Suzy B Software 2/Suzy B Software CD-ROM 2 (1994).iso/extras/textfile/answers/answers.txt

Text File | 1995-04-27 | 24KB | 544 lines

                   Answers to Business Questions

The text below contains excerpts from THE HOME OFFICE AND SMALL
BUSINESS ANSWER BOOK by Janet Attard. The book, which is published
by Henry Holt and Company, contains practical, real-world answers
to more than 900 of the most frequently asked questions about
starting and running home offices and small businesses.


The following is copyright (c) 1993 by Janet Attard. All rights
reserved. The file may be copied to BBS and online services only
if this copyright notice and all other information in the file
remains intact. Used by arrangement with Henry Holt and Company,
Inc.

                         Excerpts from
         THE HOME OFFICE AND SMALL BUSINESS ANSWER BOOK
                         by Janet Attard

This week more than 39 million people in the United States are
likely to spend some time tapping away at home computer keyboards,
tinkering with gadgets in slightly musty basements, loading boxes
or barrels or tools into vans or garages, or pursuing any number
of other activities, all in pursuit of one common goal--making
money at home.*

Who are these people? How successful are they at making money at
home? More importantly, should you work at home and will you be
successful? Here are some insights and information to guide you in
your decision


WHO WORKS AT HOME?
Almost everyone works at home, or so it often seems! There's that
guy up the street who has a little wallpapering business on the
side; the woman around the corner who translates scientific papers
into German; your sister in Chicago who works as a freelance
direct mail copywriter ;and your brother-in-law in California who
leads corporate training seminars.

Then, too, there's the auto mechanic who makes house calls; the
plumber, the homebased word processor your company hires
occasionally, the woman who does your taxes every year; the
computer consultant that just installed a new inventory system in
your company's warehouse, and the young man in a suburban NY
community who grew his "little" newspaper delivery route into an
enterprise so profitable that it let him put aside enough money to
pay for his college education and╩make a down payment on a
condominium he purchased for rental income -- before he turned 18.

And, let's not forget your old school "pal" Jim Douglas. Jim is
that guy you haven't seen in 15 years who called last week just to
say "Hello!"-- and to share information with you about a wonderful
business opportunity he's discovered that could help you save for
a financially secure retirement.

                         -=-=-=-=-=-

HOW MUCH MONEY DO PEOPLE WHO WORK AT HOME MAKE?
Some people earn as much as $250,000 a year working from home.
Others work sporadically from home and make just a few hundred to
a few thousand dollars annually. Still others grow their
businesses so big they have to move them out of their homes to
nearby business or industrial space. Results of a study conducted
by the Home Office/Small Business RoundTable on the GEnie¿
computer information service, suggest most full-time self-employed
gross $30,000 or more each year; 10 per cent them gross more than
$100,000 per year from their businesses.

                         -=-=-=-=-=-



IS THERE ANYTHING I CAN'T DO AT HOME?
There are certain products illegal to produce in the home.
Fireworks and explosives, medical supplies or drugs are prohibited
in most states. Manufacture of foods and clothing at home is
highly regulated or prohibited in some localities.2  Generally, if
what you do can affect the health and safety of others, will be
regulated, and could be prohibited as a home business. In
addition, some communities have outdated zoning laws forbidding
any type of business to be conducted in the home. Often such laws
are blatantly ignored; sometimes they are enforced.  Check your
local laws if you have any doubts.(See Chapter 10 for information
on zoning and other laws that may affect you.)

                         -=-=-=-=-=-

THERE ARE A LOT OF BUSINESSES THAT SOUND INTERESTING TO ME. HOW DO
I DECIDE WHICH BUSINES IS THE RIGHT ONE?
Look for the business that comes closest to your interests and
capabilities and one that fits in with your long and short range
financial goals. For each business you think you might want to
start, ask yourself the questions below. Write, your answers down
on a piece of paper so you can more easily compare the relative
benefits and drawbacks of one business over other.

 *   Do I really know much about this business?
 *   Do I have all the skills needed to start and run
     this business?
 *   Would I really enjoy doing whatever is necessary to sell
     this product or service?
 *   How much money do I need to make each week?
 *   How much money could this business make each week?
 *   How long would it take (realistically!) to start
     generating that much money?
 *   How much will it cost to start this business and run it
     until it starts producing income on a steady basis?
 *   Can I afford to put that much into the business?
 *   What money will I use to live on until the business
     starts making money?
 *   How fast do you need to generate money?
 *   Are there really enough people who want to buy this
     product or service?(See Chapter X, Planning)
 *   Do I know how to find them?
 *   How many hours a week can I work now?
 *   How many hours a week will it take to do all the work
     (finding customers, producing or getting the product or
     service to them, billing them, doing the bookkeeping)?
 *   How big could the business grow?
 *   How big do I want it to grow?

