Over the past week, countless individuals across the US have protested police brutality following the death of George Floyd while in custody of the Minneapolis Police Department. These protests, though sparked by the recent tragedy, have roots stemming from decades of civil inequality. Even though many of those demonstrating their First Amendment rights have engaged in peaceful protests, some individuals have reacted violently towards both public and private property.
It is far too soon to calculate the full brunt of the damage caused by violent riots, although initial reports indicate the destruction to be quite extensive. In Minneapolis alone — the heart of the now-national protests — several hundred businesses have been vandalized, looted, or otherwise harmed by fire, broken glass, or water.
Elsewhere, in cities such as Chicago and Los Angeles, business owners have had to plead and negotiate with those looking to damage and loot stores. No matter the exact extent, the total blow to businesses throughout the country is certainly astronomical.
In response to the rioting, some major retailers have backed the protests while downplaying the destruction to their stores. For instance, the department store giant Nordstrom stated in a press release that it can âfix the damage to [its] storesâ while adding that âwindows and merchandise can be replaced.â A few smaller businesses, such as a Bangladeshi-Indian restaurant in Minneapolis that lost its building to a riot-related, have also voiced support for the sometimes aggressive demonstrating.
This damage caused by rioting isn’t unprecedented — past riots in Los Angeles, Detroit, and Miami also caused heavy destruction. In those instances, governments and private organizations stepped up to aid local businesses. Unfortunately, such aid may not always be enough to heal local economic devastation — and especially so for those whose entire livelihood was tied up in businesses destroyed by a riot’s wake.
The History: How Violent Unrest Affects Local Businesses
The United States has had a long and complicated history with public protesting. The Boston Tea Party of 1773 was an organized and targeted protest that opposed the tyrannical reign Britain had over its New World colonies. The women’s suffrage movement picketed, paraded, and participated in other forms of demonstration in the early 20th century, encouraging the acceptance of a woman’s right to vote. Throughout the mid-20th century, civil rights protests helped break down racist laws.
It is not uncommon for violent rioting to accompany protesting, even if most participants are engaging peacefully. And while protesting has been shown as an effective agent of social change, violent forms of protest can inflict substantial economic wounds on local communities.
The 1967 riots in Detroit cost between $40 and $45 million (just over $300 million in today’s money) while the 1992 Los Angeles riots caused as much as $1 billion in damages. Riots born outside of civil unrest can be also pricey — the rioting that ensued after hockey’s Vancouver Canucks won the 2011 Stanley Cup damaged roughly 4 million Canadian dollars worth of property throughout downtown Vancouver.
On top of the immediate impact, it can take years for communities to recover. Five years after the 1992 riots, Los Angeles had an unemployment rate that was about 3 percentage points higher than the national average, based on a 1997 New York Times report. By 2002, the city had lost nearly $4 billion in taxable sales in the decade following the riots, according to a 2004 study published in the Urban Studies journal.
More recently, Ferguson, Mo. — home to rioting in 2014 — continued to have never-returned-to-businesses boarded up as late as 2019. The small city’s unemployment rate also sat at 5.5% in June 2019, which was over 2% higher than the Missouri state average.
Aid might also fail to reach the places that need it the most. For instance, an estimated $40 million in property was damaged during the Los Angeles-area Watts riots of 1965. However, the Small Business Administration only doled out 26 loans worth $400,000 to businesses impacted by those riots.
In the aftermath of the Detroit and Newark, N.J., riots that took place two years later, the SBA was a bit more generous, giving out $3.4 million in aid to affected businesses. Some small business owners still felt slighted, though. Edward Deeb, while representing a Detroit grocers association, argued in a 1968 Senate hearing that “the small businessman feels it unfair that only one side is being told, and that side is based on sensational charges designed to arouse and inflame a community.” Deeb further claimed that businesses in areas hit by rioting were discriminated against — insurance companies deemed these areas “high-risk” and so had increased insurance premiums for business owners.
Following the 1992 Los Angeles riots, some Korean-American business owners struggled with the English-language application forms for the SBA-issued disaster loans. Meanwhile, other owners felt “the system was designed to discourage them,” as a Los Angeles-based advertising executive told the Associated Press. All told, four months after the Los Angeles riots, only 1,400 merchants out of the roughly 10,000 businesses damaged or destroyed had received loan checks; thousands hadn’t gotten anything or simply didn’t complete the application process.
In some cases, other factors doom damaged businesses. According to the Cincinnati Enquirer, 32 of the 70 businesses that received city-made emergency loans defaulted on their loans five years after the 2001 Cincinnati riots. Business owners in the southwestern Ohio city told the paper that “aftershocks of the riots” and increased violent crime and panhandling made people feel unsafe or unwilling to go downtown — ultimately harming many of the local businesses impacted by the rioting.
There are still seeds of hope, however. Some businesses, such as a clothing boutique in Ferguson, are able to survive and thrive after receiving aid money. Additionally, it’s important to remember that the very real and justifiable anger of rioters can help further positive societal change. Those incited by Martin Luther King Jr.’s assassination hastened passage of the 1968 Fair Housing Act.
The Aid: Where Businesses Can Look For Riot Relief
The question of who pays for damage following riots is often a tricky one. Business owners generally have several avenues to pursue: insurance, government aid, and/or private support through loans or donations. Success in these avenues can vary wildly from business to business, however.
Insurance coverage for riot-related damage, in particular, will depend on the business. In some cases where landlords don’t require inventory or equipment insurance, policies may cover very little and business owners may be on the hook for losses and repairs. If you have property insurance, however, you should receive coverage for rioting and civil unrest.
As for government aid, the SBA operates a disaster loan program. In the past, disaster loans have been issued for businesses impacted by rioting, such as those damaged during the 2015 Baltimore riots.
To qualify for a disaster loan, your business will need to be located somewhere the SBA has declared a disaster area. To monitor currently declared disasters, visit the SBA website. At the time of writing, the SBA has yet to declare any disasters relating to the nationwide riots, but that may change as the situation progresses.
In some cases, the federal government has provided other support channels. For example, after the 1992 Los Angeles riots, the government issued a $600 million relief package that was made available for residents, landlords, and business owners through the Federal Home Loan Bank Board system.
Beyond federal assistance, local governments and banks have also been known to step in. The state of California handed out emergency bridge loans following the 1992 riots, while city and county governments proposed emergency loans to businesses after the Cincinnati’s 2001 riots. A special loan program for businesses hurt by those 2001 riots was also made available by a local bank and chamber of commerce.
Other local organizations can also provide aid to hurt businesses — the Ferguson clothing boutique mentioned above received $20,000 from Phi Beta Sigma, a local fraternity. More recently, the Lake Street Council, a Minneapolis-based small business advocate, has raised nearly $4 million in aid money for local businesses ravaged in the recent riots. With similar organizations also chipping in, it may behoove businesses suffering from riot-based damages to seek out non-government funded sources.
Some businesses have also found success using donation platforms like GoFundMe. Examples here include a Minneapolis bar that has already raised over $1 million after its building burned down during the recent riots. Meanwhile, a Vietnamese restaurant in Tampa, Fla., just met its $80,000 donation goal after its location had been ravaged by rioting.
The Wrench: COVID-19
Purely in economic terms, the riots come at a hard time for many small businesses. Scores of businesses have been affected by the economic turmoil churned out by the COVID-19 pandemic. According to a Facebook report, roughly 10% of small businesses surveyed don’t plan to reopen after facing financial struggles due to the coronavirus — a number that may only rise.
Because the SBA has struggled to provide adequate support during the pandemic, we don’t know how the federal government will react once the unrest settles down. It’s possible the SBA will indeed be able to help businesses hurt by the rioting through its disaster loan program. However, with the SBA currently processing record numbers due to businesses struggling from COVID-19, it’s possible that any riot-related relief will take longer than usual to flow out.
State and city governments are also facing economic woes thanks to COVID-19 forcing back tax due dates and dropping overall revenues. This could affect how much monetary aid local governments can provide to businesses in the coming weeks and months. Additionally, more unemployment claims will simply add more stress to already struggling unemployment departments.
The Action: What You Can Do To Help Your Business
We currently live in an unprecedented time where there are no easy answers. Between the looming pandemic and the civil unrest that has gripped the nation, many small businesses will have a difficult time rebuilding in the months and years to come.
If your business has been hit by rioting and looting, we recommend that you first reach out to your insurance provider. If you don’t have adequate coverage, be sure to keep an eye out for SBA action or aid planned by your local governments.
You can also look to local organizations that raise money for small businesses or set up your own donation fund through a service like GoFundMe. If all else fails, we urge you to tell your story to local news organizations or simply by sounding off in the comments below.
The post Small Business Riot Damage Relief: What To Expect & How Your Small Business Might Be Able To Get Assistance appeared first on Merchant Maverick.
Lenders knew that there would be a flood of applications on April 3, 2020, for the first rollout of the PPP Loans through the CARES (Coronavirus Aid Relief & Economic Security) Act. Yet, the influx still stunned the system, slowed the process, and sent worried small business owners scrambling. The process was then muddled by changing targets, rules, and regulations, and miscommunication between banks and the SBA and the Treasury Department.
All of that miscommunication trickled down to lenders and borrowers, leaving worried business owners wondering when they might see their money. The question lingers. With the coronavirus pandemic impacting small businesses nationwide, borrowers need their money to make ends meet during these critical months of isolation. While the White House announced via Twitter that PPP Loans had been disbursed, banks aren’t releasing numbers, the SBA won’t confirm the White House statement, and many approved small businesses are still waiting for funds.
If you are looking for information on how to navigate being a small business owner during a pandemic, Merchant Maverick’s coronavirus hub is a place to find updated content on everything from business insurance to information about PPP Loans. If you need other avenues for funding, read this post and then continue onto Small Business Loan Resources & Guides For Businesses Affected By The Coronavirus.
What’s The Holdup?
Bureaucracy, a flooded system, confusion about the terms, there are myriad reasons why the PPP Loans rollout has been riddled with inefficiencies and frustration. First, the allotted $350 billion for PPP Loans is simply not enough, and many of the larger banks limited who received that initial funding. Many banks simply do not have the capital to loan, and there was no information on when it would become available or how the government loan buyback program would work. The breakneck speed of this stimulus package almost ensured complications and mistakes, and to say it has been frustrating is an understatement when compared to the scope of this pandemic’s economic impact on small businesses.
It seems people working with larger banks are experiencing more of a holdup than people who went to credit unions or local banks. People might also find luck casting a wider net with lenders by using matchmaker sites, such as Lendio or Fundera.
When Can I Expect My PPP Funds?
Small business owners are making plans, and the government and lenders are scrambling to respond. An expression oft-used in education is the notion that you are building the plane while flying it, and that is how it feels right now for those wondering how to navigate the new small-business normal.
From what we can gather from reports from small businesses, a few who worked with local banks received funding this week. However, those stories are not the norm. Most small businesses with approvals are still waiting for funds, and some are concerned with the eight-week timeline. It appears the government is sticking with the mandate that 75% of the PPP funds should go back into payroll during the next eight weeks to qualify for loan forgiveness. However, most businesses seeking help have been shuttered or have significantly reduced hours due to the nation’s shelter-in-place orders, and laid-off employees can benefit from the generous unemployment funds, which leaves some small businesses worried about those loan terms.
There is no date to provide, no concrete answer, only guesses as to when the PPP funds will be widely distributed to approved lenders. Also, since it is becoming evident that the allotted $350 billion will not be enough, there are already discussions about additional legislation and stimulus money arriving soon. At the moment, all we can do is hold on, pay attention, and be ready to move quickly on informed decisions. If you are still waiting after approval, keep checking in with your lender but also know that they are working as fast as they are able on their end. Soon is not a good enough answer, but it is simply the best we have.
Tips To Get Funded Faster
There are a few things you can do on your end to smooth the process and eliminate hiccups, but if you have been approved and are waiting on funds, have solace that you are not alone in waiting and that all institutions are focused on getting you money quickly. If you are still waiting to apply, here are a few things that might help:
Tell Your Story Far & Wide
Some of the best advice out there from small business owners and lenders is to make this personal. It is personal. For a small business owner, life and business are intertwined: Your small business is your life, and your life is your small business. So, since small business owners are the heart and soul of this nation, now is the time to tell your story. Narratives are important to me, and if you read all my articles on this site, you will see my message clearly: Your story is the best marketing material you have. You are your brand, especially in a time when consumers want to help businesses in their community. Make it easy to know who you are, what your business supports, and how people can help. Then use that narrative and that energy to let a lender know what is at the heart of your application.
Have All Your Financial Records In Order
This is not the best time to discover that you have inaccurate books or disorganized records, but fortune will favor not just the bold but also those with excellent bookkeeping skills. You have to get your financial records in order and your taxes completed. Things will move faster if you have answers and numbers ready when asked.
Cast A Wide Net
It’s important to check with your local bank or a bank where you have an existing loan first. Anecdotally, some banks are working with pre-existing loan accounts first, although the message is that some of those banks have reversed their decision. Because this is a moving target, a few experts suggest that the more loan applications you make, the better chance you have of seeing some movement with at least one of them. With the worry about funding running out and some lenders changing priorities, it makes sense to inquire with several lenders. However, this is a strategy to see who can fund you faster, but you must make sure you do not apply for more than one loan. (Ask for institutions to contact you before submitting for approval, so you can make sure you do not accidentally apply for multiple loans, which would be fraud under the PPP Loans provisions.)
Final Thoughts
If the PPP Loans don’t appear to be a decent fit or the process is hindering business operations, check into other lending options from the CARES Act, such as the Economic Injury Disaster Loans. Stay tuned as we update this and other COVID-pandemic information as quickly as we are able, and feel free to ask questions or leave your own experiences in the comments.
The post When Will My Paycheck Protection Program Loan Be Funded? appeared first on Merchant Maverick.
Are you passionate about education? Do you love working with students? Do you have a specialized skill that you want to pass on? If so, you might be a good candidate for establishing your own tutoring business.
Becoming a tutor allows you incredible job flexibility, while also giving you an opportunity to do meaningful work in your community. When you tutor, you make an impact on students’ lives and help guide them toward educational success. And at the same time, tutoring allows you to manage your own schedule and set your own rates. What’s more, when you set up an online tutor business, you can even work from home!
Have you been considering starting a tutoring business, but you aren’t sure where to start? In this article, we’ll walk you through a step-by-step process for planning your tutoring business. And, we’ll also give you some ideas for where you can turn for the funding you might need to get set up.
Ready? Let’s go!
Why Start An Online Tutoring Business?
Tutors start their own businesses for a number of reasons, but one of the primary reasons is the ability to be your own boss. When you operate an online tutoring business, you are able to set your own hours, determine your own hourly rates, and take on as many or as few clients as fit your schedule. The flexibility that comes with tutoring is one of its biggest advantages.
What’s more, becoming a tutor is an excellent way to support students and parents. When you step in as a tutor, you help students learn the skills they need to succeed in the classroom, and you relieve some stress on parents. For many students, a tutor can change the outcome of their educational career. So if you have a heart for students, and a desire to see them grow and succeed, tutoring could be your passion.
