (Hat Tip Instapundit)
That's the current picture. Bleak enough as is, right? So how to Obama's proposed tax increases impact the picture?
So there you go. Our young entrepreneur works long and hard for not much money on the hopes of a big payout at the end, and while the payout is still there, it's not nearly as big as it once would have been. The question is now whether or not the smaller payoff is worth the sacrifice to get there.
The bottom line:
I don't think this will discourage everyone from trying, mind you. This scenario is just one of the many ways in which entrepreneurs can make money. It is possible to start a company with the goal of simply drawing a regular paycheck, albeit from yourself, and a larger one than you were getting before. For those people, if they can keep their income below Obama's suggested threshold of $250,000, may not encounter the high taxes.
On the other hand, who goes into business hoping to make less than $250,000 per year? I'd dare say most people would like to think they could make more than that. The question is whether they're willing to give up more in taxes for the priviledge.
I think Manzi is correct that this will discourage entrepreneurship at least a little. But even a little can be a lot.
Consider a hypothetical aspiring entrepreneur: an engineer, say, with an idea for a new company. First she has to invest a lot of her own time just to develop her idea to the point that it could win funding from a venture capitalist or angel investor. The odds of going from idea to funding are, say, ten to one against. But let’s assume that after working nights and weekends for a year to produce a working prototype, write a business plan, and recruit a team, she finally gets funded by a professional venture capitalist. Having cleared this hurdle, she gets to quit her job and work much longer hours for much lower wages for about a decade. All the while, our engineer knows that she has only a 20 percent chance of steering the company to a successful exit that makes her a lot of money.
That's the current picture. Bleak enough as is, right? So how to Obama's proposed tax increases impact the picture?
Tax increases influence this calculation directly by reducing the size of the payout. The capital-gains tax that hits her when she sells her company is just the first thing for her to consider. Second and more important are increasing tax rates on dividends, interest income, and (again) capital gains—since she will invest the proceeds she gets from selling her company in a portfolio of stocks, bonds, and so forth, and rising taxes will reduce the present value of the after-tax consumption that the portfolio will generate in perpetuity. In the low-odds scenario of success, she will be in a very high-income category, and all of the taxes on the rich that Obama is proposing or implying will apply to her.
So there you go. Our young entrepreneur works long and hard for not much money on the hopes of a big payout at the end, and while the payout is still there, it's not nearly as big as it once would have been. The question is now whether or not the smaller payoff is worth the sacrifice to get there.
The bottom line:
By my figuring, if you use Obama’s campaign proposals for long-run capital-gains, income, and FICA tax rates as a (probably conservative) guide to where rates may go, the prospective entrepreneur would have to increase her estimated odds of success at the moment of funding from 20 percent today to about 30 percent under the new tax regime in order to have the same financial incentive to start the company. That’s a huge difference; in fact, it’s about the same as the margin of difference between the odds of success for a new venture-backed company started by a first-time entrepreneur and the odds of success for a new venture-backed company started by a founder who has already done at least one successful start-up. Any venture capitalist can tell you how much likelier the second guy is to get funded than the first.
I don't think this will discourage everyone from trying, mind you. This scenario is just one of the many ways in which entrepreneurs can make money. It is possible to start a company with the goal of simply drawing a regular paycheck, albeit from yourself, and a larger one than you were getting before. For those people, if they can keep their income below Obama's suggested threshold of $250,000, may not encounter the high taxes.
On the other hand, who goes into business hoping to make less than $250,000 per year? I'd dare say most people would like to think they could make more than that. The question is whether they're willing to give up more in taxes for the priviledge.
I think Manzi is correct that this will discourage entrepreneurship at least a little. But even a little can be a lot.
Tuesday, February 24, 2009
Choosing a Business Entity Type
One aspect of forming a business has been weighing on my mind, and that's what type of business entity to form. I'm rather wary of government and want to make sure everything I do is by the rules so I don't regret it later. But even the most friendly of state governments do not make it easy to find out what you should do.
The first step is to decide what type of business entity you want to form. A few resources I've found are fairly good at spelling out the difference between the various options:
http://www.expertlaw.com/library/business/business_form.html
http://www.medlawplus.com/library/legal/businessentitychoice.htm
and, of course, the IRS...
http://www.irs.gov/businesses/small/article/0,,id=98359,00.html
The easiest to get into is the Sole Proprietorship, of course. Very little is needed to start such a business. In my state you file a $25 "Doing Business As" form and you're on your way. My main concern is that the business does not automatically pass to my wife if I die. The other is that if someone sues me successfully they can take everything I own, whether it's related to the business or not. There isn't much protection under the law.
A Limited Liability Company would be the next, most obvious choice. But that gets a bit more expensive and complicated. In my state it's $100 to file, plus I have to draft an Operating Agreement, which could easily mean a trip to the lawyer. On the up side, my family and I would be shielded from liability, it's easier to transfer membership and control, and taxes would still not be too complicated.