TABLE 2.1 on page 20 should help you explore your interests and
skills.

                         -=-=-=-=-=-


WHAT SHOULD GO INTO A BUSINESS PLAN IF I'M NOT LOOKING FOR A LOAN
OR INVESTORS?

If you will be investing any significant amount of money or time
in you venture, you should create a business plan that at minimum
puts the following information down on paper:

 * What business am I in?
The answer to this question should dictate the focus for all your
operation.  For instance, are you in the business of selling dried
floral arrangements or decorative home accessories? Do you have a
word processing business, a resume service or a secretarial
service? If you offer several different products or services, how
do they fit together? What do they have in common? You should be
able to summarize the nature of your business in a sentence or
two. If you can't do that, your business isn't likely to have the
focus it needs for growth and success.

 * Who are my customers and what do they want to buy?.
Even though you aren't looking for a loan or investors, you still
need to gather facts about your market so you can make realistic
sales forecasts.

 * How will I sell my products or services?
Many homebased entrepreneurs get so engrossed in developing their
ideas that they forget to determine how they are going to sell
their products or services and what it will cost them to make
those sales. Typical is the person who pulls thousands of dollars
out of savings to buy the equipment necessary to run a business,
then discovers that newspaper ads cost more than he thought and
that he doesn't have enough money left to run ads long enough to
have them do any good.  The time to make such discoveries is
before you sink thousands of dollars into setting up you
operation, not afterwards.

 * What will all of my expenses be?
One of the biggest mistakes made by people who start homebased and
other very small business is not calculating all of their costs.
Production and advertising expenses are only part of the costs you
will incur.  Even if you work from home you will still have to buy
supplies, (for instance, just printing out or photocopying a
single page of text can cost you anywhere from about 2 to 5 cents
depending on the cost of ink and the type of paper you are using),
You will also pay for business cards, letterhead and envelopes,
equipment, repairs, gas if you travel to your customers,
professional fees, taxes, insurance, etc.

 * At what point will I make a profit?
The point of being in business is to make a profit. You need to
know the how many sales you need to make at what price to make the
kind of profit you want or need from the business. You also need
to determine how long it might take you to reach that level of
profit so you can determine if you have enough money to live on
and support the business until it does become profitable.

                         -=-=-=-=-=-


HOW DO I MAKE REALISTIC SALES FORCASTS
You start out by getting industry statistics if possible. Trade
associations, trade magazines and newspapers all may have
information on the total volume of sales in an industry and how
this year's sales compares to last year's sales.
You may be able to get some information about the size of your
market and location of it through the same sources. Demographic
information available from the U. S. Department of Labor, the
Bureau of Census, the U. S. Department of Commerce, and local or
regional economic development agencies all can be extremely
valuable too.
Other ways you can get the facts you need to predict sales
include:

 *   Using industry averagers to calculate response rates to
     different advertising and sales methods.

 *   Asking distributors, wholesalers, or sales representatives
      or agents what their experience has been with similar
      products or services.

 *   Getting circulation figures (or audience size) for the
     media you plan to use for advertising

 *   Calling other advertisers who use or have used that
     media in the past and asking what their response rates
     have been.

 *   Surveying your potential customers (in person, by mail or
     on the phone) to find out what they buy, how much of it
     they buy, what they like or don't like about what they buy
     now, what it will take to get them to switch to your
     product(s) or services.


                          -=-=-=-=-=-


SHOULD I INCORPORATE IN DELAWARE?
As a small business with just a few shareholder-employees, the
easiest and best place to incorporate is usually within your own
state. Although Delaware may offer to some tax breaks and
potentially more statutory protection from liability for corporate
directors than your own state, the advantages are likely to be
outweighed for a small corporation by the disadvantages. For
instance, you would have to have appoint someone in Delaware to be
an agent for your corporation  (there are companies in Delaware
that do this); you will have to pay an annual franchise
(corporate) tax to the state of Delaware; and if you incorporate
in Delaware but do business in another state (the state where you
live, for instance) you will have to file an application in your
home state to do business as a foreign corporation, and will then
have to pay a franchise fee as well as income taxes in your home
state.

                         -=-=-=-=-=-


IS IT BETTER TO CHARGE FOR A SERVICE BY THE HOUR OR THE JOB?
There is no "better way" to charge. In fact, there will be some
instances when you charge by the hour, others where you charge by
the job, and perhaps still other times where you work on a
retainer basis, or get a "per head" fee (for teaching or seminars,
for instance), a contingency fee, commission (on sales or
placement) or royalties.

