Question of the Week: Do I Need a Business License?


As far as Business Licenses go, every state and usually every major city within that state each have different rules, limits, restrictions and regulations when it comes to what constitutes a “hobby” and what qualifies as a “business”. In general, many states have minimum income requirements that must be met before a license is required. Please visit your state’s licensing department website to research the details of acquiring a business license in your area.

The question of the week is:

My business is super-micro-tiny and not bringing in a whole lot of income.
Do I need a business license to operate my business?

first lemonade stand by InspirationDC via flickr

For the sake of brevity, let’s assume that you’ve already researched your local laws on running a business in your area and found that there is a minimum earning limit of $600 per calendar year before a business license is required. We’ll also assume that your business has not earned more than $600 in one year thus far, so the real question becomes:

If I don’t earn enough to require a license, why should I consider getting one now?

There are quite a few good reasons why getting  a business license now would be good for growing your business. Here are just a few…see how important they will be to your business in the near future:

  • • You are putting together a business plan for this year that will grow your business
  • • You plan on buying a large bulk of supplies for the inventory to implement those plans
  • • You plan on spending a good amount of your marketing budget on business cards, website development, etc.
  • • Your business was brand new last year and you plan on continuing  to grow it even further it this year

If you are planning on growing your business this year, then you will need the benefits that having a business (and resale) license affords for your business. Some of the benefits include:

  • • Buying your supplies at wholesale prices – usually 50% or more off the regular list price
  • • Opening accounts with your usual suppliers that would allow you to pay for your purchases up to 30 days later
  • • Discounts at local retail suppliers – anything from wholesale pricing to non-tax on cost of goods / supplies

Oh the other hand, if you are not planning to grow your business at all this year, then it might be a good idea to wait on that license until you are certain that you are going to stick with this “making money by making stuff” idea and are ready to move forward.

What do you think? Are you ready?

Business license owners, please tell us: When did you know you were ready to get your business license?


Quick Tip – To Sale or Not to Sale?



When sales are slow, more often than not, the first thing we think is:

“Maybe I should offer a discount. That will make people buy stuff, right?!”

salesale by xrrr via flickr

Well, hold on for a minute. Consider this first: There are lots of reasons why things don’t sell. Many of those reasons have nothing to do with you, your business or even your prices:

• They don’t have the money to buy right now even if it were on sale
• They do have the money but won’t buy right now no matter what the price
• Their cat is sick and they need to go to the vet
• (Insert reason that has nothing to do with you or your business here)

Unless you already have an established customer base that you are rewarding for shopping regularly, having a site-wide sale* should really only be used to clear out old / discontinued inventory and/or to make room for new inventory – and it should be clearly stated as such.

(*having a sale is different from running a coupon promotion that drives traffic to your site – we’ll talk about that in a future post)

Why?

Having too many sales or discounting your products might get you a few sales in the short term, but in the long run, it can drain your profit margin, damage your shop’s credibility and sometimes create customers who will always expect to get your work for less all of the time – instead of VALUING it for exactly the great quality work it is!

You work hard and your designs should be something you are very proud of and if you want to take your business to the next level, you’ll be better off NOT setting the precedent that you are the shop that never sells anything for full price.

Better customer service costs little to nothing, so instead, strive to be the shop that represents the best quality products, offers quick shipping and has really great communication with buyers at all times.

I mean, really…that’s the kind of shop you’d want to buy from, isn’t it?

Now tell us: What is the most successful promotion you’ve run in your shop or have seen in other shops?

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Friday Feature – FreelanceSwitch Hourly Rate Calculator


On Fridays I’ll feature some of my favorite websites, books, shops, artists and other creative inspirations. If you have something you’d like me to feature, please contact me with your ideas! I’d love to know what you have in mind!

This week:


Hourly Rate Calculator

Ever wonder what your absolute hourly rate would have to be in order for you to pay for all of your business *and* personal expenses with only your business to bring in the income? Well, wonder no more!