But it does sound complicated. I'm sure I could draft a decent Operating Agreement if I had someone else's to use as a model. But by the time I'm done, depending on how much I value my time, I may be better off just using MyNewCompany.com. They do all of that for you, if you're willing to pay. The most basic package is $180, and gets the job done. It may very well be worth it. Does anyone out there have experience with them?
So I guess the bottom line is this: Do I feel lucky? Chances are a sole proprietorship is all I'd really need. After all, you have to make money to pay taxes, right? But I'm big on risk management, and in a recent class I took they pointed out that one risk that should always be addressed is "What happens if I succeed beyond my wildest dreams?" Could I convert a sole proprietorship to an LLC or other business entity?
Perhaps if I'm that successful it wouldn't matter.
The first step is to decide what type of business entity you want to form. A few resources I've found are fairly good at spelling out the difference between the various options:
http://www.expertlaw.com/library/business/business_form.html
http://www.medlawplus.com/library/legal/businessentitychoice.htm
and, of course, the IRS...
http://www.irs.gov/businesses/small/article/0,,id=98359,00.html
The easiest to get into is the Sole Proprietorship, of course. Very little is needed to start such a business. In my state you file a $25 "Doing Business As" form and you're on your way. My main concern is that the business does not automatically pass to my wife if I die. The other is that if someone sues me successfully they can take everything I own, whether it's related to the business or not. There isn't much protection under the law.
A Limited Liability Company would be the next, most obvious choice. But that gets a bit more expensive and complicated. In my state it's $100 to file, plus I have to draft an Operating Agreement, which could easily mean a trip to the lawyer. On the up side, my family and I would be shielded from liability, it's easier to transfer membership and control, and taxes would still not be too complicated.
But it does sound complicated. I'm sure I could draft a decent Operating Agreement if I had someone else's to use as a model. But by the time I'm done, depending on how much I value my time, I may be better off just using MyNewCompany.com. They do all of that for you, if you're willing to pay. The most basic package is $180, and gets the job done. It may very well be worth it. Does anyone out there have experience with them?
So I guess the bottom line is this: Do I feel lucky? Chances are a sole proprietorship is all I'd really need. After all, you have to make money to pay taxes, right? But I'm big on risk management, and in a recent class I took they pointed out that one risk that should always be addressed is "What happens if I succeed beyond my wildest dreams?" Could I convert a sole proprietorship to an LLC or other business entity?
Perhaps if I'm that successful it wouldn't matter.
Friday, February 20, 2009
Staying Focused on the Goal
One of the reasons I'm starting a business is because my job has been marked for elimination in two months. While I don't think this idea will provide enough income soon enough to help with that immediate crisis, I do think it's worth getting started now.
The problem is staying focused. My wife and I both have engaged in a significant amount of "thrash" this week as we shift from task to task and try to figure out where we can best make a difference in our current situation. It's a bit easier for me, as I still have a 9-to-5 job I need to finish. But my wife is finding it a bit more difficult.
So what do you do when you have more options than you have time? Here's my advice: Crate, Evaluate, Delegate, Regenerate, and Coordinate.
Crate (a verb, meaning "get it all together in one place": Sit down with your business partner. In my case it's my wife. Brainstorm what needs to be done, both in getting the business going and in maintaining all the other essentials of life. Write it down! If it's not written down it will be all to easily pushed out by the next concern that comes along. If a specific task is not clear enough, break it down into smaller tasks until you feel each task is clear and manageable.
Evaluate: Prioritize the list based on how critical each item is to the over-all goal. Some will be obvious, but other will require careful thought to separate the "good" things from the "great" things. It may involve trying to do some cost-benefit analysis.
For example, my wife is a skilled quilter. A local gift shop is interested in selling her quilts, but charge "space rent" and a percentage commission. On the surface it sounds great, but when we ran the numbers we realized that my wife could make more money per hour working at McDonalds, and with less risk.
Less simple to analyze is whether we would be better off devoting more attention to our family garden this year or to helping her build up an inventory of craft goods to sell if more favorable terms can be found. Both are good goals. Both have both short term and long term benefits. Both require some money up front. Choosing which is better is nearly impossible without some sort of psychic ability. We ended up taking our best guess based on what we expect to have happen.
Delegate: Divide up the more important tasks. Clearly decide who is responsible for what. Don't try to tackle the entire list, however. Start with the most important items and pick those you believe you can accomplish within the block of time before your next "business meeting", which shouldn't be more than one week.
Be open and honest with each other about what you can reasonably expect to accomplish during that period. Don't take on too much just to feel like you're doing your fair share. If you've got other concerns to address or just can't work at the same pace as your partner, that's okay. Just so long as you communicate that. Setting realistic expectations will save lots of headache and guilt later on.
You may also discuss the next few items beyond that time frame just in case you end up accomplishing more than you expected, but even if that happens you can always quickly pick up the list, let your partner know you're selecting an additional task, and just go with it. You've got the list, so you know what the next most beneficial task is.
Regenerate: You are not a machine. You have to leave time for yourself. Make sure you have time do something different, something enjoyable, something that rejuvinates you. Take time away from the project so you can get some perspective and attack it fresh later. Far too often I find myself too close to my work to notice that I'm actually heading in the wrong direction--or at least missing out on a better direction.