In addition, over the past few years, online tutoring has been increasing in popularity. According to IBIS world, the market size of online tutoring services in the US (as measured by revenue) is expected to increase by 4.1% in 2020. There is always a need for educators, especially during the school year and around standardized testing time, and when you become a tutor you help fill that need. If you want to join a growing market, now is a great time to open our own online tutoring business!
When To Sign Up With A Tutoring Service Instead Of Starting Your Own Business
There are a couple of routes you can take to begin tutoring online. You can choose to sign up with an existing online tutoring network (such as Care.com), or you can start your own independent online tutoring business. Your choice between these two options depends on your available resources, your timeline, and your intentions for your business.
In general, you should sign up with an existing tutoring network if the following applies to you:
You Have A Limited Social Network: If you don’t already have a number of potential students in mind, it might be best to join a tutoring website. These sites help connect tutors with students, which can reduce some of the demand that comes with building an entire client base from scratch.
You Need To Start Working Immediately: Finding clients and establishing a presence in the tutoring market can take significant time, energy, and money. If you want to skip over this process, signing up with a tutoring site is a great option. You’ll be able to find clients and get teaching much sooner.
You Don’t Mind Paying A Fee: Most tutoring sites charge tutors a percentage of their earnings. You should have room in the budget for this expense in order for a tutoring site to be an advantage.
You Don’t Want To Set Up The Technical Tools On Your Own: In order to successfully tutor across the internet, you need access to a variety of tools. At minimum, you need a video conferencing tool, a way to share your computer screen, and a virtual whiteboard. Many tutoring sites that specialize in online tutoring (such as Varsity Tutors) offer these tools built into their platforms.
Here are a few tutoring sites you might consider: Chegg Tutors, Care.com, VIPKid, and Varsity Tutors.
Alternatively, you should consider building your own business if:
You Already Have Potential Students: If you have a wide social network full of school-age children and college students, you may not need any help building a client base.
You Want To Keep All Your Earnings: This is a huge factor. If you resent the amount that tutoring sites charge for their services, you should build your own business. You’ll have to cover other expenses, but you get to decide how much those other expenses cost.
You Have The Time To Get Set Up: As I mentioned above, building your own business takes time. Make sure you have the time (and available income) to build your business before you begin.
Before You Start Your Tutoring Business: Essential Prereqs
As you might imagine, education is a major requirement for starting your own tutoring business. In general, most tutors need to have earned at least a high school diploma or a GED. This is especially true if you are signing up with an online tutoring site.
The level of education you have earned plays an important role in determining what content areas you can teach. Here are the grade levels and subjects you can tutor with each level of education:
High School Diploma Or GED: At this education level, you are able to tutor elementary and middle school students. You are also able to tutor high school students, although you may need to demonstrate your knowledge in other ways (using transcripts or standardized test scores to demonstrate content area knowledge).
Undergraduate Degree: With a Bachelor’s degree, you are able to tutor elementary, middle school, and high school students. You are also able to tutor college students in your area of specialization. This is especially true if you have work experience post-college that relates to your specialization.
Post-Graduate Education: You can tutor elementary, middle school, high school, and college students. Depending on your area of specialization (if you have a degree in education or in teaching English for Speakers of Other Languages), you might also consider teaching adults who are finishing their GED or who are looking for a way to develop their English fluency.
As you look into tutoring, you should also consider working towards a Tutoring Certification. These certifications require you to go through a few hours of training, pass a background check, and submit a couple of letters of recommendation. Earning a Tutoring Certification enhances your credibility, and it also demonstrates to parents that you are safe around their students. Many tutors also benefit from the training included in earning a Tutoring Certification. These certifications are available from the National Tutoring Association and the American Tutoring Association. Depending on the certification, you may have to pay for training, membership fees, a background check, and application fees. These expenses total around $200-$250 for certification, but I think this expense is worth it for the amount of credibility you gain.
Finally, in order to begin tutoring, you need to identify your area of specialization. Think about where you can add value, and consider the experience that you have under your belt. Is there a particular grade level or content area that you are skilled in? As you look for your specialization, consider the subject areas in which tutors are in high demand: English, Math, Science, Test Prep, and Study Skills. And remember, each of these subjects can be broken down into sub-categories like Algebra, Chemistry, reading comprehension, SAT and ACT preparation, etc. Once you have identified one or two specializations, you’re ready for the next step.
8 Steps To Starting Your Own Tutoring Business Online
Step 1: Make A Business Plan
Strong businesses start with a strong plan. A business plan is a written description of your planned business and business strategy. It’s your vision of how your business will be organized, how it will operate, and how it will be profitable. You can find lots of information online about writing a business plan. Your local chamber of commerce and government economic development agencies likely also have resources you can use.
A typical business plan includes:
Executive Summary
Company Description
Market Overview
Sales & Marketing Strategy
Operating Plan
Organizations & Management Team
Financials
Once you have a basic idea of how your business will operate, it’s time to calculate your starting costs. Do you need to purchase materials or teaching aids? Will you be paying for website building software or a web host? Do you need to purchase any hardware or software, or perhaps buy business insurance?
Since your business is just getting started (and since you will probably be the only employee for a while), your business plan does not have to be incredibly in-depth. Mostly, you should use this plan as an opportunity to set goals, create your marketing strategy, and predict your business expenses.
Step 2: Perfect Your Computer Setup
Your next step is to set up your classroom. Find a place in your home to conduct your online tutoring. You should look for a location that’s away from the noise of the house and has plenty of light. Then, position yourself so that there is a clean, neutral background behind you in video calls.
You should also make sure that you have all of the technology you need to begin online tutoring. You, of course, need a computer and a strong internet connection. You should also have a webcam and a functional microphone (even if it’s just the microphone built into your laptop). In addition, we recommend purchasing a tablet or digital drawing pad and stylus that you can use with a virtual whiteboard software. These tools make it easier for you to illustrate and share concepts with your students from a distance.
Step 3: Find The Right Tutoring Software
Once you have your hardware figured out, you should select your software. You should consider purchasing the following types of software:
Video Calling Software: Find a video calling software like Zoom or Google Hangouts that allows you to schedule meetings in advance and then send meeting links to your attendees via email. You should also look for the ability to share your screen as you will likely want to use this tool to make demonstrations in your tutoring.
Virtual Whiteboard Software: Virtual whiteboard software allows you to draw, write, and diagram on a digital whiteboard. All you need to use the software is a mouse, but using a tablet or a digital drawing pad and stylus (like Wacom Intuos) gives you even better control. A few virtual whiteboards you should check out include Ziteboard, Â IDroo, and Scribblar.
Document Sharing Software: Consider using the free tools that Google provides to your advantage. Google Docs is an excellent tool for sharing documents, editing simultaneously, and making comments on specific pieces of a document. Google Classroom further expands these tools. Using Google Classroom, you can create a central hub of information for your students. Here, you can add resources, assignments, and rubrics. You can use quiz features to help students assess their learning. Google Classroom stores students’ work indefinitely, making it a great way to keep track of student progress over time.
Step 4: Set Your Rates
As your own boss, you get to decide on the rate you charge for your services. Rates vary dramatically from tutor to tutor, and they typically depend upon your education level, the subject area that you teach, and your students’ specific learning needs.
Typically, tutoring rates fall somewhere between $20–$80 an hour.
Tutors who charge the highest rates are those who teach in-demand subjects that require significant experience and familiarity, like SAT prep, and high school and college-level math and science. Tutors who have training and experience working with students with special education needs also typically charge higher rates.
Unfortunately, hourly rates tend to drop when you tutor online instead of in-person. This is primarily because tutors are not limited by location, which makes the online tutoring market much larger with more available tutors. On the other hand, when you tutor online, you eliminate any expenses related to travel and you don’t have to rent out a space for tutoring.
I’ve seen information that suggests that the average rate for online tutoring is $20–$30 an hour, although you can certainly charge more based on your education level and experience.
As you think through your pricing rates, you should look into the rates that other tutors in your content area charge. Then, you should take into account your anticipated business expenses (pricing for any required software, self-employment taxes, and the time you spend preparing for each tutoring session). Using this information, you can set your own pricing range.
Step 5: Register Your Business
In many cases, registering your business is technically optional.
Tutors who decide to operate as a sole proprietorship or partnership do not need to do anything to register their business. Essentially, the business is an extension of its owner. Sole proprietorships are easy to set up, and typically in a sole proprietorship, taxes are simpler than they are with other forms of incorporation. In a sole proprietorship, when you go to file taxes, you file your business taxes and personal taxes together. You will have to pay self-employment taxes on your earnings. In addition, sole proprietorships do not come with the liability protection that is part of many other types of business structures. You are personally liable for any debts your business takes on.
Other forms of incorporation require more time to set up and come with their own advantages and disadvantages. Here are the most popular ways to incorporate:
Limited Liability Corporations (LLCs): Aside from setting up a sole proprietorship, many tutors find that establishing an LLC is their next best option. LLCs offer limited liability protection for their owners, and they are not as complex as a corporation. Each state has its own rules for what it takes to start an LLC, and you don’t necessarily have to register your LLC in the state where you’re doing business (although you generally should). Like with a sole proprietorship, LLC owners report their business earnings and losses on their personal taxes.
C-Corp:Â In a C-corp, shareholders are considered the owners of the company, and they receive limited liability protection. However, at the same time, business decisions are made by corporate officers who may or may not be shareholders. In a C-corp, taxed are filed separately from personal taxes, and shareholders pay income tax on dividends. In order to form a C-corp, you have to file articles of incorporation with your state.
S-Corp:Â S-corps are very similar to C-corps, but with a few additional restrictions: You have to have fewer than 100 shareholders, and they have to all be U.S. citizens or residents. Profits and losses are reported on personal taxes. Finally, in addition to filing your articles of incorporation, you also have to file IRS Form 2553.
Even if you decide to operate your tutoring business as a sole proprietorship, we suggest setting up a plan for separating your business finances from your personal finances. The easiest way to keep your finances separate is to create separate business checking and savings accounts. These additional accounts make it easier to track your profits and losses, and they can save you a ton of headaches when it’s time to pay your taxes.
You should also consider filing a DBA (Doing Business As), Trademark, or Entity Name for your business. Filing a business name allows you to operate your business under its own name, instead of your legal name (Math Works as opposed to Sandy Davis, for example).
Step 6: Establish A Web Presence
As an online tutor, it’s crucial that you have a strong online presence. There are a few ways you can go about building your web presence:
Create A Website: It never hurts to have a sleek, attractive website. Developing your own website adds credibility to your business and can help build hype for your services. Luckily there are user-friendly and cost-effective website builder tools that you can use to set up a site in a matter of days. Some of these tools (such as Wix) even provide appointment scheduling tools that you can use to allow your clients to book–and pay for–their tutoring sessions online.
Set Up Social Media: Set up business accounts on the social media sites that your clients use most frequently (Facebook and Instagram are good places to start). Make sure you include important information like your subject areas and a link to your website. You should also encourage reviews on your Facebook page, so parents and students can leave testimonials, improving your credibility.
Create A Yelp Page: If your business doesn’t already have a Yelp page, now is a good time to set one up. Adding a page on Yelp encourages more clients to leave reviews, and it can help direct new potential clients to your services.
Check out these top website builders:
Service
Pricing
Hosted or Licensed
Templates & Themes
Compatible Credit Card Processors
Next Steps
$14 – $179/month
Hosted
Excellent
Many
Go to Site
Free – $29.90/month
Web-Hosted
Excellent
Many
Go to Site
Free – $25/month
Web-Hosted
Average
Many
Go to Site
$0/month
Hosted
Good
Square Payments
Go to Site
Step 7: Choose A Payment Processing Solution
In order to accept payments online, you’ll have to integrate with a payment processing solution.
Payment solutions fall into two categories: Payments Service Providers (PSPs) and merchant accounts. PSPs are typically easier and faster to set up, but they are also known for having account stability issues. Many PSPs accept merchants almost immediately, and then upon review decide that certain merchants are too high-risk to use their platform and freeze their accounts. Merchant accounts, on the other hand, take longer to set up because there is an initial review process. This makes merchant accounts more stable (you are less likely to have your service revoked). Merchant accounts also allow you to negotiate the rates that you pay for payment processing. In order to process online payments with a merchant account, you need to find a payment gateway, which is an integration that allows you to connect your website and your merchant account.
Here are a few payment processing solutions that might work for you:
Payment Service Providers: PayPal is one of the most widely accepted PSPs out there, and it is a familiar payment option for your clients. Another good PSP is Square. In fact, Square includes appointment scheduling features, so your clients can schedule sessions and pay for services at the same time.
Built-In Payment Processors: Some website builders come with their own in-house payment solutions. One of these options is Wix Payments for Wix users. Built-in payment solutions are great options for quickly setting up a payment method.
Merchant Accounts: Although merchant accounts often take longer to set up, for some merchants the initial investment is well worth it. We particularly like Fattmerchant and Payment Depot.
Step 8: Market Your Business
Once you have your website and payment method set up, it’s time to start marketing your tutoring business! Your marketing strategy should take into account your current network and your intended audience. Here are a few methods you can try:
Email Marketing: If you already have a large personal network, make sure to notify them of your new business. Use email marketing software like Constant Contact or Mailchimp to reach out to family and friends with information about your tutoring services.
Social Media Marketing: Use your personal and business social media accounts to announce your business. One great way of gaining new clients with social media is to put out free content that anyone can view or download. Upload or link your favorite learning resources, and create a few videos to show how you prepare for a tutoring session. Sharing these resources and videos demonstrates your personality and teaching style. It can help build your reputation and make you appear more approachable.
Post In-Person Flyers: Place fliers with tear-off tags on bulletin boards in libraries, churches, schools, gyms, and daycare centers. Think about where parents of school-age children might be, and get your fliers out there! Be sure to always check with management before posting your fliers, of course.
Offer Free Consultations: Consider giving new potential clients an opportunity to meet with you for a free initial consultation. It’s a good idea to include parents in this initial conversation.
Share Customer Testimonials: Ask happy clients for a positive customer review, and then use that testimonial to your advantage. Word-of-mouth goes a long way. Make use of it in any way you can.
How To Fund Your New Online Tutoring Business
New businesses often find themselves in need of capital. If you’re facing startup costs and wondering how to address them, here are a few options:
Personal Savings
If you have some liquid assets saved up, now might be a good time to use them. By using the money you’ve already saved, you eliminate the risk associated with debt and you ensure you won’t be losing additional money on interest. That said, you take a risk by using your personal money to finance your business. If your business fails, you lose that money.
Credit Cards
One of the easier–and riskier–ways to fund your startup expenses is with personal or business credit cards. Credit cards allow you to access credit quickly and apply it to many different types of purchases.
You should keep in mind, however, that credit cards charge high-interest rates on any balances you carry from month to month. This makes credit cards a good option for purchases you can pay off quickly, and a potential problem for ones that you can’t.
Note: Avoid taking out cash advances on your cards unless absolutely necessary. They come at a very high cost.
Personal Loans
Although traditional business loans are not an option for some new businesses, you can often use a personal loan to cover some of your startup expenses. These loans can be easier to get when you’re first starting out.
