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["Toni Hawryluk" <tonihawr AT msn.com>]

http://www.noaa.gov/<http://www.noaa.gov/>
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Subject: [Homestead] Home Business, Startup,
        from concept to successful operation
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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
subcontractors.
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.