          *  Charge by the hour if the job is one where the
customer is likely to make changes in the job specifications while
you are working on the project. Here's the type of situation you
need to be wary of: A copywriter, after spending half a day at a
client's office getting all the information he needed to write the
copy for a new product brochure and sales letter for one of the
company's products, spent the better part of a second day writing
the material. Then, before he had a chance to deliver the
assignment, he got a call from the company's marketing manager who
informed him the company had decided the mailing should include a
limited time offer for a large discount on the product. The entire
mailing had to be redesigned and rewritten. Had the writer quoted
a flat rate on that job he would have lost at least one full day's
earnings.

          *  Charge by the job if the client won't agree to an
hourly rate, or if you know how long it will take you to do
certain types of job, (such as write a publicity release, or adapt
a commercial program for a specific use) it is often more
profitable to charge for the job.  For instance, if the going rate
for writing a short publicity release is $150, and you can write
the release in an hour, it's obviously better to state a flat fee
of $150 for writing the release than it would be  to charge $50 or
$75 an hour for your work.

Tip:
Sometimes charging by the job is advisable to avoid raised
eyebrows and questions about why your rates are so high.


Tip:
On corporate or other projects where many changes are likely due
to either a difficult client or the need for  approvals from
multiple department heads in a company, at each phase of a project
have someone at the company "sign off" on the work (sign a piece
of paper approving the work and authorizing the next step/or
acceptance). This will allow you to bill for changes made at a
later stage (and perhaps help keep you from being held responsible
for errors) that should have been caught in early stages of the
project.

                         -=-=-=-=-=-


HOW DO MOST SMALL BUSINESSES GET THEIR CUSTOMERS?
Results of a survey completed by more than 900 visitors to the
Home Office/Small Business RoundTable on the GEnie service in 1992
show that the majority of small and homebased businesses (54
percent) get most of their customers through word-of-mouth
advertising. The second leading source of customers for the same
group of people was networking (16 percent).


                         -=-=-=-=-=-


HOW DO I GET EDITORS TO WRITE AN ARTICLE ABOUT MY PRODUCT OR
SERVICE?
You have to have an interesting story or a "hook."  The fact you
sell cellular telephones is neither exciting, nor newsworthy. But
if one of your customers is using your portable cellular phone in
an interesting or new way, letting a reporter know about that
unusual or new use of your equipment might make the news and get
your company name in the press.
You also must know which media would be interested in the story
you are presenting.

"The major mistake people make is to propose stories that are not
appropriate for the publication." says Ron Roel, deputy business
editor of Newsday and New York Newsday.  "Be familiar with the
publications you  are trying to pitch the story to. Know what
kinds stories they print, what the length is. Show that you have
done some research and you have a particular reason to call about
a particular story, not that you just want someone to write about
you."

                         -=-=-=-=-=-


I'M PLANNING ON QUITTING MY JOB TO START MY OWN BUSINESS. CAN I
CONVERT MY COMPANY HEALTH INSURANCE POLICY TO A PERSONAL ONE?

If your present employer has 20 or more employees and you become
ineligible for insurance under the company group plan due to a
"qualifying event," you may be entitled to continue the plan for
up to 18 months1 under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA).If termination of employment is
due to disability, the continuation period is extended to 29
months.). You will have to pay the premiums out of your own
pocket, however. At the end of the continuation period you would
have the option of converting it to an individual policy under the
health care policy's regular conversion options.

                         -=-=-=-=-=-


DOES THE COBRA LAW APPLY TO ALL COMPANIES THAT HAVE TWENTY OR MORE
EMPLOYEES?
No. Some government, church and self-insured plans are exempt from
the COBRA law, so be sure to check before assuming you can
continue coverage.

                         -=-=-=-=-=-

WHAT ARE "QUALIFYING EVENTS?"
The following five events are considered qualifying events under
COBRA:
1) You cease to be an employee for any reason other than gross
   misconduct.
2) You change from full-time to part-time employment and no
   longer qualify for the company's healthcare plan due to the
   reduction in hours you work.
3) You are the spouse of the insured and lose coverage due to
   divorce, legal separation or the death of the insured.
4) You are a child who ceases to be eligible for group plan
   benefits.
5) You become entitled to Medicare benefits.

                         -=-=-=-=-=-

SUPPOSE I COMBINE A VACATION WITH A BUSINESS TRIP. CAN I STILL
DEDUCT MY TRIP?
If the primary purpose of the trip is business and the trip is
within the United States, you can deduct all your costs to and
from the location plus the hotel and other business-related costs
described above for the business part of the trip. Money you spend
on transportation or meals, entertainment, etc. during the
vacation part of the trip are not deductible. If, however, the
primary purpose of the trip is vacation or personal, no part of
your transportation costs from your tax home to your destination
are deductible. The transportation costs after you arrive that
relate to the business activity while away would be deductible.