The downside of a personal loan is that you don’t get the liability protection you’d have if you applied as a business. You may also be more limited in terms of the amount of money you can take out. Still, if you need a little money to get started, it’s not a bad option.
Grants
Grants might be the closest thing to “free money” we have in the real world. Grants are often highly competitive, and they require businesses to complete a fairly involved application process. As you consider your options, you should factor in the amount of time you spend applying for a grant. And, you should take into account the likelihood that you will not be selected for that grant.
If you need some advice on where to look for grants, check out our feature on the topic.
ROBS
ROBS stands for Rollovers as Business Startups, and they are extremely niche products for entrepreneurs with retirement accounts like 401(k)s.
For a fee, a ROBS provider allows you to use money from your retirement account to pay for startup costs without incurring any tax penalties for accessing retirement funds early. Like with personal savings, with ROBS, you are risking your own money. ROBS is probably overkill for most new tutoring businesses, but it is a good option to keep in mind.
Go Out & Start Your Online Tutoring Business
Does tutoring from the comfort of your own home sound like your dream job? Tutoring can be one of the most rewarding and profitable small businesses to start. And with minimal start-up costs and very few steps to getting started, you can get begin tutoring in very little time!
That said, as with all new business ventures, you should approach your online tutoring business with a strategic mindset. Take your time, decide on a niche, gather all the tools you need, and work towards building a positive reputation in your social network. Now is a great time to enter the tutoring market. So get out there, and get teaching!
What’s Next
Your complete guide to business structures
Learn about unsecured business lines of credit
Check out this guide for starting a consulting business
Learn how to start an Amazon business
Check out this guide to starting a pet sitting business
The post How To Start An Online Tutoring Business: Prerequisites & 8 Steps To Success appeared first on Merchant Maverick.
The novel coronavirus global pandemic is quickly reshaping American life as we know it. As a small business owner, you’re no doubt concerned about how COVID-19 will affect your livelihood. Restaurant owners especially face challenges due to restrictions on gatherings of people, local quarantines and curfews, and just the general fearful atmosphere that has your most loyal patrons now fearful to leave their homes.
Nevertheless, people still have to eat.
While it’s hard to predict the future as things are changing so rapidly, it seems likely that many restaurants will remain open throughout this pandemic, if only in a limited capacity—i.e., for delivery and takeout. We’re here to help you weather out this storm so you can stay open, or at least stay in business, even if you must close your restaurant temporarily because of COVID-19.
Keep reading to learn how your restaurant business can adapt to new business conditions in the age of coronavirus, including resources on how you can save your business from closing and even continue serving customers during this crisis.
Whatâs Going To Happen To Restaurants As Coronavirus Spreads?
As more and more cities are affected and local governments declare emergencies, all businesses should be prepared for a downturn. This downturn will almost certainly be temporary, and it will be worse in certain regions than in others, as outbreaks are occurring in different regions at different times. However, it’s becoming pretty clear that no customer-facing business—retail, restaurant, health and beauty, service etc.—will be unaffected.
As a result of the worrying spread of COVID-19, many restaurants are temporarily shutting their doors, reducing their seating capacity, or restricting business to only take-out and delivery.
Will the government mandate a shutdown of all restaurants? Well, some state and city governments have already done this as of the time of writing this article, and more will likely follow suit. However, delivery and take-out are not included in those closure orders thus far, and some governors and mayors are only ordering restaurants to operate at half-capacity. Of course, it’s very possible that measures may become stricter in the coming days and weeks.
White House guidelines issued March 16 recommend against gatherings of only 10 or more people over the following 15 days, and that all restaurants close (dine-in service) in states with evidence of community transmission; however, at the time of writing, those announcements were just guidelines and not mandated orders.
Is Your Business Prepared For A Pandemic?
So, is your restaurant business ready to deal with the coronavirus pandemic? Have you actually ever thought about what to do if thereâs ever a large-scale crisis? It might seem like it’s too late, but you can still prepare for what changes might be ahead, including even future pandemics or national emergencies. While everyone’s hunkering down, the internet makes it possible to communicate with employees and customers, and even apply for and access emergency funds during this time of crisis.
5 Essential Things You Can Do To Prepare For A Community Health Crisis Or Other Disaster
As a restaurant owner, there are some basic things you can and should be doing from a business management/community health perspective. These actions apply not just to the current health crisis, but also to protecting your business from future crises.
Revisit Health & Safety Policies
This may seem kind of basic, but it’s nonetheless important. We’re talking handwashing techniques, proper sanitation, and when people should stay home from work. You can help protect your business, employees, and patrons by implementing some stricter health and safety policies, today.
To inform such policies, be sure to consult the official CDC guidelines for businesses regarding COVID-19 and all local ordinances and guidelines. You can also find some helpful information about maintaining worker health in the U.S. Chamber of Commerce Toolkit for Coronavirus.
Revisit Employee Attendance Policies
Do you have an overly strict attendance policy? You’ll probably need to relax this policy — at least for the time being — so that people donât feel tempted to go into work when sick. Make it easy for your employees to make the right choice.
Again, be sure to consult all local laws and ordinances. For example, the city of San Diego has ordered that the city’s businesses can no longer require a doctor’s note when an employee is sick, as they don’t want doctors to be burdened by paperwork instead of helping sick patients.
Analyze Your Cash Flow
Cash flow is super important, now more than ever. Take a look at where things are right now and what you anticipate your cash flow will be over the next few months—including worst-case scenarios. How much do you have on hand? How much do you need to keep the lights on? When are your next bills due? Are you eligible for a cash-flow loan if you need one? Check your POS reports for changes. Your revenue may be down, but by how much? Donât just rely on âimpressionsâ or visual scans.
Here’s a good resource you can use right now to analyze your business’s cashflow: How To Calculate & Analyze Business Cash Flow
Check Your Business Insurance Policy
Familiarize yourself with your business insurance policy. What does it cover? How much does it cover? Here are some resources we have on business insurance:
Business Insurance For Florida Small Businesses
Business Insurance For Startups: How Much It Costs And Why You Need It
How To Get Business Insurance In 4 Easy Steps
Do I Need Business Insurance?
Own A Business? Here Are 7 Types Of Business Insurance You May Need
Monitor News & Policy Changes
While it’s not necessarily helpful to obsessively check the news all day for developments (though it can be hard not to right now), it’s important as a business owner to stay on top of all local, state, and national health policy changes that could affect your business. Find a reliable source of news for health updates specific to your city, and make sure your device is set up to receive alerts so you get all the relevant updates.
Of course, you’ll need to make sure you’re adhering to all current policies so that you don’t get shut down. For example, you’ll need to adhere to social distancing policies from the CDC which recommend that customers be seated at least 6 feet apart and that dine-in seating is reduced to 50 or less. Depending on your state or city, there may be additional guidelines you must follow.
5 Strategies To Keep Business Going In A Tough Time
Okay, so weâve covered basic emergency preparedness. Now, what can you do to keep your restaurant going during a time of crisis? Here are some ways restaurants can cut costs and/or keep money flowing in.
Implement Takeout & Delivery
Offering takeout and delivery is important when people do not want to dine-in or you’re unable to offer dine-in service due to the current emergency policy in your area. As mentioned, some governments are mandating that restaurant dining rooms close or operate at half-capacity. You can offer a takeout and delivery option via an online restaurant ordering system that works with your restaurant’s website, or you can offer delivery via a third-party delivery service.
While third-party delivery services typically take a big cut of the sale—as much as 30 percent—during the crisis, food delivery services like Uber Eats, GrubHub, and Seamless are currently suspending their commission fees to independent restaurants. These services are also instituting “no contact” food delivery policies in adherence with social distancing recommendations.
Sell Gift Cards
People in our communities cherish their local businesses and want to help them out. After all, you want the businesses you love to frequent to still be around after the current crisis ends. If your restaurant offers gift cards, people can buy a gift card now (providing the money you so desperately need at the moment) and redeem it later once your regular operations resume.
Here’s an excellent resource that can help you set up gift cards for your small business if you haven’t already: How To Implement A Gift Card Program For Small Business: What You Need To Know & How To Get Started
Adjust Your Menu & Hours
This is a time to trim the fat and focus on just the essentials. This is the time to update your menu and drop high-cost/low-profit items, and slow-moving items. Focus on what’s cheap, popular, and in-season. Further reading:Â 14 Ways To Create, Implement, & Maintain A Great Restaurant Menu
Many restaurants are adjusting their hours to save money and also to minimize risk. You might consider temporarily closing during your least-busy days or hours to save costs, or getting nixing your happy hour when people would be less likely to practice social distancing.
Communicate With Customers
Most businesses have an email list and/or a social media presence. Even if you’re not sure if you do, check your point of sale. POS systems like Square automatically collect customers’ email addresses and other contact info so you can reach out to them. Whether you are closing or staying open, be sure to contact your customers to let them know what precautions you are taking against coronavirus and any adjustments your business has made to your hours, sanitization policies, or anything else.
If your restaurant is closing temporarily, you may just want to reassure customers that you will reopen when it’s safe and perhaps encourage them to purchase a gift card in the meantime.
Advertise & Promote
If you’re still open, you need to let customers know, and entice them to buy food from you. For example, you can use social media, text marketing, and email to offer some specials for takeout. You may even want to use online advertising in the form of pay-per-click ads and (paid) social media ads on Facebook and Instagram. As far as what foods to offer for your promotions, you will especially want to focus on selling meals that are super cheap to make with high profit margins.
What To Do When A Temporary Slow-Down Becomes The Worst-Case Scenario
What are your options when things start going from âwe need to tighten our beltsâ to âhow long can we keep the lights on?”—or worse, when government orders force closure?
What measures are being taken now to help small businesses after the COVID-19 outbreak? Here are some steps governments are taking to help businesses affected by COVID-19:
The SBA has announced it will provide disaster relief loans up to $2 million for small businesses affected by COVID-19. Here is SBA’s news article about coronavirus SBA loans and its guidelines for businesses re: COVID-19.
The Fed has cut interest rates to zero to help businesses and consumers during coronavirus—This means your business could qualify for a very low-interest loan.
State and city governments have announced various measures to help small businesses during the crisis; for example, the city of San Jose, California voted to adopt a temporary 30-month moratorium on evictions for small businesses and residents of the city, which has been hard-hit by the virus.
The U.S. Chamber of Commerce is lobbying to cancel payroll taxes for April and May (this has not been made into law yet).
Some more things you can do:
Check Your Local Chamber Of Commerce to find out about coronavirus disaster relief programs for small businesses in your state and city, such as eviction moratoriums, payroll and sales tax relief programs, low-interest loans, etc.
Communicate With Your Creditors and also with your vendors, your landlord, etc. Everyone is hurting right now and they will likely be willing to work with you, especially if you can negotiate arrangements for when things pick up. Some credit card issuers are even offering special relief programs. It’s better to be proactive than to get behind and then ask for help.
Check Your Business Interruption Insurance Policy if you have one. Your policy must include communicable disease coverage for it to cover coronavirus-related losses.
Here is more coronavirus-related information and resources for restaurants compiled by the National Restaurant Association: Coronavirus Information & Resources.
Being Proactive Is The Best Way To Protect Your Business (& Your Customers)
Why is it so important for businesses to get ahead instead of just waiting this crisis out? Well, even if you have to close or drastically reduce your operations, you still have the ability to take actions that can lessen the impact of coronavirus on your restaurant. You can:
Promote your takeout and delivery services
Communicate with your customers
Sell gift cards
Apply for disaster-relief financing
Negotiate with your creditors
At the end of the day, we’re all in this together. Also, state and local governments are very motivated to reduce the impact of this crisis and small businesses, which are the backbone of the American economy. Seek out the resources for small business help because they do exist.
Read our Small Business Outbreak & Pandemic Guide: Coronavirus Edition for more actionable information for small businesses during the COVID-19 pandemic.
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Every day, in areas all over the world, small businesses are disrupted by emergencies and disasters. Regardless of how safe you feel, no one can predict the future with one-hundred-percent certainty. If your business does not already have an emergency plan in place, you should make that a priority on your to-do list. Do it now, today. I mean it: As soon as you are done reading this article.
Chances are high that at some point in the life of your business, you will encounter an emergency, and if you have a plan, you can prevent panic and major turmoil in your life and the lives of your employees.
Our current news cycle is dedicated to the coronavirus COVID-19 outbreak, and employers and employees alike have anxiety about what might happen should the virus spread. The impact has the potential to be severe and businesses everywhere are bracing for disruption. It is not unwise or irrational to develop a plan for your company, even in this early stage. Worries of a global pandemic are already impacting consumer/employee/business choices.
In our house, I am the resident emergency preparedness expert. I was a resident of Japan during the 2003 SARS pandemic, and after an ill-advised trip through Asia at the height of the spread, I was quarantined for 10 days while I self-monitored for symptoms. That event, combined with my experience writing a fictional exploration of a viral pandemic, has led me to become more pro-active about emergency planning.
Right now, you should be addressing employee and customer concerns about the COVID-19 virus outbreak. Should pandemic levels rise within your community, you need an informed plan and emergency procedures in place. It may feel overwhelming, but it doesn’t have to be.
Ask yourself:
How will this affect me?
What could this look like long term?
What should I do to prepare?
If you don’t know where to start, that’s okay. Wash your hands, take a deep breath (not too deep if people around you are coughing), and follow me as I take you into my world: You are now a small business owner during a global viral outbreak and you have a plan.
Outbreak, Epidemic, Pandemic: What’s The Difference?
First things first. There are key differences between an outbreak, an epidemic, and a pandemic, and each impact your business differently.
Outbreak:Â According to the World Health Organization, an outbreak occurs any time a disease spreads more often than statistically normal in a specific geographic area.
Epidemic:Â An epidemic is the wide-spread outbreak of disease across multiple communities in a short period of time.
Pandemic:Â The next level is a pandemic, which is a a global outbreak that impacts communities world-wide. (Pan, from your Greek roots studying days, means “everyone”.)
At the moment, COVID-19 is in the outbreak category and people with the virus are confined into specific geographic areas.
Even if your small business is not directly affected by sick employees/sick customers/school closures, your supply line might be slowed or halted depending on what happens throughout the world. If you live close to an outbreak area, expect an economic impact (for better or worse, depending on the services you offer).
The best thing to do right now is to keep yourself informed from reputable sources, and do your best to stay healthy — not just for your sake, but for the most vulnerable in our communities who depend on our health for their health.
Short-Term Strategies You Can Implement Right Now
It’s important to plan and prepare for a potential pandemic, but adopting best practices right now in our personal and professional lives may be able to prevent a pandemic, and that — at this moment– is the aim. Your business decisions should be informed with current and accurate knowledge and not driven from a place of blind panic. Panic helps no one. So, don’t panic, and do these things:
Open Lines Of Communication & Be Transparent
Worry breeds gossip, and gossip, rumors, and conjectures are never helpful, especially in a crisis. The best way to prevent gossip is to open up the lines of communication and be fully transparent. If you don’t have an emergency plan, yet, be upfront about it. Point your employees and contractors to reputable sources of information and do what you can to mitigate panic. Talk to HR about developing a streamlined source of communication for worried employees. Be honest. Be empathetic (people are worried). Be proactive, not reactive.