Coordinate: Meet regularly and go through the process again. Make sure your list of tasks is complete. Add to, change, or remove from your list. Discuss successes and challenges alike. Celebrate progress. Delegate and go at it again.
I can't stress enough the importance of meeting regularly with your partner. Especially if your partner is your wife. There are two blocks of time we have designated as "sacred time" each week. The first is Date Night. We spend time together every week. It may not be much more than watching a video and having snacks, but it's a shared experience nonetheless. It gives us something to discuss, and shared "movie quotes" we can pull out in conversations throughout the week.
It's not always the same night, but I will cancel my own fun with my friends before I'll cancel my date with my wife.
The other is "Family Council". Every Sunday night we get together and plan the week. Then we set aside time to discuss issues that may be on our minds. Sometimes it's straight-forward "what are we going to do about..." type stuff, but sometimes there are deeply personal issues that need to be examined and worked through. Our Sunday night meetings are not always fun, but they've really strengthened our marriage.
I wouldn't go so far as to equate a business partnership as a marriage, but it can be close. And if your partner is your spouse, it's all the more critical. Staying in touch and staying focused will mean all the difference.
The problem is staying focused. My wife and I both have engaged in a significant amount of "thrash" this week as we shift from task to task and try to figure out where we can best make a difference in our current situation. It's a bit easier for me, as I still have a 9-to-5 job I need to finish. But my wife is finding it a bit more difficult.
So what do you do when you have more options than you have time? Here's my advice: Crate, Evaluate, Delegate, Regenerate, and Coordinate.
Crate (a verb, meaning "get it all together in one place": Sit down with your business partner. In my case it's my wife. Brainstorm what needs to be done, both in getting the business going and in maintaining all the other essentials of life. Write it down! If it's not written down it will be all to easily pushed out by the next concern that comes along. If a specific task is not clear enough, break it down into smaller tasks until you feel each task is clear and manageable.
Evaluate: Prioritize the list based on how critical each item is to the over-all goal. Some will be obvious, but other will require careful thought to separate the "good" things from the "great" things. It may involve trying to do some cost-benefit analysis.
For example, my wife is a skilled quilter. A local gift shop is interested in selling her quilts, but charge "space rent" and a percentage commission. On the surface it sounds great, but when we ran the numbers we realized that my wife could make more money per hour working at McDonalds, and with less risk.
Less simple to analyze is whether we would be better off devoting more attention to our family garden this year or to helping her build up an inventory of craft goods to sell if more favorable terms can be found. Both are good goals. Both have both short term and long term benefits. Both require some money up front. Choosing which is better is nearly impossible without some sort of psychic ability. We ended up taking our best guess based on what we expect to have happen.
Delegate: Divide up the more important tasks. Clearly decide who is responsible for what. Don't try to tackle the entire list, however. Start with the most important items and pick those you believe you can accomplish within the block of time before your next "business meeting", which shouldn't be more than one week.
Be open and honest with each other about what you can reasonably expect to accomplish during that period. Don't take on too much just to feel like you're doing your fair share. If you've got other concerns to address or just can't work at the same pace as your partner, that's okay. Just so long as you communicate that. Setting realistic expectations will save lots of headache and guilt later on.
You may also discuss the next few items beyond that time frame just in case you end up accomplishing more than you expected, but even if that happens you can always quickly pick up the list, let your partner know you're selecting an additional task, and just go with it. You've got the list, so you know what the next most beneficial task is.
Regenerate: You are not a machine. You have to leave time for yourself. Make sure you have time do something different, something enjoyable, something that rejuvinates you. Take time away from the project so you can get some perspective and attack it fresh later. Far too often I find myself too close to my work to notice that I'm actually heading in the wrong direction--or at least missing out on a better direction.
Coordinate: Meet regularly and go through the process again. Make sure your list of tasks is complete. Add to, change, or remove from your list. Discuss successes and challenges alike. Celebrate progress. Delegate and go at it again.
I can't stress enough the importance of meeting regularly with your partner. Especially if your partner is your wife. There are two blocks of time we have designated as "sacred time" each week. The first is Date Night. We spend time together every week. It may not be much more than watching a video and having snacks, but it's a shared experience nonetheless. It gives us something to discuss, and shared "movie quotes" we can pull out in conversations throughout the week.
It's not always the same night, but I will cancel my own fun with my friends before I'll cancel my date with my wife.
The other is "Family Council". Every Sunday night we get together and plan the week. Then we set aside time to discuss issues that may be on our minds. Sometimes it's straight-forward "what are we going to do about..." type stuff, but sometimes there are deeply personal issues that need to be examined and worked through. Our Sunday night meetings are not always fun, but they've really strengthened our marriage.
I wouldn't go so far as to equate a business partnership as a marriage, but it can be close. And if your partner is your spouse, it's all the more critical. Staying in touch and staying focused will mean all the difference.
