As an
expert within my specialized field you will find my thoughts and action steps
qualified and proficient. The inkjet, laser toner cartridge business is worth
tens of billions of dollars. My own career allows me to guide you, show you the
way to the direct path to profits, revenue growth and all the good things you
can gain by starting your own business. Let me give you a suggestion into the
great allusion that has been created by The Fortune Companies like Hewlett
Packard, Brother, Epson, Canon and Lexmark, just to mention a few. This
suggestion also comes with a warning. The very mention of these facts to your
friends and family will create some bitterness and anger so you should keep them
hush-hush.
The great
illusion or if you prefer the great fantasy is that inkjet and laser toner
cartridge components are expensive. These giant global companies have created
their own daydream and also the consumer nightmare. Quality ink for your inkjet
printer cartridges wholesales within the printing industry for about $60.00 to
$75.00 a gallon. If you use a inkjet cartridge refiller service like a Cartridge
World, Office Max or even Walgreen’s you’re getting about $0.75 cents worth of
black ink for $10.00 to $15.00 dollars. The marketplace has created the false
impression that ink is very expensive and very exclusive and very special to
your specific printer.
The
complete story tells the whole truth.
You need
to do some homework. Where can you purchase inkjet and laser toner
cartridges?
This
great illusion,
the brand
name inkjet laser toner cartridge business, like most magic tricks have some
reality facts mixed inside all the false impressions.
Did these
giant companies, the Fortune Companies like Hewlett Packard, Brother, Epson,
Canon and Lexmark, just to mention a few spend millions of dollars on research,
chemistry, production discipline, knowledge based research and development?
Yes.
These
companies and their retail partners followed the American Dream right into your
purse or wallet. These companies have done great things with machines,
engineers, chemistry, process controls, management, and designs, marketing and
just plain old selling their dream to you.
You can
print anything you want at home.
This
printing technology allows you to enter the art of printing without any special
skills.
All you
need is their printer and their expensive ink
Doing
something you like isn't the only consideration. You need to get an idea of the
prospects for the potential business. Is it a business with a market? Can you
make money at it? This will require some research into the marketplace as well
as how other similar businesses have fared.
Developing a Work Space
Your home
is where you live. This means that its primary function is to serve as a
dwelling for you and your family - not as a warehouse or meeting place for your
business and its clients. Make certain that if you are considering entering the
manufacturing business (for example) that your garage or shed is large enough to
handle your work - without forcing your family and your vehicles into stormy
weather.
Similarly, if your work will be computer-based, make sure that
you have the technology necessary to give your idea a fighting chance. In
addition, make sure that you have a dedicated area that's cut off from the rest
of the house and that can afford you some privacy. Remember, hearing a barking
dog or a crying baby in the background when you are trying to work or meet with
a client may not be ideal for you or your family.
Outsourcing Partners/Employees
while it
would be great to be the sole owner of your company and have complete control of
every aspect, sometimes a lack of funds or experience make it necessary to have
a partner. In this case, consider someone that is bright, will represent the
company well, and has some sort of expertise in the business you are developing,
be it sales, marketing, book-keeping, or other financial matters.
Also, try
to define the tasks that you and your partner(s) will be responsible for before
opening up shop. That way, there will be fewer disagreements and the business
will operate more smoothly. Also, make sure that all partners are legally cared
for by the company, and that the proper forms are filed with the regulatory
authorities - this may mean filing twice and paying for title changes if you
need to find a new partner, but it will protect both of you in the long
run.
Next,
decide if you'll need employees - whether now or in the future. If so, put some
thought into how you will get them and what you will pay them for their work.
Also, think about how you'll do payroll and whether people will want to work
from your home, from their own homes or if you'll need to find another facility
to house them.
Doing
Your Research
some
books on forming a small business suggest that after hatching an idea, an
entrepreneur should just "go for it." However, this bold approach could land you
in some shaky territory.
Instead,
a good first move is to start asking family and friends what they think about
your small business idea. Consider asking them specific questions such as:
• Would you purchase this particular product and/or
service?
• What do you think its worth?
• What is the best way to market the idea?
• Is this something that you think is a fad, or do you
feel it could be a viable business for the long term?
• Is there anything you can think of to improve this
idea?
• What other businesses in this field have you heard of
or do you currently use for this product/service?