Develop An Emergency Plan
No matter what the emergency, your business needs a plan. For the COVID-19 outbreak, create contingency plans for what happens if:
You or your employees become ill
Schools close
Work events are canceled
You cannot receive supplies because of closed borders.
Already, conferences and summits are shuttering across the globe, and there will be a widespread economic impact if the virus continues to spread. Prepare for it, but not with worry: Prepare with methodical readiness.
Use this time to address your company-wide emergency preparedness for any emergency. If you have a brick and mortar store and the lights go out, do you have flashlights for your employees? Where are your fire routes posted? Is your business insurance updated? If you don’t have insurance, look into the options you have for protecting your business in a disaster or emergency. Business Interruption Insurance might cover your losses in the event of a pandemic; check with your insurance company.
Where should employees receive communication about business developments? Who should employees talk to if they are worried about their health plan or sick leave?
Your emergency plan is a living document, plan to revisit it often.
Do Your Part To Limit Community Spread
Community health is important. The COVID-19 virus is seemingly caused by close contact with an infected person who may or may not be symptomatic. Symptomatic employees should stay home and self-isolate. If you are able, allow your employees to work remotely, conduct business meetings in GoogleHangouts or via Skype, and embrace people’s choices regarding their own health. (I’m looking at you, guy who wanted to shake my hand and got all awkward when I stumbled away mumbling about not knowing you.)
This is a complicated and nuanced topic, but at the moment we need to exercise caution and allow the flexibility for workers to stay home without penalty if they are sick or need to care for someone who is sick.
Another thing to consider regarding community spread is to rethink what you ask customers to touch/engage with. While at the mall yesterday, my child played with an iPad on display, and ten-seconds after he vacated the device, an employee was there to clean the screen. (I also had my own child wash his hands, too.) I asked about the policy: They had a pretty strict cleaning policy in place prior to COVID-19 and wiping down touched surfaces happens regularly and quickly–screens are germy places. How often and how deeply are you cleaning community areas? Make a plan.
What If My City Is Quarantined?
Quarantine can be an emotionally challenging experience: I speak from my own past. In my situation, I was under house-quarantine with instructions to monitor my health. Every day, someone from my place of employment brought me treats, groceries, or get-well notes, but the boredom took a toll. The first few days were fun and I watched marathons of the X-Files. But by the time I arrived at day 10, I was desperate for human connection and freedom.
A city-wide quarantine could happen if a COVID-19 outbreak needs containment, and that decision would certainly alter any attempts to continue “business as usual.” Currently, the quarantine for COVID-19 is a mandatory 14 days in isolation. This might be one of your worst-case scenario events to plan or prepare for. Could your business still operate during a quarantine? Better yet, is there a way your small business could help during a quarantine? What does that look like? (Small businesses that can deliver goods and services might see a business increase, for example.)
We don’t know what is going to happen at the moment, so the only thing you can do is prepare and have a plan in place for quarantine. Expect losses and disruptions, prepare for them, and communicate wholly with your staff.
Why Pandemic Planning Is Important For Your Business
One hot summer day, when my kids were very little, I packed us up for a long walk to a local park. Inside our stroller, I packed a giant first aid kit and some snacks. It wasn’t until we were about halfway to our destination and my youngest said he was thirsty that I realized I didn’t bring water. We didn’t need the 100 bandaids. We needed water.
If you haven’t planned effectively for the emergencies or disasters that might occur at your business, you could be left adrift in the middle of a crisis without the right tools. Pandemic planning is important because, well, here we are! This is the current fear and it’s a statistically relevant concern.
However, any type of emergency planning is necessary for your small business. Explore business insurance, look for ways to reduce potential community spread, have answers for worried employees, and be honest about the impacts an emergency might have on the business.
Think about your geographic area and prepare for the emergency/disaster that might occur and ramp up your plans. Whether it’s an earthquake, flood, tornado, hurricane, man-caused disaster, or pandemic, your business should have a plan. You must communicate that plan and ease the worries of those you employ, serve, and meet in the community. In an emergency, we often learn that we are all in this together.
The post Small Business Outbreak & Pandemic Guide: Coronavirus Edition appeared first on Merchant Maverick.
It’s a beautiful spring day, the sun is shining, and the birds are chirping. Out in the fresh air, you’re surrounded by vendors selling the freshest local produce, natural products, and unique handmade gifts. No, this isn’t a dream — it’s a trip to your local farmers’ market.
Farmers’ markets are growing in popularity across the nation, so it’s no surprise that farmers, artists, and other local vendors are capitalizing on this money-making opportunity. Perhaps you’ve even pondered the idea, or maybe your family and friends have suggested you make some extra cash by selling your handmade or homegrown wares.
In this guide, we’ll explore how to become a seller at a farmers’ market. While it may seem as easy as grabbing your goods, setting up a table, and bringing in customers, there are actually tips and strategies to keep in mind to improve your odds for success … and increase your profitability. From selecting your products to marketing to buyers, we’ll cover it all to help you get started on the right foot. Read on to find out how you can start selling your goods at your local farmers’ market.
Why Are Farmersâ Markets So Popular?
From small towns to big cities, farmers’ markets are quickly popping up everywhere and attracting people of all ages. What makes a farmers’ market so appealing? It might be easier to ask what’s not to love about these local stops!
There are a number of reasons that more people are frequenting farmers’ markets. One of the top reasons is that these are places where you can purchase fresh local produce, most of which is organic and isn’t genetically modified. Compare this to your local supermarket where you aren’t sure of when the produce was picked and shipped or how it was grown. Farmers’ market produce is the freshest, and often the healthiest, that you can find.
Buying locally isn’t just good for your body — it’s also better for the environment. Produce at farmers’ markets usually comes from small family farms, which use fewer pesticides and chemicals. Because these products aren’t being shipped around the country, shopping at your local farmers’ market also conserves fossil fuels.
When you shop at your local farmers’ market, you’re supporting small businesses, whether it’s a small family farm or a local artist peddling paintings, pottery, or other handmade art that you won’t find in your local department store. In addition to supporting your local economy, attending a farmers’ market is a great way to meet new people. Farmers’ markets are family-friendly (and sometimes, even pet-friendly!) events that let you meet and socialize with people in your community. Some farmers’ markets even offer live music, classes, and other special events that only add to the fun. Add in local food trucks serving delicious meals and treats, and it’s not hard to see why farmers’ markets are truly the place to be.
Now, it’s pretty easy to see why you would visit a farmers’ market, but what are the benefits for sellers? In a 2015 survey, the USDA found that over $700 million of goods were sold at over 8,000 farmers’ markets around the United States — and the majority of that money is being funneled directly back into local economies. The USDA also found that farmers and ranchers make less than 16 cents for every dollar when selling to retailers. On the flip side, they can retain nearly 100% of their profits when selling locally through farmers’ markets.
10 Kinds Of Products You Can Sell At A Farmersâ Market
Despite its name, you don’t have to be a farmer to sell at a farmers’ market. There are lots of ways that you can connect with the community while earning a profit. Items to sell might include:
Produce
Sure, you don’t have to be a farmer to sell at a farmer’s market, but if you are, you can certainly bring your freshly grown produce to sell to your customers. Seasonal local fruits and vegetables really sell, but don’t forget about unique products you won’t find in most supermarkets (think colorful heirloom tomatoes or purple cauliflower). No matter what you bring, make sure that you only provide the freshest, highest-quality produce for your customers.
Don’t feel stuck to just fruits and vegetables, either. Mushrooms and fresh herbs that you’ve cultivated yourself are also big sellers at farmers’ markets, providing you with additional opportunities to earn some extra cash.
Milk, Meat & Eggs
If you raise cattle and chickens, it’s a no-brainer to bring your milk, meat, and eggs to the farmer’s market to share with your community while making a profit. These are popular items at farmers’ markets because of freshness, but also because many people prefer buying from small farms that treat their animals humanely, as opposed to large factories that may have questionable practices.
Not a rancher, but you enjoy hunting? Venison, bison, and other wild game can be sold at the farmers’ market. And it doesn’t stop at fresh meat, either. You can always sell your dried meats and jerky that you’ve marinated, cured, and dried yourself.
Baked Goods
Your family and friends think you could be the next Betty Crocker, so why not bring your baked goods to the masses? If you love to bake, there are endless possibilities and a whole lot of money-making potential at your local farmers’ market. Bake your homemade cookies, cakes, pies, scones, and cinnamon rolls and sell them to customers during your free time. Again, you can think outside of the box to boost your profit potential by selling unique items such as dog treats or treats for customers with special dietary needs (i.e. vegan or gluten-free).
Flowers, Plants & Seedlings
From season to season, people spruce up their homes inside and out with colorful flowers, outdoor plants, and houseplants. From flower baskets that add a touch of color to your front porch to common and unique species of plants, many customers bypass big-box home improvement stores and instead purchase from local growers.
You don’t even have to wait to have fully grown plants and flowers. Some shoppers may prefer to buy seedlings that they can plant and grow themselves. Succulents and herbs are also popular options to consider.
If you grow roses, tulips, lilies, or other beautiful flowers, you can also create unique arrangements that shoppers may snap up for weddings, prom, Valentine’s Day, or even “just because.”
Honey
If you’re a beekeeper, cash in on the benefits of your (and your bees’) hard work by selling your delicious honey at the farmers’ market. Customers can purchase high-quality honey for use as a natural sweetener, but there are also additional benefits of eating local honey. Local raw honey is often marketed as a natural home remedy used to help with seasonal allergies, soothe sore throats, kill bacteria, or even help you get a good night’s sleep.
Want your honey to stand out from the rest? Switch up the way you process your honey to create creamed honey, or consider adding natural flavors to make your own unique honey blend.
Also, don’t overlook the value (for health and your wallet) of pollen granules. These tiny pellets contain a mixture of nectar, saliva, and pollen and are rising in popularity due to their perceived health benefits. Pollen granules are used for treating inflammation, strengthening the immune system, reducing stress, and other ailments.
Soap & Skincare Products
As we learn more about the chemicals in everyday household items, more people are stepping away from these potentially harmful ingredients and going a more natural route. If you’ve created the perfect recipe for homemade soaps, lotions, or other skincare products, set up a display at your local farmers’ market to peddle your natural concoctions.
As more people move to natural products, the farmers’ market in your area gives you the perfect platform for selling your goods. There are lots of opportunities in this space, from creating your own natural (and great smelling!) bug repellent to homemade sugar scrubs and natural deodorants.
One thing to remember is that you can be multi-dimensional at a farmers’ market. For example, if you keep bees, not only can you sell honey and pollen granules, but you can also sell natural beauty products made from pollen, honey, or beeswax.
Beverages
Need some inspiration for what to sell at the farmers’ market? Look no further than the neighborhood kid with a lemonade stand. And the great news is that you aren’t just limited to lemonade, although selling freshly squeezed lemonade to hot shoppers is an easy way to make some extra cash.
If you make your own local wine or mead, brew your own craft beers, or even make a mean cup of hot apple cider, selling beverages can help draw in customers. Your booth or display can serve as a showcase for your homemade brews, or you can sell beverages in addition to other products. Many people that frequent farmers’ markets are looking for products that are unique and can’t be found in the local grocery store, so think outside the box. Flavored lemonades made with freshly squeezed lemons and natural flavorings, kombucha, and other tasty beverages can be sold by the glass, bottle, or jug.
Prepared Foods
Spending a long time at the farmers’ market can leave shoppers feeling famished. Why force hungry customers to drive to restaurants when you can bring the food right to them? If you operate a food truck, consider bringing your tasty fare to the farmers’ market. If you have openings in your schedule, a partnership with a local farmers’ market can fill your weekends with customers and the profits they bring with them.
Arts & Crafts
Whether you’re a professional or just an amateur artist, locally-made arts and crafts are big sellers at farmers’ markets. No matter what type of art you make, a farmers’ market is the perfect platform for selling your creations.
Paintings, drawings, embroidered items, crocheted blankets, hand-painted t-shirts, pottery, wood carvings, sculptures, and homemade greeting cards are just a few of the arts and crafts you can peddle at your local farmers’ market.
Other Unique Goods
Don’t see anything on the list that appeals to you? Then tap into your own unique talents. The great thing about the farmers’ market is that there are relatively few limitations when it comes to what you sell. While you can’t sell anything illegal or dangerous, you can let your creative flag fly and bring something truly unique to the table. What can you offer that is different and unique? Exotic spices, ethnic goods, homemade candles … the list goes on.
One way to be a successful seller is to think about what your customers want or need. For example, if you live in an area known for its tasty barbecue, consider selling your own dry rubs or barbecue sauce. Whatever you decide to sell, make sure that it’s unique to attract the most customers. Homemade, natural products are popular, but items like vintage clothing and shoes may also sell quickly. Whatever you do, just make sure that what you’re selling is allowed by your chosen market.
7 Ways To Prepare For Selling At A Farmers’ Market
Once you’ve decided that you want to sell at your local farmers’ market and you’ve decided what products you’ll be offering, the hard work is over, right? Not exactly. Whether your goal is to sell on occasion to earn some money on the side or you dream of bringing in a steady income by selling your goods to the community, there are some steps you need to take to help boost your chances for success.
Find Farmers’ Markets In Your Area: Once you know what to sell, the next step is to figure out where to sell it. And just like the unique products you’ll find from sellers, not all farmers’ markets are the same. Get a good idea of the culture, people, and products at each farmers’ market by visiting them yourself. Keep your eyes open for markets that have a need for what you’re offering, but don’t forget to find a farmers’ market that’s a good fit for you. For example, if there are no other artists and you’d feel uncomfortable selling your art, keep searching. If you’d like to bring your four-legged friend with you, look for a dog-friendly market. You can also turn to the internet to learn more about the farmers’ market in your city and surrounding areas. Look for official websites and social media profiles that feature pictures, posts, and information about each market. Finally, you should get an idea of the registration process. While this process varies across markets, you need to be aware that vendor registration windows aren’t always open, and you may have to sign up weeks, months, or even longer in advance to secure a spot. You can find this information online or talk to a manager in-person to learn more about signing up as a vendor.
Research Local Ordinances & Health Regulations: Nothing can bring your business to a halt faster than getting shut down by the health department or local authorities. Do your research to learn about local ordinances and health regulations, such as how produce and prepared food must be stored or how baked goods are prepared. Laws and regulations vary, so contact your local health department to learn more.
Make A Business Plan: Even if selling at a farmers’ market feels more like a hobby than a business, it never hurts to create a business plan before you get started. This business plan can be used to outline your goals, how you plan to finance your business, and your marketing plan. If you’re panicked at the thought of a business plan that’s an inch thick, don’t — a one-page plan is sufficient for keeping you on track. Don’t know where to get started? Learn how to create your one-page business plan in no time.