Wednesday, February 18, 2009
Graphics Software on the Cheap
Since my business idea centers around a website, it's important that I get some decent graphics, including a logo. Since I'm doing this on the cheap, I can't afford to hire a graphics designer to do it. And if I could afford Photoshop, I could probably afford to hire a graphics designer. So what's a guy to do?
I started my IT career as a graphical editor for a software company who did things on the cheap. They bought me a copy of JASC software's Paint Shop Pro to use. Since I'm not a graphic designer I have no idea what bells and whistles it may be missing, but it was more than sufficient for what I was doing.
Later on I took on the company's customer newsletter, which required even more photo editing. With Paint Shop Pro I was able to produce credible graphics, my magnum opus being a picture of our company's new headquarters, complete with our sign, a flag on the flagpole, and the landscape looking nice and tidy. The thing is, at that point the building still had the former occupant's sign, the flagpoles were bare, and there were abundant weeds--we hadn't even moved in yet when I took the picture.
I had a blast removing the old sign, crafting a new sign from our company logo, "pulling" weeds, and adding the national and state flags. And I learned that PSP could do practically anything I could think of.
So when I committed to opening this new business I looked forward to getting some graphic editing software. I looked online, but even used, Photoshop was just too much for my budget. So I looked for PSP instead. The company has since been bought by Corel, but I was able to find a used version of PSP 8.10 online for $30. A bargain.
The software came in the mail yesterday, so last night I sat down to install it. Then, since they've changed the interface, I decided I'd tinker with it a bit to see what's changed. Two hours later I'd put together three separate logo options for my wife to consider. Perhaps half an hour of that was learning the interface changes, and the rest was trying a thousand different options.
It was fun. It was cheap! If you're not a good enough graphic designer to appreciate the difference between Paint Shop Pro and Photoshop, I'd say don't bother paying for the more expensive product. Cheap alternatives are easily found on Amazon or eBay.
I started my IT career as a graphical editor for a software company who did things on the cheap. They bought me a copy of JASC software's Paint Shop Pro to use. Since I'm not a graphic designer I have no idea what bells and whistles it may be missing, but it was more than sufficient for what I was doing.
Later on I took on the company's customer newsletter, which required even more photo editing. With Paint Shop Pro I was able to produce credible graphics, my magnum opus being a picture of our company's new headquarters, complete with our sign, a flag on the flagpole, and the landscape looking nice and tidy. The thing is, at that point the building still had the former occupant's sign, the flagpoles were bare, and there were abundant weeds--we hadn't even moved in yet when I took the picture.
I had a blast removing the old sign, crafting a new sign from our company logo, "pulling" weeds, and adding the national and state flags. And I learned that PSP could do practically anything I could think of.
So when I committed to opening this new business I looked forward to getting some graphic editing software. I looked online, but even used, Photoshop was just too much for my budget. So I looked for PSP instead. The company has since been bought by Corel, but I was able to find a used version of PSP 8.10 online for $30. A bargain.
The software came in the mail yesterday, so last night I sat down to install it. Then, since they've changed the interface, I decided I'd tinker with it a bit to see what's changed. Two hours later I'd put together three separate logo options for my wife to consider. Perhaps half an hour of that was learning the interface changes, and the rest was trying a thousand different options.
It was fun. It was cheap! If you're not a good enough graphic designer to appreciate the difference between Paint Shop Pro and Photoshop, I'd say don't bother paying for the more expensive product. Cheap alternatives are easily found on Amazon or eBay.
Tuesday, February 17, 2009
PayPal Donations and Blogger
EDIT: This is embarassing. I just found this article over on Bloggertricks.com on how to do everything I do below as a widget. It works quite easily, and I didn't even have the tag problems I had trying to place the button on the page without widgets. The only value this article adds is the ability to center your Donate button in the center of the sidebar, or if you want to find a different way of doing it.
As I mentioned in a previous post, last night I wrestled with PayPal and Blogger to install a donation button so people can hit my tip jar. (Disclaimer: Hit it if you find some value here. If not, that's cool. I learned a few things from putting it in, and that was the main goal.)
It took me the better part of an hour, I think. There were two main problems. The first was with the code that PayPal provided to paste into my blog. In their defense, there is probably no way they can anticipate every possible circumstance in which their code may be used. I don't know if the problems I encountered were because of bad coding on their part of bad implementation in Blogger.
Anyway, whenever I would paste the code into Blogger and attempt to preview the change it would error out. Fortunately Blogger does provide fairly good error messaging, so I was able to figure it out on my own. The essence of the issue was a failure to close either the [input] or the [img] tags. (Note: so as not to confuse Blogger I replace all <> symbols with [ and ].)
From studying the rest of the code (I'm referring to the "Layout" tab, under the "Edit HTML" option) I found that you can both open and close a tag by placing the closing slash ("/") at the end of the tag, such as [img...... /]. By adding the close slash at the end of each [input..../] and [img..../] tag, I was able to get the code to work properly.
