Why to Consider a Home Business

The information below issue is quoted directly from a financial planner’s – Robert Mecca – weekly newsletter.  Why quote a financial planner in this home business blog?  Mecca points out several problems in the U.S. and European economies, currently and in the future.  Expert opinion like this is additional support for starting a home business.  A home business does not always replace a full-time job but may provide extra income or serve as a safety net, in case of lost employment.

Mecca’s last line is important: “I feel sorry for American workers under age 50 who will pay more into the social security system, work longer to get benefits, and be taxed heavier on the benefits.”  Social security benefits aren’t great anyway.  Also, today’s youth can expect to have many jobs throughout their careers.  Pensions are rare and many existing ones are woefully underfunded.  The answer?  Get that second personal income, own a business, and prepare for future financial problems.

“The FOMC led by Ben Bernanke reiterated that our US economy is moving forward at a slower clip than he would desire. Continued stubborn high unemployment and housing problems are a major drag on recovery efforts. I am convinced we do not have hyper inflation on the horizon. We see pockets of rising living costs. And there are some signs the housing market is improving. Europe, meanwhile, continues with their problems. Spain’s credit rating fell for the second time this year. England has fallen back into a recession. And social security is expected to run dry three years ahead of expectations. The latest projection is 2033 or only about twenty years from now. In previous news and commentaries, I predicted there will be an overhaul of reform and stick to my prediction. I feel sorry for American workers under age 50 who will pay more into the social security system, work longer to get benefits, and be taxed heavier on the benefits.”

By Dion D. Shaw

Dion D. Shaw is the founder and owner of Homepreneurs

Homepreneurs.  New Day.  New Opportunity.

Disclaimer

Homepreneurs does not endorse nor have any relationships with any of the services listed (Robert Mecca is a friend).  Homepreneurs receives no compensation or consideration for its suggestions.  Homepreneurs strongly urges all interested parties to conduct research and accepts no responsibility for any losses incurred.

© Homepreneurs 2010 – 2012, All Rights Reserved

image credit: stage2planning.com

Accounting Made Easy by the Accountinator

Home business, small business, and large corporations all need accounting services to one extent or another.  Larger business will have staff accountants while small business may have one or two bookkeepers and a home business has, well, you!  As the chief cook and bottle washer of a home business, the owner handles the production, marketing, sales, shipping, accounting, and more. Outsourcing accounting functions is an option of course, but many start up businesses want to save money and owners prefer to control all aspects of company operations.

How much about accounting did you learn in high school or college?  A few terms here and there and the difference between accounts receivable and accounts payable.  If a few accounting classes were taken, one might understand the difference between a balance sheet and a trial balance report or be able to define and describe E.B.I.T.A and G.A.A.P.  Lost yet?  I have taken a few classes in accounting and know little more than terms and roughly how they apply to accounting.  When I do need help and terms explained in plain language, I turn to a friend – Mark Holtzman -  that puts terms into plain and clear English on his blog: www.accountinator.com .

Mark’s basic tenet is pure and simple: “Do-it-yourself accounting – quick, cheap and easy.”  Here at Homepreneurs we understand and agree with quick, cheap, and easy.  The concept has guided us from the beginning and continues to this day. We are constantly on the hunt for free or low-cost services that can help you start and run a home business. The Accountinator is one of – if not the – most valued informational site we’ve run across.

When you need tips on starting a business, Homepreneurs can help.  If you need to know the language of business and all things accounting, I’ve not found a better source than Mark Holtzman’s Accountinator.  In his several times per week postings, you’ll find wisdom, advice, humor, and education.  Check the site out, you won’t be disappointed.

By Dion D Shaw

Dion D Shaw is the founder and owner of Homepreneurs

Disclaimer

Homepreneurs does not endorse nor have any relationships (Mark Holtzman is a friend) with any of the services listed.  Homepreneurs receives no compensation or consideration for its suggestions.  Homepreneurs strongly urges all interested parties to conduct research and accepts no responsibility for any losses incurred.

© Homepreneurs 2010 – 2012, All Rights Reserved

How To Stay Afloat While Between Jobs

“Those who fail to plan…

Plan to fail…”

I’ve always believed that people should experience two things: a job loss, and owning an old Volkswagen Beetle. The former because it gives one a chance to examine career choices and change if desired. Why the Bug? Owning an old car with no air conditioning, no power anything, and using soup cans for oil filters provides a sense of the simple things in life.

Back to the layoff – though it can have certain positive aspects – it is a major disruption in life. How does one put food on the table, pay the bills, etc?  Expenses must be managed and some income flow maintained.  I’ve personally experienced this three times in 12 years, each time a little harder than the last.  But below are some thoughts and tips for getting through this difficult period:

- Use blogs and websites like Homepreneurs to find jobs or ways to make extra money.

- File for unemployment benefits.  Assuming you weren’t fired for theft or some other felony, you are likely eligible.