Get Startup Capital & Set A Budget: While selling at a farmers’ market can certainly be one of the more inexpensive ways to make money off your homemade goods, there are still some expenses to consider. One of the most common expenses is a booth rental fee. You need to consider other expenses, too — think signage for your booth, tablecloths and other items to spruce up your display, price stickers, and the cost of materials and packaging for samples. It sounds like a little, but these small expenses can add up quickly if you don’t watch out. Determine if you need to get financing before you start selling, set a budget, and stick to it. Want more tips? Check out our guide, How To Start A Side Hustle.
Look Into Business Registration: Depending on local regulations, you may be required to register your business before you take part in a farmers’ market. Some farmers’ markets require you to provide an Employer Identification Number (EIN) or Taxpayer Identification Number (TIN) when you register as a vendor. If an EIN is required, it’s easy to obtain one for free from the Internal Revenue Service. Contact the farmers’ market you’re interested in to learn more about the requirements for sellers.
Research Business Insurance: Some farmers’ markets require their vendors to have their own business insurance. Even if this isn’t a requirement, though, you still want to research your options to protect yourself from liability. If you’re unsure of how to get started, check out our article on general liability insurance for your business and contact your chosen farmers’ market to determine if insurance is a requirement. They may even be able to recommend local insurance companies that other vendors use.
Get Accounting Software: Even if you’re just making a little extra money on the side, do you really need accounting software? Yes, you do, and though it may seem like a pain now, you’ll thank us later. No matter how much you’re bringing in from your sales at a farmers’ market, it’s important to keep track of your finances. The best way to do that? Accounting software. The good news is that there are many options available that are low cost (or even free!) and easy to use, even if you have no prior accounting experience. Tracking your finances will help you see how much money you’re making, as well as where you’re spending it — allowing you to determine where you can make changes to increase your profits. You’ll also be glad that you kept track of finances when it’s time to pay your taxes. If you don’t know where to get started, take a look at some of our top accounting software choices for small businesses.
Should You Accept Credit Card Payments At Your Farmers’ Market Booth?
In a world where paying with plastic is quickly becoming the standard, you might be wondering if you should accept credit cards at your farmers’ market booth. Unfortunately, there isn’t a clear answer, but here’s what you should consider before making your choice.
Mobile point-of-sale (POS) apps make it easier than ever to accept credit cards. With your smartphone or tablet and a card reader provided by your chosen provider, you can accept debit and credit cards with ease without a bunch of heavy equipment and complicated systems. Some credit card readers are even available for no cost, and you could even score extras like stickers that advertise that your booth accepts debit and credit cards. There are lots of POS apps to choose from, so do your research on top choices like Square, SumUp, and PayPal Here.
On the flip side, though, you don’t have to accept credit card payments. Many farmers’ markets are prepared for customers that are paying with plastic, so they allow customers to purchase tokens which can be used to buy products from vendors. At the end of the day, these tokens can be redeemed so the seller gets their earnings. If you’re thinking of going the cash-only route, check out our article, Can You Really Run A Cash-Only Business?
If the farmers’ market you’ll be attending does not offer this service, you definitely want to consider getting a POS app and card reader so that you can serve all customers, regardless of how they’re paying. Mobile POS apps come with additional features that may be beneficial to your business, such as inventory tracking and sales reporting.
Another consideration to keep in mind is whether or not you’ll be taking larger orders or custom orders. If this is the case, you’ll need to have the ability to create invoices for tracking your orders and getting paid by your customers. Let’s say that the holidays are coming up, and you’ve been commissioned to make baked goods for a Christmas party. Before you invest your time and money into fulfilling the order, you can make sure you get paid by sending your customer an invoice that can even be paid online. Some mobile POS systems like Square Invoices allow you to create and send invoices, or you can use your accounting software if that feature is available.
Can You Accept Food Stamp/SNAP Benefits At A Farmers’ Market?
Statistics show that the Supplemental Nutrition Assistance Program (SNAP) helped 40 million Americans each month in 2018. This program — formerly known as food stamps — provides benefits that allow low-income households to afford food. SNAP participants are provided with an Electronic Benefits Transfer (EBT) card, which is used like a debit card at participating retailers. This includes grocery stores, convenience stores, and, yes, even farmers’ markets. This system makes it easy for you to accept EBT without having to jump through hoops.
Most farmers’ markets have a system in place that allows SNAP participants to purchase tokens with their EBT cards. These tokens can then be used to make purchases. Many states even reward SNAP participants for shopping at farmers’ markets with “double-up” programs. These programs match each dollar spent (up to a certain amount), allowing these households to receive more healthy and nutritious food using their benefits.
5 Clever Marketing & Promotion Tips For Your Farmers’ Market Stand
You’ve decided what to sell and where to sell it — now, it’s time to sit back and wait for customers, right? Wrong! While you won’t have to have a huge (and expensive) marketing campaign for your farmers’ market stand, there are some steps you need to take to make your business more appealing to shoppers.
Business Cards: A customer that isn’t interested in what you’re selling now may become a customer in the future, or you might have a customer that wants to spread the word about your business. Make sure that they can get in touch with you by passing out business cards. You can easily create business cards online and have them shipped to your door for a low price. Make sure to include critical contact information, including your name, the name of your business, your email address, social media or website links, and any other relevant information.
Email List: Allow your customers to sign up for an email list. There are lots of options for the emails you send, including new product announcements, upcoming sales, or your schedule if you attend multiple farmers’ markets and events. Mailchimp is one good option that’s free for small businesses.
Social Media: Social media isn’t just for connecting with overseas relatives and old classmates. Social media is a great outlet for advertising your business. Create a social media profile for your business and provide contact information, photos of your products, customer reviews, and important updates. You can also join groups in your area that allow you to interact with customers, take preorders, answer questions about your products, and more.
Dress Up Your Display: You can’t just throw your products on a table and expect them to sell. Sure, you may make a little bit of money, but to maximize profits, it’s time to pimp out your display. For this technique, you’ll have to invest a little bit of money, so make sure you budget and plan before implementation. Use signs, tablecloths, and decorations to make your space stand out. Arrange your products neatly and make sure that everything is labeled and priced correctly. This is your chance to really show off your personality, so take advantage of the opportunity to attract customers.
Offer Free Samples: Nothing in life is free — unless you’re a customer and businesses are giving out free samples. While providing samples of your products does come with some expenses, allowing your customers to try before they buy is a good way to get them interested … and have them reaching for their wallets. Provide small bites of your baked goods or testers for your natural lotions and body products. Before distributing your samples, make sure that you’re aware of all health regulations to keep your business in operations and provide a sanitary shopping experience for your customers.
Are You Ready To Start Selling At Farmers’ Markets?
On the surface, selling at a farmers’ market seems easy, but as you can see, there’s actually quite a bit of work that goes into planning, prepping, and selling your products. While it may take a lot of hard work and expense to sell your products and make a profit, there are many benefits to peddling your goods at farmers’ markets, including low costs, more personalized interaction with your customers, and creative freedom.
It’s up to you to determine if selling at a farmers’ market best fits your business goals. Once you’ve made the decision to move forward, we offer plenty of great resources to help you launch and operate your small business. From learning how to apply for a small business loan to choosing the right accounting software and POS systems, you’ll find everything you need to make your business dreams a reality. Good luck!
The post How To Sell At A Farmersâ Market (Plus 7 Clever Tips To Succeed Before You Even Get Started) appeared first on Merchant Maverick.
You’ve done it. You’ve come up with a business idea, you’ve drafted your business plan, and you’ve started estimating costs and seeking funding to get your small business off the ground.
Or maybe you’re further along in the process. You’ve launched your business, and you’re working hard to ensure it’s a success. Good for you!
But wait … are you sure you’ve thought about all the key components of running a profitable business? For example, have you thought about how you’re going to do the accounting for your new business? If your doors are already open, do you have an accounting system in place?
If your answer is no, this article is for you. While it’s important to create a business plan, shop around for vendors and suppliers, and deliver exceptional products or services to customers, few things are more important than accounting for your business. Without good accounting, you’re putting your business at risk of failure by not keeping a close watch on your financials.
As a new business owner, you already have a lot of expenses that can pile up quickly. Adding an accountant to the mix just isn’t feasible for most businesses in their beginning stages. Fortunately, there are options available that make accounting simple … and are easy on the wallet. In this post, we’re going to talk about small business accounting. We’ll start off with the basics, then take a step-by-step look at how to use accounting in your business. We’ll explore accounting software options, the financial statements your business needs, and the tax deductions that can save you money come tax time.
Whether you’re a new business owner or haven’t gotten off the ground yet, whether you know a little about accounting or you’re completely in the dark, you’re in the right place. Welcome to Accounting 101.
What Is Accounting?
Merriam-Webster defines accounting as:
The system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results.
In other words, accounting is a process used by business owners and entrepreneurs to keep track of the financial transactions of a business, from purchasing supplies and inventory to the revenue that the business makes. Accounting allows you to analyze the financial health of your business to determine where money is being spent, how money is being made, and how these numbers affect the business.
The Basics Of Accounting
Whether you’ve dabbled in accounting in the past or you’re brand new to it, every business owner should have an understanding of the basics of accounting. These concepts may be very new to you or seem confusing at first. However, take the time to learn them so that you can tackle your company’s finances head-on and reap the benefits of good accounting.
The Accounting Equation
We can’t discuss the fundamentals of accounting without first discussing the accounting equation. Knowing and understanding this principle is essential for double-entry accounting, which we’ll discuss a little later. For now, though, let’s familiarize ourselves with this basic equation.
The accounting equation states that:
Assets
=
Liabilities
+
Owner’s Equity
Now, let’s break down each of these terms to ensure that you have a full understanding of the accounting equation.
Assets: Assets are everything that your business owns. This includes the cash in your business bank accounts, commercial real estate, equipment, inventory, and accounts receivable.
Liabilities: Liabilities include everything that your business owes. This includes accounts payable, loans, and other debts.
Owner’s Equity: Owner’s Equity (also known as shareholder’s capital) includes all investments of capital by the owners of the business.
The accounting equation keeps everything in balance. Each side must be balanced. If each side isn’t balanced, there is an error that must be found and corrected.
The Importance Of Double-Entry Accounting
Many businesses use what is known as double-entry accounting. Double-entry accounting simply means that transactions are recorded to two or more accounts. This system of accounting provides more accuracy and helps keep your books balanced. The accounting equation we discussed earlier is the foundation of double-entry accounting.
Double-entry accounting gives you a better view of your business finances. Single-entry accounting only uses income and expenses, whereas liabilities and assets are recorded using double-entry accounting. Not only does double-entry accounting give you a better understanding of the net worth of your business, but it offers additional benefits. Double-entry accounting makes it easier to spot errors and also comes in handy when it’s time to run financial reports.
This is a very basic overview of double-entry accounting. To learn more about how it works and why your business should use double-entry accounting, check out our post, What Is Double-Entry Accounting (And Do You Need It)?
Debits & Credits
In double-entry accounting, transactions are recorded as debits or credits.
You’re probably already familiar with debits and credits if you use a debit card from your bank or a credit card. That said, you’ll need to forget everything you think you know when learning accounting, because these concepts are completely different.
If this sounds like a foreign language to you, don’t worry. Let’s break it down so it’s easier to understand.
Debits: A debit increases assets and expenses and decreases liabilities.
Credits: A credit decreases assets and expenses and increases liabilities.
Total debits must equal total credits or there is an error that needs to be found and corrected. Remember, it’s all about balance.
Let’s take a look at an example. Say your business has purchased a piece of equipment at a cost of $15,000. You borrowed the money to purchase the equipment. Because you gained an asset, this is recorded as a debit of $15,000. However, you have to pay back the money you borrowed, which creates a liability. Therefore, you will record a credit of $15,000 under accounts payable (liabilities).
Account
Debits
Credits
Equipment
15,000
Accounts Payable
15,000
Totals Debits = $15,000 Total Credits = $15,000 â
Both sides are equal and balanced.
Debits and credits are not used in single-entry accounting. While it may seem easier to simply skip this and forego double-entry accounting, remember the benefits that we discussed earlier. Using double-entry accounting gives your business a clearer, more complete view of your finances. And before you get too worried, most accounting software handles the double-entry accounting for you behind the scenes, so you won’t have to do everything manually.
Ultimately, understanding these concepts may be difficult, but you’ll find that the benefits of balanced books are well worth the effort.
Journal Entries
An important piece of the accounting pie is the general journal. This is where all business transactions are recorded in order by date. Each journal entry should include four things. Those are:
The date of the transaction
The account(s) and amount(s) credited
The account(s) and amount(s) debited
A memo describing the transaction
When recording a journal entry, debits are recorded in the left column, while credits are recorded in the right column. Each side will be balanced, meaning that the total amount of debits on the left should equal the total credits on the right. Let’s look at a quick example.
You purchase $500 worth of inventory for your business. This inventory was purchased with cash. You have inventory (an asset) in your possession, so $500 is recorded in the left column of the journal since this is a debit. Because you paid with cash, your cash account is decreased by $500. Therefore, a credit in the amount of $500 is posted in the right column.
The Chart Of Accounts
Another key accounting concept to remember is the chart of accounts. A chart of accounts lets you see exactly where your company’s money is going. While it may seem confusing initially, understanding how a chart of accounts is organized helps the numbers make sense.
While we won’t dive too deeply into this concept, you should walk away from this article with a basic understanding of what a chart of accounts is. Typically, a chart of accounts is divided into five sections: assets, liabilities, equity, income, and expenses. These categories are further divided into accounts, such as utilities, advertising, accounts payable, cash, and materials and supplies.
Here’s an example of what a chart of accounts looks like:
Your chart of accounts is important for a number of reasons. In addition to breaking down your expenses, your chart of accounts helps you have a clear picture of where your money is going to and coming from. Your chart of accounts also helps you track inventory and can be extremely beneficial come tax time. If you remember our journal entry example from earlier we spent $500 cash on inventory, you’ll see this reflected in the chart of accounts above where the “cash on hands” account reads -$500.
To learn more about this accounting concept, check out our post, How To Set Up A Chart Of Accounts.
Now, let’s pause, take a breath, and let all of this information sink in. Understanding these concepts and key accounting terms certainly helps you dive into your company’s accounting with more confidence. Rest assured, however, that you don’t have to know everything about accounting to balance your own books. Gone are the old days of paper journals and ledgers and manually writing down every transaction. Today, there are lots of accounting software options available. While you do have to learn how to use your chosen software and may still have to do some tasks manually, accounting software does a lot of the heavy lifting for you, from automatically posting transactions from your business bank accounts to calculating depreciation on assets to sending out recurring invoices.
How To Do Small Business Accounting
With an understanding of basic accounting concepts under your belt, it’s time to put that knowledge into practice. From the first steps you need to take before launching your business to picking the right software for your business to hiring an accountant, we’ll cover it all in this section.
Set Up Your Business Entity
Before you start your business, you must set up your business entity. This determines your legal structure and influences how you file and pay taxes, your personal liability for the debts and liabilities of the business, how you can raise money for your business, and various requirements that your business must meet. Consider the needs of your business and future goals when selecting your legal structure. The main business entities include:
Sole Proprietorships:Â A sole proprietorship is an unincorporated business that is owned and operated by one person. This is the easiest entity to set up and does not require formal registration. Business profits or losses are reported on the owner’s personal income tax return. A sole proprietor is held liable for the debts and obligations of the business.