However, I didn't care much for the alignment of the button, and there was no text to explain what it was. For that I had to reach back into my cobwebbed memory of HTML and pull out the good old [p align='center'] tag. I inserted the tag and some text into the code, and it worked. What I ended up with (edited for brevity sake) was something like this:
Next came the problem of where to put it. It took me several tries of hit-n-miss to even find someplace where it would show up, let alone get it right. I found that the best place to put the code is between [div] sections. But depending on your template, that may not put it in a good spot. The template for this blog, for example, left no place for the button until after all the widget and blog ads, so it would have been well off the screen.
So I had to get creative. I looked for the section beginning with:
[div id='sidebar-wrapper']
[b:section class='sidebar' id='sidebar' preferred='yes']
I then added a tag to end that section after the profile section widget:
[b:widget id='Profile2' locked='false' title='About Me' type='Profile'/]
[/b:section]
[/div] (red text shows added code)
I then inserted my PayPal code at this point. But that left some additional homeless widgets after it. I had to essentially create a second side-bar wrapper as follows:
[div id='sidebar-wrapper']
[b:section class='sidebar' id='sidebar2' preferred='yes']
[b:widget id='AdSense2' locked='false' title='' type='AdSense'/]
[/b:section]
[/div]
Note, I had to make the sidebar id='sidebar2' instead of just 'sidebar', or Blogger complains.
Once I figured all that out it wasn't too bad. I'm pretty sure I could have found some online help documentation from Blogger that might have helped. Unfortunately I have a bad habit of getting a by myopic when struggling with a problem, and I forget to look. It might have saved me half an hour had I looked for help.
But now I've got tip jars up on my blogs. And you can to!
Follow-up thought: I suspect the reason why I had tag trouble in the Edit HTML mode but not in creating the widget is that the Edit HTML mode is really XML, whereas the widget deals with straight HTML. HTML follows a more loose standard than XML, I believe.
As I mentioned in a previous post, last night I wrestled with PayPal and Blogger to install a donation button so people can hit my tip jar. (Disclaimer: Hit it if you find some value here. If not, that's cool. I learned a few things from putting it in, and that was the main goal.)
It took me the better part of an hour, I think. There were two main problems. The first was with the code that PayPal provided to paste into my blog. In their defense, there is probably no way they can anticipate every possible circumstance in which their code may be used. I don't know if the problems I encountered were because of bad coding on their part of bad implementation in Blogger.
Anyway, whenever I would paste the code into Blogger and attempt to preview the change it would error out. Fortunately Blogger does provide fairly good error messaging, so I was able to figure it out on my own. The essence of the issue was a failure to close either the [input] or the [img] tags. (Note: so as not to confuse Blogger I replace all <> symbols with [ and ].)
From studying the rest of the code (I'm referring to the "Layout" tab, under the "Edit HTML" option) I found that you can both open and close a tag by placing the closing slash ("/") at the end of the tag, such as [img...... /]. By adding the close slash at the end of each [input..../] and [img..../] tag, I was able to get the code to work properly.
However, I didn't care much for the alignment of the button, and there was no text to explain what it was. For that I had to reach back into my cobwebbed memory of HTML and pull out the good old [p align='center'] tag. I inserted the tag and some text into the code, and it worked. What I ended up with (edited for brevity sake) was something like this:
[!-- PAYPAL INSERT --]
[form action='https://www.paypal.com/cgi-bin/webscr' method='post']
[p align='center']
[input name='cmd' type='hidden' value='_s-xclick'/]
[input name='encrypted' type='hidden' value='-----BEGIN PKCS7-----MIIH...wnj9w==-----END PKCS7----- '/]
[input alt='' border='0' name='submit' src='https://www.paypal.com/en_US/i/btn/btn_donate_LG.gif' type='image'/]
[img alt='' border='0' height='1' src='https://www.paypal.com/en_US/i/scr/pixel.gif' width='1'/]
[br/]Hit the Tip Jar![/p]
[/form]
[!-- END PAYPAL INSERT --]
Next came the problem of where to put it. It took me several tries of hit-n-miss to even find someplace where it would show up, let alone get it right. I found that the best place to put the code is between [div] sections. But depending on your template, that may not put it in a good spot. The template for this blog, for example, left no place for the button until after all the widget and blog ads, so it would have been well off the screen.
So I had to get creative. I looked for the section beginning with:
[div id='sidebar-wrapper']
[b:section class='sidebar' id='sidebar' preferred='yes']
I then added a tag to end that section after the profile section widget:
[b:widget id='Profile2' locked='false' title='About Me' type='Profile'/]
[/b:section]
[/div] (red text shows added code)
I then inserted my PayPal code at this point. But that left some additional homeless widgets after it. I had to essentially create a second side-bar wrapper as follows:
[div id='sidebar-wrapper']
[b:section class='sidebar' id='sidebar2' preferred='yes']
[b:widget id='AdSense2' locked='false' title='' type='AdSense'/]
[/b:section]
[/div]
Note, I had to make the sidebar id='sidebar2' instead of just 'sidebar', or Blogger complains.
Once I figured all that out it wasn't too bad. I'm pretty sure I could have found some online help documentation from Blogger that might have helped. Unfortunately I have a bad habit of getting a by myopic when struggling with a problem, and I forget to look. It might have saved me half an hour had I looked for help.