If you're
married and/or have kids, you should also be asking your family how they feel
about you quitting your job and working from home. This will affect them on a
psychological and financial level. If any of their answers are negative, you
should spend some time discussing their concerns and decide whether your goal is
worth continuing against their wishes.
After
obtaining all of this feedback, go back to the drawing board and see if the idea
can be improved upon so that your product or service can be differentiated from
the competition. Remember, you want to hit the ground running and turn as many
heads as possible when first starting off!
Finding
Funding
Once you
have an idea and the approval of your family, you need to decide how you are
going to finance it. Most businesses will need at least a little startup income.
This investment will hopefully help you break even after a year, but keep in
mind that even successful businesses can remain in deficit for the first few
years. Because of this, you will want to tap into a few different sources of
funding. Some of these include:
• A small-business loan
• Savings
• Money generated from other investments
• Family/friends who will act as investors
• Personal loan from the bank
• Home equity loan
• Credit cards (as a last resort)
Source
capital that won't hamper your longer-term security. In other words, try to
avoid racking up costly credit card debt that could cost 20% or more in yearly
interest fees. Also, try to avoid borrowing against your 401(k) or other similar
plans as this may adversely affect your retirement.
Finally,
one of the best things you can do before you take the entrepreneurial leap is to
build up an emergency fund to fall back on if your company doesn't break even
for a few months. Three months of living expenses is a minimum goal for a new
business owner, but even more will help take the stress off of you and let you
spend your energy on your company. (To learn more, see Build Yourself An
Emergency Fund.)
Covering
Your Bases
All
business owners should think about what would happen to the enterprise and the
revenue streams being generated if health or other issues were to prevent them
from being involved in the business. In other words, if the entrepreneur were to
become disabled, who would takeover? Could the business survive?
Consider
these issues beforehand and determine whether disability income insurance makes
sense, or if a partner could fill the void caused by your absence. (To find out
more about protecting your company, see The Disability Insurance Policy: Now In
English, Protecting Your Income Source and Protect Your Company From
Lawsuits.)
Foreseeing the Future
It's
great to own a business, but ultimately the entrepreneur will probably want to
retire or move on to other challenges. With that in mind, you should create a
business plan that discusses how you will transfer, sell or close your company.
If your business depends on your unique knowledge and contacts, it may not be
able to be assumed by another party.
Conclusion
There are
few things more satisfying and rewarding than launching and owning your own
home-based business, but before diving in, be sure to do your homework. Making a
business work is not an easy task, but proper planning will help to increase its
chances of success.
Traditionally, most people took a job with a single company at
age 20, worked there their entire lives and eventually retired from that same
company 40 years later, often with a nice gold watch. Now, the gold watches are
gone and multiple career changes are almost expected over a working lifetime.
This has given rise to the professional freelancer, someone who works without
long-term commitments to a single employer. They hop from job to job, selling
their swords to the highest bidder.
While the
idea of being your own boss and enjoying the variety and freedom of the
freelancer's life sounds great, these perks come at a cost. In this article,
we'll help you decide if freelancing is for you.
To Be
Bossed?
First,
let's delve into why you might want to keep your nine-to-five job versus taking
the free road to working in your PJs sitting on your living room
couch.
1. It's
Easier Come Tax Time
Employees
have the advantage of knowing that their employer is responsible for the mailing
of W-2 forms at the end of each calendar year with all of their tax information
on it. The employees then will take the information on that form and enter into
the appropriate box/line on their tax return (1040), which again is easily laid
out.
Freelancers don't get off that easy. In fact, they are required
to compile all 1099 forms from domestic employment, document the raw checks they
receive from international employers, as well as keep accurate track of the many
deductions and expenses they would have incurred throughout the tax year. This
can be very difficult and time consuming. It also requires that the freelancer
be extremely well organized, and either understand the basics of what is
deductible or be able to afford an accountant who does. (To find out how to
deduct your home-based business items, check out Don't Overlook These Broker
Deductions.)
2.
Retirement Accounts/Matching
While not
every employer offers employees 401Ks and/or other retirement plans, it has been
estimated that some 440,000 companies do, based on research by the Profit
Sharing/401(k) Council of America. A good number of these employers also provide
employees with some sort of matching contribution that usually vests over time.
Freelancers typically do not get to enjoy this benefit seeing as they are not
officially an employee of the company. (To learn more about matching
contributions, see Introductory Tour through Retirement Plans, Making Salary
Deferral Contributions - Part 1 and Part 2.)