Partnerships:Â Partnerships are legal structures for businesses with two or more owners. Formal registration is not required to form a partnership, although there should be an agreement between partners. Business profits and losses are passed through to the owners and filed on their personal income tax returns. The owners in a partnership may be responsible for the debts and obligations of the business based upon the type of partnership that has been formed.
Corporations:Â Corporations are the most expensive and complicated of all legal entities. Corporations have regulations that other legal structures don’t have, such as establishing bylaws and holding meetings. Corporations may also be subject to corporate tax rates and may face double taxation. However, there is limited liability on the owners, and corporations also have more opportunities for raising large amounts of capital through the sale of stock.
Limited Liability Company:Â A limited liability company (or LLC) combines the benefits of multiple entities. Owners of LLCs have limited liability, so personal assets aren’t at risk if the business goes under. The owners of the LLC can also determine how business revenue is taxed.
Check out our post, Types of Business Structures: The Complete Guide, to learn more about the different business entities, and consider speaking to an attorney to determine which choice is best for your business.
In addition to setting up your business entity, there are a few other steps you need to take in these early stages. The first is selecting a name for your business. As a sole proprietor, you aren’t required to register your business if you’re using your own name. However, some small business owners opt to file a Doing Business As, or DBA. A DBA is a fictitious name that is registered with the county or state where the business will operate. If you select another legal structure, such as an LLC or corporation, you’ll register your business name when you file other paperwork with state and local authorities.
The next step is obtaining any licenses and permits required to legally operate your business. Your local chamber of commerce or Small Business Administration office can help you find out what your business needs and how to obtain these licenses and permits.
If you plan to hire employees for your business, you will need to obtain an Employer Identification Number (EIN). This is available at no cost by registering with the Internal Revenue Service.
Other steps that you may need to take before opening your business may include purchasing business insurance, hiring employees, buying or leasing commercial space, and advertising your business to bring in customers.
Open A Business Bank Account
When you start your own business, you need a business bank account. This should always be one of the first steps you take before launching your business. However, if you’ve already gotten your business off the ground and don’t have a separate account, it isn’t too late to head to your local branch to open a business account.
There are a few reasons why opening a separate bank account is so important for your business. First of all, it simplifies bookkeeping and filing taxes. You won’t have to pick apart every transaction to determine which ones were personal and which were for business purposes.
Speaking of taxes, keeping a separate business bank account could prove to be extremely helpful in the event that you’re audited by the IRS. Sloppy bookkeeping and jumbled expenses could very easily turn a simple audit into a drawn-out nightmare.
Finally, if you plan to apply for any type of business funding, such as loans or lines of credit, a lender typically only deposits funds into a business bank account. By opening a business bank account, you also establish a relationship with a bank, which could provide you with low-interest funding further down the road.
Choose Your Accounting Method
Now, if accounting didn’t seem confusing enough, we’re about to throw another curveball your way. There are actually two different methods of accounting. Before you get frustrated, though, just know that the two types are very easy to understand and differentiate from each other.
The first (and most common) method is accrual accounting. Accrual accounting recognizes revenue and expenses or sales or bills are incurred, not when the cash switches hands. With this type of accounting, accounts payable and accounts receivable are recorded.
Accounts Payable: Expenses that you owe but haven’t yet paid (think bills).
Accounts Receivable: Revenue that your customers owe but haven’t yet paid (think invoices).
Let’s take a look at an easy example. Let’s say that you’ve received $5,000 in payments from your customers and $1,000 in outstanding invoices. You also have paid bills totaling $500 and $100 in unpaid bills.
Using the accrual method, your total profit for this time period would be $5,400. You would add the revenue you have received ($5,000) plus your accounts receivable ($1,000). Then, you would subtract your expenses ($500) and your accounts payable ($100) because your accounts receivable (unpaid invoices) and accounts payable (unpaid bills) are already recognized as part of your profit/loss.
The benefit of using the accrual accounting method is that it gives you a clear view of your income and expenses. On the flip side, though, it doesn’t give you a clear picture of the cash flow of your business. While your books may show that you have earned a bigger profit, you might not have as much available cash because of unpaid invoices.
The other method that you may use for your business is cash basis accounting (or simply cash accounting). Cash basis accounting recognizes revenue and expenses when cash changes hands. This method does not use accounts receivable or accounts payable. Instead, only revenue that has been received and expenses that have been paid are calculated.
Let’s go back to the previous example. Remember, we have $5,000 in revenue, $1,000 that we haven’t yet received, $500 in expenses, and $100 that we owe. Using the cash method, your total profit would be $4,500. You would simply subtract your expenses that have been paid ($500) from the revenue that your business has received ($5,000) because cash basis accounting does not include your accounts receivable (unpaid invoices) or accounts payable (unpaid bills).
The benefit of using the cash basis accounting method is that you can more easily track your cash flow at any time. However, you won’t get the longer-term overview of your revenue and expenses through the accrual method and most accountants do not recommend this form of accounting.
There are some other differences between the two methods of accounting, such as how income is reported for tax purposes, but this is just a basic overview. If you want to learn more to help you decide which method is right for your business, check out our post, Cash VS Accrual Method: Which Is Better For Your Business?
Find The Right Accounting Software
Our modern, tech-filled world makes it easier than ever to operate a business. This includes accounting software that eliminates the tedious tack of paper accounting. While this software doesn’t do all the work for you, it does keep your financial information organized in one spot, automates some tasks, and simplifies the accounting process. In other words, you don’t have to have a degree in accounting to do your own books if you have the right accounting software. If you don’t have the funds to hire a bookkeeper or accountant for your business (and most new businesses don’t), accounting software is a cost-effective way to keep your finances on track.
So, how do you know which software is best for your business? There are a few considerations to keep in mind:
Price:Â Before searching for accounting software, have a budget in mind. What can your business comfortably afford? In some cases, you may not be able to afford anything — and that’s okay! There is free accounting software available. However, free software may come with lots of ads, fewer features, or allow for no more than one user. If you have complex accounting needs, multiple users, or have other specific needs, there are options available at all price points.
Features:Â Consider the needs of your business when choosing accounting software. If you’re running a larger business, for example, or need software specific to your industry, free software with basic features won’t be a good fit. You may want the whole gambit: invoicing, contact management, accounts, payable, time tracking, project management, and more. However, if you run a smaller business, have only a few clients, and don’t need a ton of added features, a basic and easy-to-use program is a good choice.
Online & Offline Options:Â Most business owners and entrepreneurs these days use online accounting solutions. There are many benefits, including no installations required, automatic updates, integration with apps, and access from multiple devices, such as your smartphone. However, there are also desktop-based options that may work for you, such as in locations that don’t have fast and reliable internet connections.
Your Accounting Skills: Before choosing accounting software, keep in mind your accounting skills. If you’re new to the game, look for software designed with the beginner in mind that offers an easy-to-use interface and has great customer service. If you have some experience in accounting, you can certainly dive right into one of the more complex programs.
Add-Ons:Â Some accounting software offers additional add-ons for an extra fee. Payment processing, for example, may be an additional feature that benefits your business. Again, consider the needs of your company and shop around your options for software that best fits these needs.
Not sure where to start? Compare some of the top options available to your business.
Stay On Top Of Bookkeeping
Accounting software certainly simplifies accounting and bookkeeping tasks, but it’s important to remember that it doesn’t do all the work for you. You will still have to keep on top of certain bookkeeping tasks. The specifics of your bookkeeping requirements vary based on the needs of your business, but some common bookkeeping tasks you may have to perform include:
Creating and sending invoices to customers
Reconciling bank statements
Reviewing expenses and income
Reviewing aged receivables
Sending payment reminders or setting up automated reminders
Analyzing and updating inventory
Reviewing and paying invoices to your suppliers and vendors
Scanning receipts
Running and reviewing financial statements
Run Financial Statements
Running and reviewing financial statements is made easier with accounting software. Financial statements not only help you stay on top of your business finances but also help when filing your taxes and may be required if you apply for a loan or other funding.
Let’s discuss some of the most common financial statements you need to run for your business.
Balance Sheet:Â A balance sheet reports assets, liabilities, and equity for a set period of time. This report provides an overview of owner investments, what the company owes, and what the company owns. The balance sheet uses the accounting equation we discussed earlier and is used in conjunction with other reports to analyze the financial health of the business. The balance sheet can also be used to calculate ratios, such as the debt-to-equity ratio.
Profit & Loss Statement:Â A profit and loss statement (also known as P&L or income statement) shows the profit or loss of a business over a specific period of time, such as quarterly or annually. The cost of doing business — including cost of goods sold and operating expenses — are deducted from the revenue (or top line) of the business. The difference between the two is known as the net income, or the bottom line, and shows whether the business had a profit or a loss.
General Ledger:Â The general ledger contains every financial transaction that occurs within a company. Transactions are broken down into accounts, which include assets, liabilities, equity, income, and expenses. The chart of accounts that we discussed earlier is typically the first page of the general ledger.
Statement Of Cash Flows:Â A statement of cash flows (or simply cash flow statement) shows how money comes into and goes out of the business. Cash inflows from operations, financing, and investments are recorded on this statement. Cash outflows are also recorded. This includes investments and expenditures for business activities. A statement of cash flow gives you a view of the financial health of your business, helps you analyze how your money is made and spent, and helps you plan for the future to ensure you have cash available to keep your business in operations.
These are just a few of the financial statements that you can run using accounting software. While these are the major reports that every business should run, the software you select may also offer additional reports that are important for your business like job costing reports, annual budgets, reports of sales by product, and other financial documents.
Don’t Forget Tax Deductions
It’s time to discuss the moment that most small business owners dread: filing and paying taxes. With good accounting, though, filing your taxes (or getting through an IRS audit) won’t be quite so painful.
The rates and requirements for filing taxes are based on the legal structure of your business. For example, a sole proprietor simply files the business income or loss on their personal tax return, while certain corporations may face double taxation wherein tax is paid on the income of the business and on the dividends received by the owners.
While filing your taxes can be scary, especially if your business made a profit, you can ease your tax burden by taking advantage of the tax deductions available to small business owners. This can include:
Furniture & expenses
Employee benefits
Travel expenses
Loan interest
Insurance premiums
Marketing & advertising expenses
Salaries & wages
Vehicle expenses
These aren’t all of the tax deductions available to small business owners. Working with an accountant or tax professional can ensure you take advantage of all the deductions available to your business.
Know When To Hire An Accountant
While it is possible to handle much of your own accounting for your small business, there comes a time when many businesses need to enlist the help of an accountant. There are a number of reasons that business owners choose to hire an accountant. As the business grows, you may become too busy to handle the financial side of things and would prefer to focus on other activities within the business. An accountant is also extremely beneficial to have on board when it’s time to file your taxes. If you plan to acquire or sell a business, an accountant can provide advice and help determine if the transaction is a smart financial move. When you want to expand your business, an accountant can give advice and help you create a business plan.
There are several situations where hiring an accountant is in the best interest of your business. Even though this is an additional expense, it is often a critical move if you want to grow a successful and profitable small business. Learn more about when you should hire an accountant for your business.
The Benefits Of Good Accounting
We’ve established that every small business should have an accounting system in place. But why is it important to have good accounting? At the risk of sounding melodramatic, the success of your business depends on it — quite literally. Here are the benefits of good accounting:
Budgeting & Planning:Â Good accounting can help you set company budgets for your business and plan for upcoming projects.
Financial Health:Â As previously mentioned, having your numbers organized allows you to assess the financial health of your business to determine what you’re doing right … and what needs to be changed.
Track Payments: Without good accounting and bookkeeping, it’s difficult to keep up with customers that haven’t yet paid you for your products or services. By staying on top of your accounting and bookkeeping, you can easily send out invoices, payment reminders, and even collect payments.
Tax Time Benefits:Â Keeping accurate records makes it easier to file your taxes or go through an audit by the IRS.
Funding Opportunities:Â If you seek capital from investors or lenders, having accurate financial statements is critical to securing funding — and some lenders (like Fundbox) even require that you use accounting software to be approved.
Major Purchases:Â If you’re considering a major purchase to grow your business, the numbers can help you determine if it’s the right time to make the purchase, or if it makes more sense financially to hold off on spending the funds.
Cash Flow:Â Good accounting lets you assess the cash flow of your business to determine where you need to make changes to boost profitability.
Revenue Forecasts:Â With the right financial reports, you can more accurately forecast future revenues of your business.
Maximize Business Growth:Â Accounting allows you to track the growth of your business, allowing you to make important decisions and changes to help maximize growth.
The Bottom Line
Every business is different, but one thing should remain constant: good accounting. Whether you’re a sole proprietor running a business from your home office or you visualize running a large international corporation, all business owners and entrepreneurs should make accounting a priority. With so many great software programs and tools at your disposal, it’s easier and more affordable than ever to track your company’s finances. Take a look at the Best Accounting Software For Small Businesses to start your journey on finding the perfect accounting software.
Ready to learn more about accounting? Check out our eBook, The Beginners Guide To Accounting. It’s free to download and is a must-read for any business owner or entrepreneur that’s ready to master the basics of accounting.
The post Accounting 101: Understanding Small Business Accounting appeared first on Merchant Maverick.
If you’re intrigued by the thought of making money by flipping houses, you aren’t alone. Flip through the TV channels (pun intended), and you’ll see home improvements that lead to a five- or six-figure payday. You may have even received an email promising frozen cocktails on the beach while raking in the dough … all because of house flipping.
What these TV shows and emails don’t tell you is that there is a lot of hard work involved in starting a house flipping business. I know, I know. The idea of a burgeoning bank account without having to do much work is appealing, but it isn’t the reality of the industry. That said, don’t be entirely discouraged — you can build a successful business that centers on flipping houses for a profit. You simply have to be prepared to put in the hard work — just as you would with any other business.
In this guide, we’re going to look at how to start your own house flipping business, step-by-step. While this isn’t a get-rich-quick scheme or even a guarantee of profitability, understanding the industry and what it takes to open and operate your business can increase your chances for success. Whether you’re brand new to house flipping and toying with the idea of becoming an entrepreneur, or you’re ready to hit the ground running, this guide is a must-read before you get started.
Why Start A House Flipping Business?
If you’re reading this, you probably already have at least some idea of what a house flipping business does, but let’s briefly review what this type of business entails. A house flipper buys a property at a low cost. This property could be distressed and in need of repairs, a foreclosure, an older home that needs to be updated, or a house that is located in an up-and-coming neighborhood. Once the home is purchased, it is renovated and resold to another buyer at a higher price.
So, why are people jumping into this industry? One reason that many people choose to flip houses is the potential for profits. If a property is purchased and renovated at a price that’s low enough and resold at a much higher price, you have the potential to pocket thousands of dollars per house. For example, let’s say you purchase a house for $120,000. After putting $20,000 into the house to replace floors, cabinets, counter tops, and make other cosmetic repairs, you are able to resell the house for $150,000. You have only invested $140,000 in the house, so you make $10,000 on this flip. Of course, there are circumstances where a flip doesn’t work out exactly as planned (which we’ll cover a little later), but there is the potential for big profits with a house flipping business.