- Let all your friends and business contacts know you are looking for a job.

- Cut extra – non-essential – expenses immediately.  Stop the magazines, newspapers, health club memberships, and daily lattes.

- Make a lean budget and stick to it.

- Be on the lookout for any and all opportunities.  Even temporary work can lead to a real job and proves to a potential employer that you are motivated.

- Work odd jobs to get some extra cash.  This could be delivering pizzas, mowing lawns, temp work of any kind; all this helps your cash flow.

- Work on your entrepreneurial mindset talents and mindset.

- Consider COBRA health coverage offered by the previous employer or short-term health insurance.  Nothing will drain savings faster than medical expenses.

Here are some links to other sites that may help you too:

WiseBread.com

Friends-tv.org

CookingOnABudget.com

SBA.gov

usa-healthinsurance.com

Job loss does not mean the world is ending.  Maintaining a good attitude and positive approach is very important.  Stay in contact with former co-workers.  Volunteer to help others, this can lead directly to job offers and shows a commitment to work and the community.

By Dion D Shaw

Dion  D Shaw is the founder and owner of Homepreneurs

Homepreneurs.  New Day.  New Opportunity.

This blog excerpted in part from http://blog.simplyhired.com/2011/08/8-great-ways-to-stay-afloat-while-between-jobs.htm

Disclaimer

Homepreneurs does not endorse nor have any relationships with any of the services listed.  Homepreneurs receives no compensation or consideration for its suggestions.  Homepreneurs strongly urges all interested parties to conduct research and accepts no responsibility for any losses incurred.

© Homepreneurs 2010 – 2012, All Rights Reserved

9 Business Acronyms You Need To Know

Homepreneurs recently received an email from one of our readers – Roxanne – of Business Insurance Quotes.  The organization recently published the article below and invited Homepreneurs to share it with our readers.  We love this article for its whimsical approach to a very dry topic: business acronyms.  On a serious note, this article is a must read for business beginners.  Kudos to the Business Insurance Quotes team, and thanks for sharing!

——–

Business can be a dirty business. And the language of business can be hard to understand. For beginners in the field (or the more analog of the bunch), business acronyms old and new can confuse and ultimately disappoint if not correctly understood. The more market-savvy professionals already know some of these standard shortened phrases, and business glossaries abound. But if the initial jargon has got you down, just KISS (keep it simple, stupid), and check out these nine business acronyms that you need to know.

1. GAAP

   The Generally Accepted Accounting Principles, or GAAP, are the set of rules that govern financial accounting in businesses. Bookkeepers use them, CPAs use them, and executives are familiar with them. Several on- and offline resources serve as references and reminders of this important framework; a simple search can help you fall into the GAAP. What You Thought It Meant: Giant Awesome Animatronic Porcupine.

2. IPO

   IPO stands for Initial Public Offering, and is the first sale of a private stock to the public. Most recently, the mass media has been concerned with the Facebook IPO. IPOs are often seen as “coming out” parties for up-and-coming powerful conglomerates, and often the success of the IPO predicts success in the short-term future.What You Thought It Meant: International Pun Olympiad, which is just what it sounds like — but, sadly, doesn’t exist … yet.

3. NDA

   An NDA, or Non-Disclosure Agreement, is an essential business acronym that often takes many forms. It is also known clandestinely as a secrecy agreement, and can also be called a CDA (a confidential disclosure agreement), a CA (confidentiality agreement), or a PIA (proprietary information agreement). These agreements can be one-sided, two-sided, or among a cadre of companies and resources. The most important thing you need to know if you’ve signed one is when and for what purpose you’re bound to keep your mouth shut. What You Thought It Meant: National Demonarchy Alliance. A demonarchy is defined as a political system governed by a demon. Maybe double-check that contract.

4. NOPAT

   Net Operating Profit After Tax, or NOPAT, is a performance measure that reveals a company’s after-tax profit. NOPAT does not equal net income. Assuming no debt, these are the organization’s potential cash earnings, or economic profits. What You Thought It Meant: National Organization of Paltripolitan American Teens. Paltripolitan is a rare English word used as a derisive term for a city dweller. The non-acronymable equivalent of this concept would be, “damn punk kids.”

5. EBITDA

   If you’re not a fan of GAAP, this one’s for you. EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, is a metric of measurement of cash earnings that is generally non-GAAP. EBITDA is often used in loans covenants. This valuation rubric ignores both cost of capital and degradation of long-term assets, prompting Warren Buffett to mock the metric at a Berkshire Hathaway Annual Meeting in 2002, saying, “People who use EBITDA are either trying to con you or they’re conning themselves.” What You Thought It Meant: Everyone Brings Ice, Tequila, Dom, and Alizé: the perfect BYO Party for the rapper on a budget.

