[Homestead] Home Business, Startup, from concept to successful operation

Tvoivozhd tvoivozd at infionline.net
Thu Sep 30 19:23:52 EDT 2004

OK, I'm starting to think about what is still a pretty hazy outline of 
several integrated home manufacturing businesses with these 
characteristics (possibly more, any advice is appreciated), not 
necessarily in this order and I have un uneasy feeling I am forgetting 
something---you have to get pro-forma contracts and bids to make your 
numbers at least initially fairly reliable.

This will take a while and I have no idea how much longer declining 
health will permit working on this---cross your fingers.  I need to to 
this for my kids as well as the Homestead List. Wish I had not deferred 
it so long. No damned condolences---I'm not sorry for myself and I don't 
want anyone else to indulge in histrionics.

I know this sounds like I am not adhering to the K.I.S.S principle (Keep 
It Simple Stupid), but it is --K.I.S (Keep It Safe) is equally important.

a. Write a good, complete business plan---as much for following your own 
business blueprint as for any lending agency or investor..
b. See how much business capital you have, stay within it---most early 
business failures occur because the business plan is inaccurate and 
capital is insufficient

c.  Retain an accountant and a lawyer to handle initial paperwork, tax 
returns, subsequent lawsuits, if any. You can go barefoot in business 
for a while, but don't plan to do it any longer than necessary---don't 
bet the farm.
d. Establish legal business format, Sole Ownership, Partnership, 
S-Corporation (recommended) standard corporation
e. File for and obtain Employer I.D numbers, Federal and State, local 
permits if necessary, Set up payroll withholding of taxes.

f. To whatever extent possible, the manufacturing component(s)should be 
initially confined to the kitchen table or small home workshop.
g. A constant cash-flow throughout the year, even with seasonal imbalance.
h. Use of on-site raw materials, or others nearby and 
free-for-collecting, buying them is the last alternative---compare costs 
of the last, usually you can wring out a lot of water with careful 
purchasing---which reminds me on things-forgot to which I referred to 
above---a purchasing agent should yield a savings above cost.  You want 
a good one.  If it is you, be a good one..
i. Minimize or eliminate payroll obligations---use subcontractors for 
expansion of production---breakdown business activities to facilitate 
use of subs. Draft a non-disclosure and non-compete clause with 
j. At startup low-level, you will keep all functions in your own hands, 
move them out as sales level dictates.  Last to leave would probably be 
product-assembly, packing and shipping.
k. Keep control of customer orders and cash-flow.
m. Balance the books daily---you don't need any business-threatening 
surprises---establish and pay taxes, payroll, subcontractor payment, any 
other reserve requirements as they accrue into special bank accounts.
l. Use Critical Path Method wall-charts as a constant reminder of where 
the (business(s) stand in order of scheduled events from startup through 
regular production
m. Network your computers with suppliers, subcontractors and most 
dealers to facilitate J.I.T. production, shipment, accounting and payment.
n. As soon as possible, convert payments from check to electronic transfer.
o. Establish a warranty policy.
p. Establish a returns and allowances policy.
q. Establish employment and subcontractor contracts.
r. Obtain all necessary insurance coverages, product liability, Owners 
and Officers, fire, theft, windstorm, vehicle liability etc.
s.  Market test and feedback is important to determining the value of a 
product.  The hell with market surveys, look at whether your dealers are 
coming up with escalating repeat orders.  If they aren't, do something 
about it immediately, do a better sales job or drop the line for 
something more promising.  Look at your marketing first---attractive 
packaging, presentation, accompanying sales literature, other dealer 
sales aids are as important than a good product, maybe more important. 
As soon as your product is in finished state, take it to a sales 
literature specialist and have him make a brochure (with high-quality 
photos) for your dealers and customers.

Start by selling to flea market dealers (who lust for a product the 
booth next door does not have) , and give hime some degree of 
exclusivity in return for his solemn promise to push hell out of your 
product.  Provide him sales aids to enhance his chances..  Making the 
contract in writing (with a performance requirement) will give him 
courage and guarantee his best effortsl  Craft shows are good, but less 
frequent and cost more money for you to attend.
Always remember that when possible, product animation is your best 
friend---in a countertop display, in a craft show booth, in a flea 
market booth.  Make it flashy, make it noisy if you can, see if it draws 
a crowd off the street, and see if it makes them buy.  Sales is a 
percentage business, if the crowd is bigger, the odds of a sale will 
remain the same, but total dollar volume goes up.

Oh, yeah, don't make a child-dangerous product, and you might review 
patents to see if you are in violation of any.  If it is a really good 
product but patented, it is rarely a problem to write a licensee 
agreement you can live with.

Then expand your marketing network through your website, selected 
newspapers and magazines.  Fasten your seatbelt, it can occasionally be 
an exciting ride.

I have not decided on the product mix, but am leaning toward kid-toys, 
something for their parents or  grandparents (hit them all at once while 
you've got them together.  Probably jewelry for women, don't know about 
jewelry for men, it is not my schtick. Something for cheaply and 
easily-reached specialty  audiences such as readers of  Audubon, Birders 
World , some seed  catalogs with  birdhouses.  I've had a novel and  
patentable birdhouse kicking around for some time---given time I will 
build models and tooling.  And maybe something that satisfies my leaning 
toward things mechanical.

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