A house flipping business may also be a great opportunity if you’re somehow already familiar with the industry. Maybe you have experience as a real estate agent or contractor, and you’re familiar with how the business works. You might have even flipped a house or two to make extra cash in the past, but now want to make it a full-time career. If you have experience — whether it’s selling properties or fixing them up — you can put these skills to work for your own house flipping business.
Finally, right now may be the perfect time for you to flip houses. We all remember the housing crisis of 2008, but more than 10 years later, the real estate market is hot again. Housing prices are on the rise, and investors are grabbing up properties to flip. According to Realtor.com, mid-sized cities in the South and Midwest with strong economies, growing populations, and an abundance of older properties in need of rehab are prime markets for flipping. If you live in these areas, house flipping may be the right business opportunity for you.
No matter what your reasoning, you must be prepared to work hard to make your business a success. From finding and securing financing to marketing and reselling your properties, you’ll need to be fully involved every step of the way (at least at first) and be prepared to encounter bumps in the road on your path to building a business.
6 Steps To Starting Your Own House Flipping Business
Whether you’ve already set your mind on flipping houses or you’re still on the fence, it’s important to understand what this business requires to be a success. We’ve outlined six steps to starting your own house flipping business to help you determine if this business is right for you. If so, these tips can help you get you on the right track. Let’s jump right in.
#1 Write Your Business Plan
Every business should have a business plan, and a house flipping business is no exception. A business plan is important for a few reasons. The first is that it acts as a road map for your business. It outlines the purpose of your business, evaluates the industry and your competition, projects profitability, and states the goals of your business.
In addition to outlining your goals and how you’ll achieve them, a business plan is also necessary in most cases to obtain funding. Flipping houses requires capital — capital that you obtain from traditional lenders, investors, or other sources. Your business plan shows that you know what you’re doing, you’re familiar with the industry and your competition, and you have a good chance for success, all of which add up to a lower risk investment for lenders.
There are several ways to write a business plan. A traditional business plan spans several pages and is more complex, containing in-depth analyses of your market and competition, financial projections over the next three to five years, your business strategy, and information about the members of your team. However, more businesses are scaling back on these lengthy documents and opting to create a one-page business plan. A one-page business plan is a condensed version of the traditional plan, offering information such as your objectives, a financial summary, and your industry experience. Learn more about whether a one-page business plan is right for your business.
No matter which plan you choose, there should always be a few things you include about your house flipping business, such as basic timelines, projected budgets, your market, and the types of properties you plan to flip.
#2 Set Up Your Business
Once you’ve written your business plan, it’s time to set up your business. At a minimum, this includes choosing your legal structure, registering your business name, setting up a business bank account, and acquiring any required licenses or permits. Taking these steps allows you to legally operate your business, determines how you pay taxes, and gives you credibility with lenders and investors.
The first step is to choose your legal structure. As a quick summary, a legal structure for a business may take the form of one of the following:
Sole Proprietorship:Â A sole proprietorship is the easiest and cheapest to set up. It does not require registration. Sole proprietors are taxed at the personal tax rate and file business earnings or losses on personal tax returns. This structure does not offer liability protections.
Partnerships:Â A partnership is a structure for a business with two or more owners. Partners are taxed at the personal tax rate and file earnings or losses on personal tax returns. Limited partners have liability protections, whereas general partners do not.
Corporations:Â A corporation is the most expensive to form and has the most requirements, such as annual meetings and a board of directors. Depending on the type of corporation, taxes may have to be filed using the corporate tax rate. Corporations can raise money through the sale of stock. There are also liability protections in place for owners.
Limited Liability Company (LLC): An LLC offers features of several legal structures. There are no requirements, and owners can choose how they are taxed. There are liability protections under an LLC.
This is just a brief summary of each type of legal structure. To learn more and to help determine which is right for you, check out our in-depth guide on choosing your business structure.
Once you’ve determined your legal structure, you’ll need to register your business name with the state in which you’ll operate. Depending on the legal structure you select, additional fees and or paperwork may be required.
Next, you’ll need to find out the types of licenses you need to operate your business. If you’re operating in an office outside of your home, for example, you’ll need a general business license and business insurance. As a house flipper, you’ll also need permits and insurance on each house that you flip, so it’s best to establish a relationship with an insurance agency early in the game. Some house flippers opt to get their real estate license. While this isn’t a requirement for flipping houses, it can certainly help you along the way.
Finally, you’ll need to set up your business bank account. This is necessary for keeping your business and personal finances separate, which especially comes in handy when tax time rolls around. If you seek business funding, this account will also be where your funds are deposited.
#3 Know How To Find & Secure Funding
You’ve taken all the steps of setting up your business and your new bank account. Unfortunately, your new business bank account is probably looking pretty empty … and in most cases, there certainly isn’t enough cash to buy and flip a property. The good news, though, is that this isn’t uncommon for new house flippers — or new business owners in general. It’s rare to find someone with their own cash to start and fund their own business, so that’s why new business owners turn to lenders or investors to get capital they need to start and operate their businesses.
There are a few funding options for flipping houses. The type you select is based on a number of factors, including time in business and your credit history. Not all funding will be right for your business. For example, if you have a low credit score, hard money loans may be an option for you. Hard money lenders base lending on the deal itself — not your personal or business credit or lack thereof — but are usually very short-term and have high fees.
Once you’ve been in business for at least a few months, you may need a flexible funding option to purchase properties, pay for renovations, or cover operating costs. In this situation, you may qualify for a business line of credit. Even if you have a low personal credit score, you may still qualify with lenders that consider the performance of your business over credit history.
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If you own your own home, you could use a home equity loan or home equity line of credit (HELOC) to fund your flips. If you have equity in your home, a low debt-to-income ratio, and a good personal credit score, you could qualify for one of those options, which come with low rates and favorable terms. If you have a retirement account, you could also consider a Rollovers as Business Startups plan (ROBS), which allows you to leverage your retirement funds without penalties.
For unexpected expenses or operational costs, consider applying for a business credit card. You can also get creative by bringing on a business partner or launching a crowdfunding campaign. Whether you’re new to the game, have some experience, or have credit challenges, there are options available to you. You just have to connect with lenders to find them.
No matter what type of funding you seek for your business, there are a few things to keep in mind. First, understand that borrowers with the highest credit scores typically qualify for more options that are also more affordable. So, one of the first things you want to do prior to submitting your application is pull your free credit score, access your credit report, and dispute any errors. You can also take steps to boost your credit score.
Once you apply for funding, make sure that you fully understand the terms, fees, and interest rates associated with your financial product. Don’t be afraid to shop around your options if you aren’t happy with a lender’s offer.
If you do secure funding, make sure to always pay as agreed and meet all conditions put in place by the lender. By doing so, you can not only raise your credit score, but you can also establish lasting relationships with lenders and investors that will serve you well as you build your business.
Unsure of which funding option to choose? Learn more about the best loan products for your house flipping business.
#4 Connect With Contractors & Other Professionals
In addition to lenders, you’ll also need to establish relationships with contractors and other professionals that will help contribute to the success of your business. Even if you plan to get hands-on with the renovation of your properties, you’ll still need a team of contractors to help with the work, particularly when distressed properties are involved. Not only will a contractor complete the work required to flip a house for profit, but a good contractor will know about licenses, permits, and other local requirements. You can also discuss your timelines and budgets with your contractors so you don’t have extended timelines or unnecessary expenses cutting into your profits.
When seeking contractors, don’t be afraid to ask for references or a portfolio. Also, don’t forget to shop around your options to find a reputable contractor that works with your budget. If you’re new to the industry, developing a working relationship with a reputable contractor can even help you score hard money loans from investors.
Another professional that you need on your team is a real estate agent. If you opt not to get your real estate license, a realtor has access to resources that will be essential for your business. This includes access to properties on the multiple listing service (MLS), as well as prospective homeowners that could be interested in purchasing your properties. A realtor can also help market and sell your renovated properties.
Someone else to keep on your speed dial is an attorney, and not just any attorney — one that specializes in real estate. There are some legalities of flipping houses that you don’t want to overlook, so it’s wise to have a real estate attorney on your team. An attorney is especially critical during your first flip. Overlooking important legal details, errors in contracts, and other issues could not only derail your deal but could also damage your reputation in the industry.
Over time, there may be additional professionals you’d like to have in your corner, such as an accountant and investors. For now, though, focus on finding the right contractors, attorneys, and realtors for your house flipping team.
#5 Understand The Importance Of Market Research
Knowing your market is key to maximizing profits as a house flipper. Buying the wrong property in the wrong neighborhood could result in a low profit that’s not worth the time invested in the property, or worse, a loss.
Working with a realtor can really help when it comes to knowing your market. Realtors have the inside scoop on the hottest neighborhoods, information on recently sold properties, and other data that can help you find the right homes for flipping. You can also take advantage of the vast amount of information you can find on the internet, where you can do a lot of your market research for free.
With market research, you’ll soon learn where buyers are buying, how much they’re paying, and what they’re looking for. While there are some variances depending on where you live, there are a few markets that are always hot, including neighborhoods with great schools, neighborhoods with homes that are at least 20 years old, areas with low crime rates, and houses that are close to amenities. Once you understand the market, you can begin further narrowing down the areas you wish to target and begin preparing for the next step: buying and flipping a property!
#6 Buy, Renovate, & Sell Your First Property
You’ve set up your business. You’ve connected with a team of reputable professionals. You’ve found and secured funding, or are at least aware of a few potential options. You know your market, you’ve researched recent selling prices, and there are properties on your radar. Now, it’s time to pick a property, buy it for the right price, renovate it, and then flip it for a profit.
This is where your team will really come in handy. For instance, your realtor may have information on properties before they hit the market, giving you an early edge over other flippers and buyers. Your attorney can help with the paperwork and walk you through the steps of purchasing and flipping a house — think, walk-throughs, insurance requirements, and negotiating contracts.
Once you’ve purchased the property, it’s time to start your renovations. Work through your budget and timeline with your contractors, and put the research you did earlier to good use. Look at comparable properties when determining what renovations need to be completed. For example, if recently sold houses in the same neighborhood have updated granite counter tops, add granite counter tops to your “to-do” list. Finally, be prepared for the unexpected. Deadlines may be missed, or there may be additional expenses that weren’t accounted for in the budget. It happens to even the most experienced flippers — the key is learning to roll with the punches.
After the renovations are complete, it’s time to put your house on the market. Your realtor will be a valuable asset by listing the property and helping you market it to buyers. Then, once a buyer is interested, work with your attorney to make sure all of the i’s are dotted and t’s are crossed. Once the property is sold, any amount that exceeds what you’ve put into the house is pure profit.
Final Thoughts
Let’s make one thing clear: flipping houses isn’t easy, no matter how simple it looks on TV. But if you’re ready to put in the work, you’ll find that house flipping is extremely rewarding. As you flip your first few houses and begin to find your groove, you’ll find that the process gets easier, just as it does with any other business.
You don’t have to go at it completely alone, though. We have a load of great small business resources right here, so check them out and get ready to build your business. Good luck!
The post Your Step-By-Step Guide To Starting A Successful House Flipping Business appeared first on Merchant Maverick.
Has the 9-to-5 world of gainful employment left you unsatisfied, either emotionally or financially? If so, have you ever given thought to starting a side hustle?
Maybe you have talents you want to monetize but you just haven’t come up with a concrete business idea to properly tap them. Maybe you’ve been longing to start a side business for a while but just haven’t gotten to the planning stage yet. Or maybe you’re just looking to make some extra cash on the side to supplement your income. Whatever your inspiration, if you’re considering launching a side business, it never hurts to be presented with a list of ideas — and that’s what we have for you in this article!
But first, let’s establish a few things.
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When we refer to “side hustles” and “side jobs”, we’re referring to ways you can make money that don’t involve quitting your day job. After all, if your hustle fails, you don’t want to be left high and dry without the means to support yourself.
However, we’re choosing to focus on side business ideas over other methods of supplementing your income. For one thing, our focus here at Merchant Maverick is on the needs of small businesses. For another thing, many of these alternate means of support leave a lot to be desired.
A Side Hustle Doesnât Have To Mean Entering The Gig Economy
When you start a side business, you’re building something that potentially can bring you life-changing revenue in the future and open up new professional opportunities. However, the typical gig economy job cannot offer this.
Gig marketplaces often end up paying below minimum wage after you factor in the uncompensated expenses involved. For instance, Uber and Lyft drivers are on the hook for car maintenance, gas, and rideshare insurance, all of which combine to limit a driver’s take-home pay. These (and other) gig platforms also take a service fee out of what you earn for each job. The gig economy may provide opportunities for you to make some money on the side, but these opportunities tend not to be very empowering.
Likewise, you may have considered launching a blog or becoming a YouTube personality as a way to make money on the side. There’s nothing wrong with building an internet presence and monetizing it — in fact, I wrote an article a while back about how to monetize a website/blog — but it’s not what we’re focused on with this article. It’s true that with some talent and a lot of persistence, you can build your online presence up to the point where you can monetize it and generate substantial revenue. Don’t expect a lot of success in the immediate future, however.
Side Hustle & Side Job Ideas That Anyone Can Start
Let’s explore some side hustle ideas that can empower you to take your future into your own hands — all without quitting your day job.
Caregiving For The Elderly
As our population skews ever older with time, demand for caregiving services is only going to increase. If you have an affinity for the elderly and a generous heart, you could try setting up a side business caring for seniors. Of course, it helps if you have some experience in this field, as you’ll need plenty of credentials to get started — licenses, training certificates, first aid/CPR training, etc.
You’ll also need to undergo a background check and have some quality referrals. For more information, here is a list of caregiver training requirements by state.
Babysitting & Child Care
As parents work longer and longer hours to cover the cost of raising children, demand for childcare services is higher than ever. With this in mind, you might want to try opening a daycare center, either from your home or from a dedicated daycare facility.
As daycare regulations are state-specific, you’ll need to check with the relevant agency in your state to determine what training and credentials you’ll need to run a daycare facility. You’ll likely need CPR and child-specific first aid training. If you’re operating a daycare somewhere other than your home, you’ll need liability insurance, and you’ll likely need to be licensed by the Department of Health and Human Services.
If you’re running a daycare center from your home, you won’t need liability insurance to get your license, but you should consider getting some type of small business insurance anyway.
Pet Services
We are a pet-loving people. However, we also tend to spend a lot of time at the office, which means there is plenty of demand for services that care for our pets in our absence. Why not start a pet-related side hustle and cash in on this growing market?
Here’s just a sampling of the pet-related side jobs you could look into:
Pet-sitting/doggy daycare
Pet grooming
Obedience training
Dog walking
Pet photography
Dog pooper-scooper service
Pet toys/clothing
Pet treats
Licensing and certification requirements obviously aren’t going to be as stringent as they are if you’re in the business of caring for people. However, having the proper credentials for things like obedience training can make your side business more appealing to your target audience — after all, people love their pets!
Don’t be too shy to distribute flyers advertising your services to other pet-related businesses in your area.
Arts & Crafts
Here’s a side hustle you can start with some skill — and without the need to earn certifications or licenses. Sites like Etsy have shown that there exists a massive market for handmade arts and crafts.