For example, you travel to Disneyland for a vacation for a week.
While there, you drive to the next county to visit a client and
because of the distance return to your hotel the next day. You
could deduct the costs of reaching the client and the overnight
hotel fee plus 80 percent of food costs as business expenses, but
the rest of  your expenses for the week plus your airfare to
Disneyland would be nondeductible personal expenses.

However if you were attending a week-long business convention at
Disneyland and spent a day visiting relatives before returning
home, you could deduct your entire plane fare plus hotel, meals
(at 80 percent), etc. while at the hotel. The incidental costs of
traveling to your relative's town and expenses you incurred that
day would not be deductible.

                         -=-=-=-=-=-


 *Note: This figure is based on 1992 figures from Link Resources
Corporation and includes some 8.6 million  people who bring work
home from the office.
===============================================================


Those are just a few of the hundreds of helpful answers in THE
HOME OFFICE AND SMALL BUSINESS ANSWER BOOK. Among the other
questions answered in the book are:

 - Can you still start a successful business on the kitchen table?

 - How can you get authorized to accept credit cards?

 - What can you do to keep your company from falling victim to
   credit card fraud?

 - How can you tell if a business opportunity is real or just
   a scam?

 - What goes into a formal business plan and when do you need one?

 - Should you advertise?

 - What can you do if you can't afford to advertise?

 - Do you need special business insurance?

 - How should you price your product or service?

 - Can you really get a grant to start your business?

 - How much do you really have to spend to start a 900-number
   service?

 - How do you make the business "legal"?

 - What can you do to get your customers to pay on time?

 - Can you copyright your ideas to prevent them from being stolen?

 - How can you keep others from using your business name?

 - What are the advantages and disadvantages of incorporating?

 - Can you really make money in mail order?

 - Are franchises and "packaged" businesses worth buying?

 - Is it practical to use a plain paper fax as a photocopier
    rather than buying two separate machines?

 - What kinds of products sell well by mail?

 - How long should you keep business records?

 - What should go into a contract?

 - What should you know about buying health insurance?

 - How can you gain more control over your time?

 - What tax deductions are you entitled to?

 - Will the IRS consider you an employee instead of an independent
   contractor?

 - What criteria does the IRS use to determine whether an
   individual is an independent contractor or an employee?

 - What should you do if you can't pay the taxes you owe?

 - How do you write a publicity release?

 - What does it really take to make a business successful?


                     WHAT OTHERS HAVE TO SAY

Michael Espindle, who was managing editor of Home Office Computing
Magazine until February 1993 says:

     "For millions of people who dream about starting their
      own small or home-based business, Janet Attard's THE
      HOME OFFICE AND SMALL BUSINESS ANSWER BOOK provides an
      accessible, well-thought-out game plan for making that
      dream a reality. And for those who have already taken
      the plunge, the book serves as a handy reference - one
      to keep on the same shelf as your dictionary, local tax
      codes and motivational books."

Dale McNabb, Deputy Director of the Air Force Office of Small
Business says the book:

     "Proves its worth by addressing complex subjects directly,
      simply, completely and accurately."

M. Daniel Aloot, Director, Silicon Valley Small Business
Development Center, calls the Home Office and Small Business
Answer Book:

       "THE reference book for small business owners and
       entrepreneurs who need common sense answers -- right now
       and to-the-point."


                       ABOUT THE AUTHOR

Janet Attard is sysop of the Home Office/Small Business
RoundTable and the U. S. Air Force Small Business RoundTable on
the GEnie service. She is the  owner of Attard Communications,
a company which provides writing, editorial and information
services to growing businesses and major corporations. An award-
winning writer with numerous books and articles to her credit,
she has been self-employed for more than 20 years.

                      HOW TO GET YOUR COPY
        of THE HOME OFFICE AND SMALL BUSINESS ANSWER BOOK

THE HOME OFFICE AND SMALL BUSINESS ANSWER BOOK is published by
Henry Holt and Company, Inc. in both paperback ($19.95) and hard
cover ($40.00). It is available in book stores throughout the
country or may be ordered directly from the publisher.

U. S.orders:
For charge card orders  call 800-488-5233. Please mention offer
number 23. If you prefer to send a check, please mail your
payment plus  $2.50 shipping and handling charge to Henry Holt
Reference Books,  Henry Holt and Company, Inc., 115 West 18th
Street, NY, NY 10011.  Books will be shipped via UPS.

Canadian Orders:
For Canadian orders: The Canadian price is $25.00 (ppr). Please
add 7% GST, plus $2.50 shipping and handling. To order by phone in
Canada, call 1-800-387-9776. Or, write to Fitzhenry and Whiteside;
195 Allstate Parkway; Markham, Ontario L3R 4T8.