But now I've got tip jars up on my blogs. And you can to!
Follow-up thought: I suspect the reason why I had tag trouble in the Edit HTML mode but not in creating the widget is that the Edit HTML mode is really XML, whereas the widget deals with straight HTML. HTML follows a more loose standard than XML, I believe.
Clickbank: Web Sales Made Simple
Last night I was exploring options for putting up a "tip jar" on my sites. Just as a disclaimer I'm not expecting everyone to leave tips. If you think I'm providing value for you and want to leave something, cool! But I'm not expecting to get rich from this. It was mainly an experiment to see how you would even do something like that. It was not easy, mind you. But I digress.
Someone at work with whom I've been discussing my ideas mentioned that she uses Clickbank.com for a site she's been putting together. I had no idea what it did, so I thought I'd check it out.
What they have is actually two different solutions. The first--and the one my friend is using--is an affiliate program, where you sell stuff for others on your site. You've probably seen similar things, like when people link to items on Amazon.com and get a small bonus if someone clicks through and buys something (disclaimer: I am not an Amazon.com affiliate. Yet.).
The second is an amazingly simple method for selling digital products and subscriptions online. For your part is requires two web pages. The first is the promotion page where you describe the item for sale. On this page you place a link to Clickbank for the item you wish them to purchase (Clickbank must approve the item first).
The second page is where they can download/read the purchased product, which they call a "thank you page". The purchaser will be linked to this page after they complete the transaction. They're essentially the tollgate between the two pages. Simple, yet elegant.
The first question I had is how you keep people from noticing that all they really need to do is guess the name of the "thank you page" and they can circumvent Clickbank and get stuff for free. Clickbank does offer some hints, however, if you know where to look (here).
But still, it seems to be a simple yet elegant solution. There is a $50 startup fee, and they charge $2.50 for every check they send (though after a while they can set up direct deposit). Commissions on sales are $1 plus $.075 per dollar in sales price. For example, if I sell a widget for $10, they'll pass $8.25 along to me.
They can also fix you up with affiliates who will sell your product through their sites for a commission of up to 75%. Note that this is on sales not on click-throughs or page views.
I have nothing to compare them with so far, but they sound fairly reasonable. I looked into PayPal a little last night, but that was for a tip jar. PayPal charges $.30 per transaction, regardless of size. I didn't look into their ecommerce options, which may be comparable in price to Clickbank. That may be a good topic for a future post.
But I'd say that for a quick, simple solution for selling online, Clickbank is worth a look.
Someone at work with whom I've been discussing my ideas mentioned that she uses Clickbank.com for a site she's been putting together. I had no idea what it did, so I thought I'd check it out.
What they have is actually two different solutions. The first--and the one my friend is using--is an affiliate program, where you sell stuff for others on your site. You've probably seen similar things, like when people link to items on Amazon.com and get a small bonus if someone clicks through and buys something (disclaimer: I am not an Amazon.com affiliate. Yet.).
The second is an amazingly simple method for selling digital products and subscriptions online. For your part is requires two web pages. The first is the promotion page where you describe the item for sale. On this page you place a link to Clickbank for the item you wish them to purchase (Clickbank must approve the item first).
The second page is where they can download/read the purchased product, which they call a "thank you page". The purchaser will be linked to this page after they complete the transaction. They're essentially the tollgate between the two pages. Simple, yet elegant.
The first question I had is how you keep people from noticing that all they really need to do is guess the name of the "thank you page" and they can circumvent Clickbank and get stuff for free. Clickbank does offer some hints, however, if you know where to look (here).
But still, it seems to be a simple yet elegant solution. There is a $50 startup fee, and they charge $2.50 for every check they send (though after a while they can set up direct deposit). Commissions on sales are $1 plus $.075 per dollar in sales price. For example, if I sell a widget for $10, they'll pass $8.25 along to me.
They can also fix you up with affiliates who will sell your product through their sites for a commission of up to 75%. Note that this is on sales not on click-throughs or page views.
I have nothing to compare them with so far, but they sound fairly reasonable. I looked into PayPal a little last night, but that was for a tip jar. PayPal charges $.30 per transaction, regardless of size. I didn't look into their ecommerce options, which may be comparable in price to Clickbank. That may be a good topic for a future post.
But I'd say that for a quick, simple solution for selling online, Clickbank is worth a look.
Rethinking Strategies
Yesterday I was doing a little research and came across an article from Steve Pavlina on how to build web traffic. Interestingly enough he doesn't talk about page-rankings and linking. He talks about producing quality content. I guess he knows what he's talking about. He gets about 208,000 hits per month on his site.
But more importantly he encourages people to keep money in perspective:
If you think that Mr. Pavlina is a complete altruist, just read another article of his on how to make money from a blog and you'll get another picture.
But the point stands. He is successful (in 2006 his blog was bringing $1000 per DAY) because of the reasons he states in the first article: he's in it because he wants to make a difference, and he's passionate about what he does. He does believe in getting paid for his work, but by concentrating on what he most enjoys--personal improvement--he creates a product that is evidently quite lucrative. If he contentrated just on making money and had no product he wouldn't be nearly so successful.
