Free Gift Basket Business Online Learning Guide

When to Expand Your Business

Knowing when to expand your business or gift basket business.

 

If you’re operating a small or home business as a sole proprietor, in the early stages of your business – it’s unlikely you’ll be in a financial position to hire employees. Be prepared to devote long hours to your business, as you’ll be wearing dozens of hats.

 

Owning a Home Business and Deciding when it’s Time to Expand

You’ll be responsible for every aspect of your business:

  • Marketing and promotion
  • Assembly
  • Purchasing
  • Processing orders by phone, fax and giving our price quotes
  • Reviewing delivered goods
  • Shipping and delivery of your product
  • Managing the office
  • Banking duties
  • Filing and keeping your records in order
  • Maintain inventory and processing re-orders


It’s important to decide where you want
your business to be in one year, three years and five years. Is it your goal to operate this business without employees? Is it your goal to grow and become a large business with many employees?

Many business owners have no desire to expand to the point of requiring employees. However, there’s only so much business volume one person can handle. It’s best to have a plan for when employees may be needed.

 

Knowing when to expand your home based business or gift basket business.If you decide to run your business alone, be prepared for times during the year when volume orders will make it physically impossible to operate effectively by yourself. Rather than hiring full time employees, there are other options for finding part time help. Check with your local business college or technical training schools. Many have a list of students who are glad to work for minimum wage to gain some business experience. Another option is to contact your local urban society. You could offer an internship. With these programs, you don’t pay wages, just provide training. The laws vary by state, as to the maximum amount of wages and/or hours a casual laborer can incur before you must register them as an employee and deduct taxes.

 

Employees vs. Contractors — What’s The Difference?

Whether a person is an independent contractor or an employee generally depends on the amount of control exercised by the employer over the work being done. Dictating how a job is to be done or limiting the actions of the worker may establish an employer-employee relationship.

An independent contractor:

  • Operates under a business name
  • Has her own employees
  • Maintains a separate business checking account
  • Advertises her business’s services
  • Invoices for work done
  • Has more than one client
  • Has own tools and sets own hours
  • Keeps business records

 

An employee:

  • Performs duties dictated or controlled by others
  • Is given training for work to be done
  • Works for only one employer

The Internal Revenue Service relies on the facts in each case. It doesn’t recognize the validity of any written agreement between the parties. Anyone can get a ruling from the IRS by completing Form SS-8.

For most small businesses, independent contractors should not be considered as substitutes for regular employees. Government agencies generally find that people in the work force are legally employees for tax purposes and the cost of being wrong, remitting unpaid payroll taxes, interest and penalties can be very high.

 

Staying Small?

As your sales volume increases, you should think about hiring either a full-time or part-time assistant. This person must be a compatible personality and in agreement with your business goals.

If you choose to remain in control of the design and marketing functions, you might delegate the office and bookkeeping tasks to your assistant. Maintaining accurate books and records is essential to your business, and as the company becomes more successful, the longer these tasks will take.

An assistant should be familiar with aspects of your business and feel comfortable answering the phone and dealing with customers. If you find you’d benefit from an assistant only one or two days per week, hire someone who will work on a contract basis and bill you twice a month for their services.

 

Growing Pains

Seasoned owners learn that it’s sometimes just as perilous to stand still as it is to move ahead.

For any healthy business, there comes a time when the owners must decide to take the risk of a new growth strategy or to take the risk of staying with their current game plan. We mention risk in both cases because the risk of doing nothing or even of sticking to ‘business as usual’ in the face of a changing market can be even greater than the risk of taking on larger bank loans, more debt, more employees and more uncertainty in order to grow.

Why? Because the longer you stay in the business game, the more sophisticated the players become and the higher the stakes. That’s what makes it fun (or at least never boring) and keeps entrepreneurs coming back for more, despite the ups and downs. Newcomers can enter market niches that are being ignored by players already in the field, but eventually these players will wake up and muscle into your game.

Women seem to have a harder time than men learning this. They more often make the mistake of thinking that owning a business means merely making money. The real goal, however, is to increase your net worth, not just your income. Your net worth is the assets your business owns after paying off all your creditors (liabilities). Assets include not just cash, but real estate, equipment and even the value of the ‘goodwill’ your firm has built up.

Misunderstanding the true nature of the business game is one of the major factors that hold women back. We still see our businesses as extensions of our personalities rather than business investments. We still pride ourselves on ‘paying as we go’ rather than understanding the basic rule of capitalism is not just to make capital but to put capital (your assets or business worth) to use through leverage. A basic tenet of business, leverage means using someone else’s money to make more money. You use your money as collateral to borrow more money to increase sales, which can in turn be used to leverage up the net worth of your firm.

Why do most women not play the business game like men? It may be because we really prefer to run small businesses that generate income (money to live on) but not wealth (assets you amass). Or, because of its scale, income may fit better into our lifestyles. Or it may be simply that we never learned how to play on a larger scale. The key point to examine is whether you’re staying small because you want to or because you’re afraid to grow.

Here are some steps that will help you make a rational decision:

1. Ask yourself what goals you have for yourself and your business. Do you see your business mainly as a means to make a nice living and enjoy independence? Or do you have dreams of becoming a major competitor in your industry, enjoying phenomenal growth and perhaps going public and being acquired? If the latter is true, then you need to learn more about the capital markets. No business of any scale can be run out of the owner’s pocketbook. It needs a good banking relationship and possibly investors.

2. Ask yourself if you’re limiting the growth of your company because of unresolved personal issues. It’s found that many people reach the first growth hurdle with great ambivalence. The idea or dream they had took hold – now what?

Some unresolved issues you may be wrestling with:

  • Commitment. You started your business with big dreams, but now do you worry about what it will do to your life if it grows any more?
  • Fear of failure. Do you see failing as a major loss or just a learning experience?
  • Fear of success. Do you worry about the impact of you being a tycoon to your family and friends, and feel uncomfortable with the new role you visualize for yourself?
  • Fear of losing control. Do hiring professional managers and learning how to manage them scare you?
  • Fear of responsibility. Does the idea of being responsible for employees and their families, even when times are bad, give you a knot in your stomach?
  • Loss of face. Do you worry about putting your reputation in the business world at risk for the sake of growth?
  • Losing everything. Does the thought of going “bust” keep you awake at night?

 

More Questions You Must Ask Yourself

1. Ask yourself what would happen if you took this move and what would happen if you didn’t take it. Too often in business seemingly safe moves can be perilous because of the dynamism of the marketplace. Business demands aggressive players. Particularly if you are in an industry that changes rapidly and has heavy competition. Sometimes not risking is the biggest risk of all.

2. Refine your decision making techniques. Do you act on intuition or on the basis of hard data? If you act intuitively, your subconscious motives may be interfering. Learn some basic techniques of decision making; trade-off analysis, cost benefit analysis, decision trees, and take decisions out of your gut and into your head.

3. Learn about how other businesses have grown through leveraging. Talk to other owners, bankers and financial consultants and learn how financial deals are made. Financial people use basic tools such as financial ratio analysis to gauge a project’s potential and its risks. Make sure you’re familiar with these terms and ideas.

Remember, every day in business will bring a new decision about growth. You can’t reap the benefit from an opportunity unless you take a risk. We learn this when we first start businesses. Why then is it so hard to keep remembering?

 

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