6. ROI

   Also known as the Rate of Return (ROR), ROI stands for Return on Investment. Marketing, accounts receivables, and inventory all affect a company’s ROI. If you don’t know what this stands for and what it means for your company, you’re probably not a decision maker in your company. On the other hand, if you’re obsessed with your ROI, you’re probably an entrepreneur that’s using other people’s money. Either way, it’s a good acronym to have at the forefront of the mind, as it can be helpful even to consider other life aspects this way — return on time investment, return on emotional investment, and the like. What You Thought It Meant: Radicals of Isengard. This is the business world, people — not your WoW guild.

7. KPI

   Key Performance Indicators, or KPI, are essential to know for a burgeoning business. This term refers to the health of a business, and how well it is achieving its strategic objectives. KPIs can be defined broadly or specifically, and both are an essential thing to know. What You Thought It Meant: Key Party Indicator — and if you didn’t already, you probably don’t want to know.

8. IDEA

   A problem-solving process, IDEA — the overachieving business world cousin of driver’s ed acronym IPDE (Identify, Predict, Decide, Execute) — stands for Identify, Define, Execute, Augment. These four steps are a great way to problem-solve and improve performance in one or many areas of your business. Another form of this acronym is IDEAL: Identify, Define, Explore, Action, Lookback. What You Thought It Meant: Intergalactic Drug Enforcement Agency. Watch out, junkie aliens. You’re next.

9. QA/QC

   This acronym deals with two components regarding the methods by which products or services are measured: quality assurance and quality control. QA/QC can be an editing process, an aftermarket testing mechanism, or a means to ensure inventory confidence. If your business deals with any type of product, tangible or not, developing QA/QC is vitally important to the longevity and health of any enterprise. What You Thought It Meant: Quickly Acting Quixotic Cows. Unless you’re an oddly specific dairy farmer concerned with the more romantically idealistic and ill-fated of your herd, you may want to QA/QC your use of acronyms.

Courtesy of Business Insurance Quotes

Homepreneurs.  New Day.  New Opportunity.

Starting a Craft Business – Pricing the Product

Homepreneurs recently discussed creating a home business from Arts and Crafts.  We believe this market is growing, cost-effective, and a business option for many.  Arts and Crafts can be done part-time, full-time, by the employed, retired or semi-retired.  In part one, we examined crafting as a business option, part two focused on marketing, and part three covered several sales channels.

Part 4 of our crafting series covers general guidelines about craft pricing.  Please note that each market and product pricing model is different based on location, competition, and uniqueness.

Before setting prices, ask the following question: How much is my customer willing to pay?

The first step in the process is to research crafts similar to yours using online resources – eBay, Etsy, Facebook – local craft shows, and even retailers.  You’ll want to focus on local shows of course; most people will buy on impulse at craft shows.  Your research will help set reasonable prices and view the competition.

After getting a general idea of what the market will support, look at your own costs and determine if you can make a profit with your product.  Use the common formula below to calculate production costs:

Cost of Materials (metal, wood, yarn, paper, paint, etc.)

+

Cost of Labor (normally an hourly rate)

+

Indirect Costs (craft show booth fee, website pricing, etc.)

=

The breakeven price (you won’t make or lose money, only cover your costs)

If you want to make a profit, you will need to add $$ to the breakeven price.

An example of the above formula:

COM: $100 ($10 each x 10 parts) = $100 total cost of materials

+

Labor: $5/hour x 5 hours = $25 total labor

+

Indirect costs: $25 show booth, $8 gas

= $158 total cost for producing and showing this product

You’ll need to sell these 10 products at $15.80 each just to cover your cost.

In some situations, charging an hourly rate will set your pricing too high.  In these cases you might use the following simple formula:

Double the cost of materials

This works for very simple products like afghans, sweaters, wood products, and others.  Use your market research as a guide to be competitive.

How do you make money?

The big secret is buying your materials in bulk, on sale, or producing in mass quantity (think assembly line).  Find a preferred supplier that will give you preferred discounts for frequent purchases.  Use the regular sales price as a benchmark for cost of materials (COM).  The comparison below shows the difference in costing:

Using regular material pricing:

COM:  $10 (materials) x 10 parts produced = $100 total cost.  Double price formula: $200 or $20 for each part sold.

With discount material pricing:

COM: $8 (20% discount) x 10 parts produced = $80 total cost.  You’ll still charge $200 or $20 per part, yielding an additional profit of $40.

Each model assumes a profit built into the doubling formula. The extra $40 is a bonus.

Both costing approaches are used, depending on location and circumstances.  The above are very basic formulas and should be researched and tested.

By Dion D Shaw

Dion D Shaw is the founder and owner of Homepreneurs

Homepreneurs.  New Day.  New Opportunity.

 

Disclaimer

Homepreneurs does not endorse nor have any relationships with any of the services listed.  Homepreneurs receives no compensation or consideration for its suggestions.  Homepreneurs strongly urges all interested parties to conduct research and accepts no responsibility for any losses incurred.

© Homepreneurs 2010 – 2012