So my wife and I had a talk over dinner last night (which usually isn't very easy with three young kids), and we're going to shift our focus. Money would be nice, but we'd prefer to be in this to make a difference. And since this business is more about my wife's passion than my own, she has to be in it for the right reasons or she won't be in it for long.
That's not to say I'm not passionate about this. I'm just passionate about different aspects of it. I believe in the cause we're advancing, but it's not my passion. My passion lies in writing to influence, in creating something bigger than myself, and yes, in making money to one day provide me the freedom to really focus on what I enjoy. So while perhaps our passions are not shared, they certainly can be mutually supportive.
So after our discussion we are altering our focus a little, but not by much. We'll just be providing more free content than we originally envisioned. Now that we've got that settled, it's "once more into the niche!"
But more importantly he encourages people to keep money in perspective:
It’s important that I generate some money from my work, but it’s not necessary that I extract every possible dollar. In fact, relative to its traffic levels, I’m seriously under-monetizing this site. But money is only a means to an end, not an end in itself. Making a positive contribution to the world is a lot more important to me than money. Money can be useful in achieving this objective, but human relationships are far more important. The funny thing is that the less I rely on money, the more of it I seem to have.
If you think that Mr. Pavlina is a complete altruist, just read another article of his on how to make money from a blog and you'll get another picture.
But the point stands. He is successful (in 2006 his blog was bringing $1000 per DAY) because of the reasons he states in the first article: he's in it because he wants to make a difference, and he's passionate about what he does. He does believe in getting paid for his work, but by concentrating on what he most enjoys--personal improvement--he creates a product that is evidently quite lucrative. If he contentrated just on making money and had no product he wouldn't be nearly so successful.
So my wife and I had a talk over dinner last night (which usually isn't very easy with three young kids), and we're going to shift our focus. Money would be nice, but we'd prefer to be in this to make a difference. And since this business is more about my wife's passion than my own, she has to be in it for the right reasons or she won't be in it for long.
That's not to say I'm not passionate about this. I'm just passionate about different aspects of it. I believe in the cause we're advancing, but it's not my passion. My passion lies in writing to influence, in creating something bigger than myself, and yes, in making money to one day provide me the freedom to really focus on what I enjoy. So while perhaps our passions are not shared, they certainly can be mutually supportive.
So after our discussion we are altering our focus a little, but not by much. We'll just be providing more free content than we originally envisioned. Now that we've got that settled, it's "once more into the niche!"
Monday, February 16, 2009
Business Plans
One thing I plan to not skimp on is a business plan. A business plan can really help you think through all the various aspects of starting your business. Like how you plan to make money. Who are your customers? What are you selling? What are your start-up costs? What are your expected operational costs and revenues?
See your local Small Business Administration for tips, tools, and templates for writing a business plan.
In some areas they can even put you in touch with mentors who can help you take your rough draft plan and turn it into something more useful and concrete. These mentors are often current or former business owners who want to give back to their communities and pass on the knowledge they wish they'd have known starting out. The SBA can also hook you up with other resources in your community.
My business plan is still taking shape. I've mainly got an outline at this point. But it's a start, and it's already helped me think of things I might not have otherwise.
See your local Small Business Administration for tips, tools, and templates for writing a business plan.
In some areas they can even put you in touch with mentors who can help you take your rough draft plan and turn it into something more useful and concrete. These mentors are often current or former business owners who want to give back to their communities and pass on the knowledge they wish they'd have known starting out. The SBA can also hook you up with other resources in your community.
My business plan is still taking shape. I've mainly got an outline at this point. But it's a start, and it's already helped me think of things I might not have otherwise.
Building a Site on the Cheap
One of the ways I've been able to convince my wife to join me in this crazy escapade is to convince her we can do this fairly cheaply. And you can. The question is whether it's a good idea or not.
So far our expenses have been about $75 dollars for graphic editing software (used) and domain-name registration (we bought .com, .org, and .net just to make sure we don't get any copycat sites taking advantage of any domain confusion. Paranoid? Probably).
We want the site to have a main content section with an attached blog or two and a discussion board. There are two directions we could take on this.
The first is to just use existing hosting services. Our domain registrar gives us free space to set up our site, so that part would be simple. I've set up a website before, albeit a very simple, hand-coded HTML one, so I know I can do that much.
I could also use services like Blogger.com or WordPress.com for the blogs, and through some technical wizardry make our blog on their site look like it's on ours. The same could be done for the discussion board. It's free, and at least it looks easy. The only problem might be how much control we have--and whether we can migrate if we do decide to host everything ourselves at some point.
The other options is to pay for web hosting. My ISP has been quite good, and I know they'd treat me well. But to host a site is $50 to set it up, and then $25 per month after that. I'm not entertaining any delusions of being able to make $350+ our first year. And I'll soon be out of a job.