If you have a talent for creating arts and crafts, you might have the makings of a side hustle. The most important aspect of setting up such a business is determining where you should sell your works to best target your market. Does the demographic you’re targeting attend community events and craft fairs? Or would you be better served offering your products on Etsy (or even your own online storefront)? Once you sort this out and you’ve generated a decent amount of works, you can make some money doing what you love.
Direct Sales
Did you ever get taken to a Tupperware party or an Avon party as a kid and think “hey, I could sell this stuff”? If so, you could try your hand at being a direct sales representative. If you’ve got a little salesperson in you and you want to avail yourself of some free products, it’s not a bad side hustle idea. No licensing or certification required!
It’s true that there are plenty of shady multilevel marketing (MLM) companies operating in this space. However, companies like Usborne, Scentsy, and Pure Romance are relatively reputable. But remember: becoming a direct sales representative is a good way to earn some extra money on the side, but it’s not likely to grow into something that can replace your day job.
Offer Your Freelance Services
Let’s say you want to make some money using the skills you’ve developed at your day job. Or perhaps you’ve got some latent skills just waiting to be monetized. Why not try freelancing in your spare time?
Whether your specialty is writing, graphic design, bookkeeping, tutoring, or hairstyling, there will always be a demand for freelancers. You can freelance independently, though you’ll need some solid professional connections. Alternately, you can join a freelance platform in which individuals and organizations can search for freelance workers based on their skills and experience. Just be aware that these platforms can take significant cuts of what you earn at the end of the day. Research the platform beforehand so you know what to expect in this regard.
Furniture Restoration & Flipping
Here’s an idea out of left field. Did you know you can make money finding cheap/old pieces of furniture (garage sales and Craigslist are good sources for that), restoring them, and selling them for a profit?
With a little experience and some good paints and sealers, you, too, can turn discarded pieces of furniture into items people will gladly pay for. Just make sure the furniture you’re refurbishing is structurally sound and is made of actual wood. When furniture has a quality skeleton, it’s ripe for flipping.
You can sell your restored furniture on your own — perhaps from a Facebook Business page. You can also sell at flea markets or even work on consignment.
What Do You Need To Start A Side Business?
I laid out the steps you should take when developing your side hustle idea in How To Start A Side Hustle: A 7-Step Guide, but here are some essential points:
Get some honest feedback regarding your side business idea from somebody with experience in the field in question before going through with it
Plan out how you’d like to promote your side hustle
Determine what training, certifications, and insurance — if any — will be required in the pursuit of your side business
Determine how much money you’ll need to invest upfront (and make sure that investment won’t put you in the poor house)
Don’t be discouraged if you don’t find immediate success
Software For Your Side Hustle
If you’re going to run a successful side hustle in today’s world, you’re almost certainly going to need business software. You’ll want to create a website to promote your services (and to offer ecommerce if that’s the nature of your side hustle), accounting software, and possibly email marketing software.
When preparing to run your side business, consider the following programs, each of which Merchant Maverick has tested and reviewed for business suitability. (Business software happens to be our specialty)
Wave: Cloud-based software for accounting, expenses, and invoices â the base software is free, while the payroll, payment processing, and bookkeeping components are paid services
QuickBooks Online: Cloud-based accounting software with payroll, payment processing, workerâs compensation insurance, and a custom invoice template
QuickBooks Self-Employed: Cloud-based tax software for freelancers
Square: App-based software with invoice, mobile POS, inventory, and website creation features
Weebly: Easy-to-use website builder with ecommerce support â works seamlessly with Square
Canva: Cloud-based design software â easier to use than Adobe products; doesnât require much design knowledge
MailChimp: Cloud-based email marketing software
How To Finance Your Side Hustle
Business credit cards are probably the most common means of financing a side business. You can also try obtaining a loan, though you should be wary of taking on too much debt at this stage. You don’t want your side hustle to end up causing lasting damage to your personal finances.
Here are some links to help you in your quest for financing!
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Is It Time To Get Your Own Side Hustle?
Whether for personal fulfillment or just to earn some additional revenue, more people are attempting side hustles than ever. We put together this article to show you that side hustle opportunities extend far beyond the exploitative “gig economy”.
When done right, a side hustle can not only supplement your income, it can also develop into a bona fide self-sustaining business that can eventually replace your day job.
Now go out there and do the hustle!
Square is a great way to accept credit cards for a side hustle
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Free, general-purpose POS software and reader for iOS and Android
Easy integration with popular platforms plus API for customization
Specialized software for more complex retail stores
Startup capital is a necessity for virtually all businesses. However, the cost to start a business varies widely depending on what kind of business you are starting. For example, a home-based endeavor such as a dropshipping company or an Amazon business can cost less than $1,000 to get off the ground; the same goes for a business that doesn’t require an office or much equipment, such as a pet sitting business. On the other hand, opening a business that requires more equipment and office space—such as an autobody shop or a coffee shop—could cost $100,000 or more.
In this post, I’ll go over the main costs associated with starting a business and what you can expect to pay for each of them.
Surprisingly, there aren’t too many official statistics available on how much it costs to start a business, probably because the costs vary so much. There was a study conducted by the Ewing Marion Kauffman Foundation way back in 2009 that found the average cost to start a business at that time was $30,000.
Below, we’ve put together our own startup business cost figures, but keep in mind that the amount you’ll spend will vary greatly depending on various factors, such as your industry and location.
Common Small Business Expenses
Startup Expense
Estimated Cost
Business Licenses & Permits
$200
Business Insurance
$1,000 (annually)
Equipment & Supplies
$10,000
Inventory
$1,500
Office Space & Utilities
$5,000 initially, then $2,000 monthly
Employees
$8,000 (monthly)
Marketing
$700 initially, then $200 monthly
Business Software
$200 (monthly)
Professional Services (e.g., legal services)
$600
Misc. Other
$1,000
Total estimated cost: $28,200
Business Licenses & Permits
As a new business owner, you will need to register your business in your state and apply for a local business license/permit in your city or county. Depending on your industry, you may also need to obtain an industry-specific business permit. These initial business registration costs are usually minimal (less than $500).
Business Insurance
There are several types of business insurance for startups and which type(s) you need depends on various factors. Insurance is a significant, ongoing business cost. Most businesses will need general liability insurance and business property insurance, and if you have employees, you will also need to pay for workers compensation insurance and health insurance. Commercial vehicle insurance and product liability insurance are some other business types you may or not need.
Equipment & Supplies
All businesses require some sort of equipment or supplies, but these costs vary significantly depending on what type of business you have. Examples of equipment and supplies include:
Restaurant kitchen equipment
Office furniture
Office supplies
Business vehicle(s)
Medical equipment & supplies
Computers
Product manufacturing equipment
Point of sale equipment (cash register, credit card reader, etc.)
The type of equipment and other materials you need to run your business really depends on your industry—for example, if you’re starting a wedding planner business, you’ll probably just need a computer and office supplies, whereas a trucking company will need commercial vehicles, etc.
Office Space & Utilities
If you need to rent or buy an office space, this will be a significant ongoing expense, and a big startup cost too, as you will need to pay a security deposit, first and last month’s rent, etc. Internet, gas and electricity, a business phone, and data plans will also factor into the infrastructure costs of your office space. Most businesses start out as home-based or rent a business space initially, instead of purchasing or building property.
Inventory
If you sell a physical product, you need a certain amount of inventory to start out with (and have on-hand on an ongoing basis). Retail stores need a certain number of finished products on hand, while food-based businesses such as food trucks, for example, need to stock up on raw ingredients before they can open up shop. This, of course, does not apply to information-based businesses, such as consulting businesses or various other service-based businesses.
Employees
You may or may not start your business with any employees. If you do have employees, you need to factor in payroll costs, payroll taxes, insurance costs (workers comp. and health insurance), and training costs.
Marketing
Modern business marketing includes not only business cards, advertisements, signage, etc., but also digital marketing costs such as SEO, social media marketing, and website maintenance costs. As far as your digital marketing, at the very least you will need a website and social media presence. Tip: Be sure you register your domain early on in the process of starting your business, as your website will be the foundation of your online marketing.
Business Software
Some different types of business software you might need to launch and run your business include:
Accounting software
Booking software
POS softwareÂ
eCommerce/shopping cart software
Invoicing software
Inventory software
ERP software
Website builder software
Project management software
Shipping software
Email marketing software
Industry-specific business software (for example, specialized software for dentists, auto mechanics, etc.)
Some small business software programs combine multiple functions. For example, a restaurant management software system might include POS functionality as well as accounting, inventory, employee management, and maybe even email marketing functions. An accounting program like QuickBooks combines accounting, payroll, and invoicing functions, with POS functionality as an add-on.
Generally, most business software apps are no longer large programs that you install onto a computer as a one-time expense; rather, today’s business software is usually app/cloud-based, meaning you can sign in from any internet-connected device. And rather than paying for the software as a large, one-time expense, today’s software-as-a-service (SaaS) model is based on monthly payments with no down payment or long-term commitment. So, initial investment for business software will likely be much less than you would have paid for a comparable program 15 or 20 years ago. Some business software is even free to use.
In addition to software, don’t forget to factor in the cost of the associated hardware you’ll need to run the software into your equipment costs. For example, most businesses will need point of sale equipment, a laptop or iPad, a wireless router, etc. For very small businesses requiring only a basic app to take payments, it’s possible that the only hardware you might need is your smartphone.
Professional Services
This category can include legal fees, consultancy fees, accountant fees, and fees for any other professional services you use to help launch your business. While some businesses require minimal professional services, most businesses should at least consult a lawyer and/or professional accountant during the startup phase.
Other Costs
You’ll more than likely find out that there are more startup costs than you initially anticipated. Thus, it’s important to have a certain amount of your budget set aside for miscellaneous expenses that will inevitably come up. Some various costs you’ll need to include in your budget may include:
Organizational dues
Travel costs
Shipping fees
Loan interest
Repairs/renovations
Credit card processing fees (once you start making sales)
Of course, you’ll also need to make sure you have enough money to support yourself before your business becomes profitable, so make sure this cost is included as well.
How To Calculate Startup Costs
The SBA has a very useful startup cost worksheet that outlines common business startup costs with sample figures that you can personalize to calculate the true cost of starting your business. Simply enter the estimated cost for each category (rent, utilities, inventory, employees, etc.) and you’ll be able to get a rough estimate of how much money you might need for your initial investment.
It’s also a good idea to make a sales forecast, in which you estimate how much you will sell in the first 6â12 months of opening your business. How long will it take for your business to make a profit? How long ’til you can pay off your startup expenses? With your prospective revenue in mind, you’ll have a better idea of how much you can afford to spend on ongoing expenses such as payroll and inventory.
If the total seems unaffordably high, look for areas you might be able to cut costs. For example, could you operate your business out of your home for the first six months? Could you subcontract workers instead of hiring employees? Could you use dropshipping to deliver goods to customers directly from the manufacturer, instead of buying inventory upfront?
Once you have a good idea of how much startup capital you might need for your first 6â12 months in business, you can decide how you will finance your venture.
What To Do If You Donât Have The Money
Startup funding can be difficult to procure from a traditional bank, especially if you don’t have any significant assets or previous experience owning a business. However, that doesn’t mean you don’t have any options. Online technology has actually made it a lot easier to find small business funding. Here are some options you might try to finance your business.
Online Loan: This category includes both online business loans and online personal loans. Generally, online business loans for startups are limited to short-term, high-interest loans; you won’t qualify for better terms unless you’ve been in business at least two years. Still, it’s definitely worth looking into to see what kind of loans and rates you might qualify for. Some online lenders might even offer access to SBA loans for entrepreneurs, such as SBA microloans. Look at our startup business loan comparison chart to find some startup-friendly loan options.
Business Credit Cards: If you just need a few thousand dollars to get started, a business credit card can be a smart choice. You can use a business credit card to charge startup expenses, and/or to get a cash advance (though make sure you check the terms on the advance because they usually charge high interest). You could also use a personal credit card, though business credit cards typically have more business-specific benefits, such as cash-back for common business expenses. Look at our best small business credit cards comparison to see some of the top business cards’ requirements and perks.
Equipment Financing: If your main startup expense is the equipment you’ll need to run your business — for example, restaurant kitchen equipment, manufacturing equipment, office equipment, etc. — then you can simply finance the equipment itself, in the form of an equipment loan or lease. Similar to automotive financing, equipment financing involves monthly payments (either to lease or own), and does not typically require good credit or any collateral other than the equipment itself. Check out our equipment financing comparison chart to see your best options.
Line Of Credit: A business line of credit is similar to a credit card in the sense that you can have it on hand to pay for expenses, but you only have to repay what you use. Like a business loan, you can get a line of credit from an online lender or a traditional bank. However, startups will have better luck finding a line of credit online; there are several online line of credit providers that only require only 6 or fewer months in business, whereas banks typically will not extend a line of credit to startups. Check out our line of credit comparison page to find some startup-friendly LOC options.
Other startup financing ideas:
Loan from friends/family
Crowdfunding
Seed investors
Business grant
Nonprofit lenders
Personal retirement savings— rollover a retirement account using a ROBS (rollovers as business startups) plan
Our team at Merchant Maverick has also written many informative articles about startup financing that can help you on your journey:
Crowdfunding For Startups: 8 Tips For Launching
Don’t Let Bad Credit Stop You From Getting A Startup Loan
The Best Business Cards For Startups And Entrepreneurs
SBA Loans For Startups
How To Find A Startup Grant
14 Types Of Alternative Financing For Small Businesses
The Best Business Credit Cards For People With Bad Credit
Tax-Deductible Startup Costs
If your total startup costs are $50K or less, you can write off up to $10,000 of startup costs on your taxes in the year that you start the business, including up to $5,000 in business startup costs and another $5,000 in organizational expenses (legal fees, state incorporation fees, etc.). If your startup costs exceed $50,000, the amount of your allowable deduction will be reduced by that dollar amount, and if your startup costs are more than $55,000, you are not eligible for the deduction.
Certain startup expenses are not tax-deductible—for example, the costs to qualify for doing business in your industry, such as real estate licensing costs, are not deductible as a startup expense. Additionally, business assets (one-time business expenditures such as vehicles and equipment) are not deductible as startup expenses, but may be deductible in a different category (amortization).
(In case you were wondering, business loan interest is, indeed, tax-deductible.)
Final Thoughts
It may be a cliche, but it is also true that “it takes money to make money.” Startup business costs can range from under $10K to over $100K, depending on a number of factors. It’s okay if you don’t have all the money right now: the important thing is to put together an accurate estimate of how much you will need, what you will spend the money on, and how/when you’ll be able to repay any borrowed monies with your revenue. You can then incorporate this estimate into your business plan and the loan proposal you will use to demonstrate to lenders that you are a good candidate for financing.
With the numerous financing options available to entrepreneurs these days, there is a great chance that if you have a sound business plan and accurate, reasonable startup cost estimate, you will be able to find a lender that can meet your startup financing needs.
The post How Much Money Do You Need To Start A Business? appeared first on Merchant Maverick.