Those who
work for themselves may be permitted to set up Keogh Plans or Simplified
Employee Plans to help fund their retirement, however they can be costly and
time consuming to administer. Plus the contributions come from the employee's
pocket. In other words, there is no "free money" to be had or matching programs
available. (To find out how to establish your own plans, check out 401(k) Plans
For The Small-Business Owner, Plans The Small-Business Owner Can Establish and
Tax Credit For Plan Expenses Incurred By Small Businesses.)
3. Health
Insurance
Based on
a 2006 study by the Kaiser Family Foundation, roughly 60% of businesses in the
United States offer their employee's health coverage. And while not every
company absorbs the full cost of that insurance (some require employee
contributions), the majority of the burden does traditionally fall upon the
employer. This is a huge benefit for the average employee, given the rising cost
of health care. (To read more on this subject, see Fighting The High Costs Of
Healthcare and Five Insurance Policies Everyone Should Have.)
Freelancers typically must go into the open market and purchase
their own insurance for both themselves and their families. Unfortunately, this
can cost the freelancer thousands of dollars in after-tax money each year. The
bright side is that the cost of insurance (co-pays and the like) may be
deductible.
4. Set
Hours and Stability
Full-time
employees generally have set hours, which is great for guaranteed income and job
stability. From a future employer's perspective, it also looks better if you
have worked consistently at one company for a period of time, hopefully
advancing in the position. There is very little room for a freelancer to edge
out employees in this aspect, so if you aren't sure you could pull off
freelancing, it may hurt more than your current bank balance.
Freelancers, though able to work whenever and wherever they are,
generally end up doing just that - working more hours than intended on weekends,
evenings and holidays. These non-traditional work hours can wreak havoc on
family or personal time. In addition freelancers often have peaks and valleys in
terms of work flow. They will either be incredibly busy for a time or be
incredibly slow for a period of time. It takes a long time to find a common
ground with a workload that will pay bills and increase a portfolio.
Or, Not
to Be Bossed?
Now,
let's take a look at what benefits there are to be found in branching out on
your own.
1.
Numerous Deductions
Freelancers who work from home are permitted to deduct expenses
that they incur while performing their duties. This means that they may deduct
the cost of computer paper, a computer, laptop, BlackBerry, cell phone, travel,
and a myriad of other expenses that employees would not typically be permitted
to deduct. If the items are used for personal and professional duties, then only
a portion of the items will be deductible.
This
benefit can run into the many thousands of dollars and can help to offset some
of the federal and state income taxes that would otherwise be owed by the
freelancer. (To get started, see How To Qualify For The Home-Office Tax
Deduction.)
2.
Variety and Flexibility
Employees
are usually given a task or duty and then asked to repeat again and again, often
for what can seem like eons. There is very little flexibility. Plus, these
people rarely have the ability to branch out and learn new things.
Freelancers don't have such restraints. While they may work in a
particular field such as finance, they usually have varying duties and deadlines
and interact with a number of different people. As a result, they are much less
likely to be pigeon-holed in a particular position.
3.
Compensation
While it
is not true in every case, the majority of freelancers (especially in the
financial world) tend to be paid more per hour than their full-time
counterparts. A major reason a company will pay a contractor a higher rate is
that it doesn't have to provide health insurance coverage to its freelancers or
generally pay their taxes for them. Freelancers must learn to budget in their
income taxes into their requested rates so that come tax time they aren't paying
out of pocket for work already completed and paid for.
Companies
also offer higher hourly rates to get freelancers interested in their projects.
Competent individuals don't come cheap, especially for short-term projects
(three to six months) .
4. The
Commute - or Lack Thereof
Many
freelancers these days telecommute. All they have to do is flick on their
computers from the comfort of home, and technically, they are at work. When it
comes to the commute, freelancers usually have the advantage over employees who
must hit the road during crush hours and spend valuable time, money and energy
combating this nasty traffic. (Keep reading on this subject in, Extreme
Commuting: Is It For You?)
Bottom
Line
There are
many advantages and disadvantages to being a freelancer. Being your own boss is
great, and working from home is a big bonus, but before you take the plunge its
imperative to carefully weigh the downside. Varying workloads and a lack of
employer-funded healthcare, insurance and retirement planning can quickly
destroy the benefits of "pajamas 'til noon".