On the other hand, I could control every detail of the site, and could get the blog and discussion board software for free. I'd just have to figure out how to set it up. I'd be able to control every aspect of the configuration, which could be fun--and time consuming.
At some later date I'll need to add the e-commerce components to sell the ebooks. I'm fairly certain that would almost guarantee we'd need our own hosted site at that point. And I work in the technology industry. I know how the seemingly simple task of switching to one system to another can become a disaster. So it's very tempting to start out on the architecture I will eventually have to move to anyway, regardless of the cost.
Anyone out there tried this themselves? Any advice to give?
So far our expenses have been about $75 dollars for graphic editing software (used) and domain-name registration (we bought .com, .org, and .net just to make sure we don't get any copycat sites taking advantage of any domain confusion. Paranoid? Probably).
We want the site to have a main content section with an attached blog or two and a discussion board. There are two directions we could take on this.
The first is to just use existing hosting services. Our domain registrar gives us free space to set up our site, so that part would be simple. I've set up a website before, albeit a very simple, hand-coded HTML one, so I know I can do that much.
I could also use services like Blogger.com or WordPress.com for the blogs, and through some technical wizardry make our blog on their site look like it's on ours. The same could be done for the discussion board. It's free, and at least it looks easy. The only problem might be how much control we have--and whether we can migrate if we do decide to host everything ourselves at some point.
The other options is to pay for web hosting. My ISP has been quite good, and I know they'd treat me well. But to host a site is $50 to set it up, and then $25 per month after that. I'm not entertaining any delusions of being able to make $350+ our first year. And I'll soon be out of a job.
On the other hand, I could control every detail of the site, and could get the blog and discussion board software for free. I'd just have to figure out how to set it up. I'd be able to control every aspect of the configuration, which could be fun--and time consuming.
At some later date I'll need to add the e-commerce components to sell the ebooks. I'm fairly certain that would almost guarantee we'd need our own hosted site at that point. And I work in the technology industry. I know how the seemingly simple task of switching to one system to another can become a disaster. So it's very tempting to start out on the architecture I will eventually have to move to anyway, regardless of the cost.
Anyone out there tried this themselves? Any advice to give?
Getting Serious About Self-Employment
Let me introduce myself. I'm an employee of a Fortune 40 company where I've been employed for four years. Last month I was informed my position will be terminated in April. While this did not come as a surprise, it's still not something I look forward to, especially in these economic times.
Last week my church sponsored a small business seminar. I think pretty much everyone who has ever worked for someone else has thought about running their own business someday. I'm not exception. The reality is, if I don't find a job withing a few months, I may have to try my hand at it. So a little up-front advice wouldn't hurt.
I came away fairly convinced that I can't start a brick-and-mortar business right now. But I also came away with an idea for an ebook to try selling online. The trouble is that it would involve partnering with my wife, who has not been all that thrilled with the idea of me starting my own business.
It turns out she likes the idea. We got to bed late that night from brainstorming ideas. We decided to give this a try, as the initial outlay is fairly low and the payoff could be well worth it. But it's not something we'll be able to do overnight. We want to do this right, so that we can open up several potential revenue streams at once.
What it involves (I'm going to avoid details for now) is establishing a web site with accompanying weblogs all aimed at our particular niche market. We want to load it up with unique and credible content that will drive traffic to our site. When the traffic numbers are looking decent we'll add some of the simpler revenue streams like web-ads, tip-jars, or affiliate programs.
When the traffic hits a higher goal we'll then try selling our ebook. Though it will be on the same topic as the rest of the site, we're hoping to provide new content with value-added components that will make it worth paying a few bucks for. If we have enough customers it could add up to some serious money.
But at the moment there is still much to plan, much to decide. And that's what this blog is all about--the process of getting from here to there.
Last week my church sponsored a small business seminar. I think pretty much everyone who has ever worked for someone else has thought about running their own business someday. I'm not exception. The reality is, if I don't find a job withing a few months, I may have to try my hand at it. So a little up-front advice wouldn't hurt.
I came away fairly convinced that I can't start a brick-and-mortar business right now. But I also came away with an idea for an ebook to try selling online. The trouble is that it would involve partnering with my wife, who has not been all that thrilled with the idea of me starting my own business.
It turns out she likes the idea. We got to bed late that night from brainstorming ideas. We decided to give this a try, as the initial outlay is fairly low and the payoff could be well worth it. But it's not something we'll be able to do overnight. We want to do this right, so that we can open up several potential revenue streams at once.
What it involves (I'm going to avoid details for now) is establishing a web site with accompanying weblogs all aimed at our particular niche market. We want to load it up with unique and credible content that will drive traffic to our site. When the traffic numbers are looking decent we'll add some of the simpler revenue streams like web-ads, tip-jars, or affiliate programs.
When the traffic hits a higher goal we'll then try selling our ebook. Though it will be on the same topic as the rest of the site, we're hoping to provide new content with value-added components that will make it worth paying a few bucks for. If we have enough customers it could add up to some serious money.
But at the moment there is still much to plan, much to decide. And that's what this blog is all about--the process of getting from here to there.
Subscribe to:
Posts (Atom)