Here is a really wonderful hourly rate calculator that is a straight forward, plug-in some numbers and and hit the “calculate” button to help you come up with not only your hourly rate for a profit but also your “break-even” hourly rate as well. In other words, the minimum you could earn per hour in order to just break even and not see any profit. No profit = no business. No business = no quitting your day job. Simple equations for difficult obstacles indeed.

From the FreelanceSwitch.com/rates web page:

What is This?
We have developed this hourly rate calculator to give you a guide based on your costs, number of billable hours and desired profit. It is a simple tool for you to play with.

Remember your hourly rate should always take into account factors like market demand, industry standards, skill level and experience – things that unfortunately we can’t put into a calculator!

This is an eye opening and sometimes fear inducing concept for many creative entrepreneurs. After all – if you knew how much you *should* be making, then you would pretty much have to figure out a way to get your hourly rate to the place it needs to be, right?

without fear by sam UL via Flickr

You can do it. I believe in you!

So tell us: Have you used a rate calculator like this before? Did you agree with the results?

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Question of the Week – How Do I Know if I’m Ready?

Filed under: Business,Selling — Comments (1)

As a consultant to creative small business owners, one thing I’ve learned is that we ALL struggle with very similar issues and roadblocks when it comes to improving, growing or changing our businesses. I’ll address one topic each week and hope that you’ll join in with your comments and questions in the comment section below!

This week’s question:

“I love making things, but how do I know if I’m ready to sell my work?”

Urban Craft Uprising by Beckathwia via Flickr

You get a lot of pleasure from making and giving things away, so it makes sense that you are thinking of getting into the making and *selling* business. After all, there are so many online venues that make it really easy to set up shop these days.

But how do you know when you’re ready to take the next step and make your hobby a real business?

Before you move forward, you need to know the road ahead. Taking the time to evaluate where you are in your readiness to sell your work will make the difference between trying and flailing. Yes, I said FLailing…which is what it feels like when you’re in over your head!

To test your resolve, try these statements on and see how they feel (true or false):

  • • My friends and/or family always tell me that I should sell my work
  • • If necessary, I can spend all hours of the day happily making things
  • • I willing to make the same (or similar) items more than once to sell them
  • • I am not afraid to show my work to a stranger and hear their feedback
  • • When I receive feedback, I can take the things that are constructive and leave the things that are not
  • • I know that not everyone is going to like what I make…and I’m okay with that
  • • The thought of hard work does not scare me away from considering starting a business

If you answered “true” to all of the above, then you just might be ready to take the next step toward selling your work to others!

If you answered “false” to a few of these questions, don’t worry — look them over again and try to figure out what would help you say “true”.

If you ultimately decide that you don’t want to sell your work, then take heart: There truly is great value and satisfaction that comes from making something and giving it away. So, if you don’t want to start a business, don’t give in to the pressure. Just keep doing what you do best – making great stuff!

Current business owners:
What questions did YOU ask yourself before taking the leap? Please comment and share your insight with us!


What’s Your New Year’s Theme?

Filed under: General,Random — Comments (0)

flowphoto by Marlo M.

Happy New Year to you!

I have a great idea – let’s start the New Year not with resolutions but with a New Year’s Theme. By theme I mean – a word, phrase or mission statement that will serve as your touchstone throughout the year to help keep you on track and moving toward your goals.

Before you choose a theme, ask yourself these questions and others like them. You can write down your answers or just meditate on them – the choice is yours. Either way, this is NOT an exercise to beat yourself up – rather, let your answers guide your intuition toward a theme that will shed light on a new way forward.

  • ● What were some of the goals you accomplished last year?
  • ● What are the traits you posses that helped you accomplish them?
  • ● What were some goals that you missed?
  • ● What stopped you from reaching them?
  • ● Are those goals still on your list this year?
  • ● What do you need to reach them?
  • ● How do you want to feel about your business at the end of the year?

These questions and others like them will help you hone in on your main blocking point from the past year. Use this knowledge to choose a theme that will assist you when you need encouragement and inspire you when you need some guidance.

Some effective one-word New Year’s Themes:

Focus
Balance
Discipline
Collaboration
Center		 Awareness
Kindness
Courage
Flow
Compassion

What’s your theme for 2011?


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