7 Reasons Not To Choose A Product-based Business

7 Reasons Not to Choose a Product-based Business

When starting a micro business, the first idea that pops into most people’s minds are to start a product-based business. But the problem is product-based businesses are one of the hardest businesses to run successfully. Here’s why:

  1. Inventory: There are many decisions to consider such as how much to buy and how to pay for inventory.
  2. Storage: You will need a place to store the inventory and space to wrap, label, and ship the packages.
  3. Shipping: It is not cheap to mail products and going to the post office to ship items is time-consuming.
  4. Packaging: You will need boxes, envelopes, labels, packaging, etc., all which costs money and takes up space.
  5. Unsold inventory: What happens if you bought inventory but cannot sell it?
  6. Back Orders: When you run out of inventory, your customers will have to wait until you receive more inventory to ship. Some customers will cancel their orders if they have to wait.
  7. Returns: It is impossible to make everyone happy and you will have to deal with returned products. If there is be nothing wrong with the product, you may be able to resell it, but you may be returned a damaged item. Returns can get expensive because you paid for the shipping initially and may have to pay shipping again to mail a replacement.

Starting_small-259x300This is why I recommend starting a service-based business in my book, Starting a Micro Business. A service-based business is low-risk, easy to start and easy to close down if need be. It also doesn’t have any inventory to worry about and most often requires no or very little start-up costs. A service-based buy is usually selling what you hold between your ears; your knowledge.

Learn more about starting a micro business by grabbing a copy of, Starting a Micro Business, today!

Carol Topp

Start a Micro Business with No Debt (podcast)

DollarsSenseShow16

I hate debt-especially for a teenager starting a micro business!

Dollars and Sense host, Carol Topp and guest host, 17 year old Jonah Wilson, discuss 5 dangers of using debt to start a micro business.

Listen here

In the podcast, Carol and Jonah mention Starting a Micro Business, a helpful book (and ebook) that can be very helpful in launching your micro business.

Show Notes:

5 dangers of starting a micro business with debt

  1. Debt presumes on the future
  2. Debt encourages quick decisions, not careful planning6
  3. With debt, you are a slave to lender
  4. A loan can increase the risk of failure
  5. Debt can stop blessings.

 

Video: Should I Start A Micro Business With a Friend?

Have you thought about starting a micro business if a friend? Word of advice, DON’T! In the video below, I explain how starting a micro business with a friend is like getting married. Not only is it like getting married, but if you ever want to end a business with a friend, it can prove to be harder to end than trying to get a divorce!

Watch the video filmed live at my workshop, The Best Micro Business for a Teenager to Start, at the Cincinnati Home School Convention:


micro-mid-1Have you ever had a great idea and thought about starting a micro business? If so, you should check out my book series, Micro Business for Teens. In my books, you’ll gain valuable insight for starting a micro business.

A micro business is a small, simple and fast to start-up, sole-proprietor business that usually consists of one worker, the owner. Micro Businesses are usually low-risk and easy enough for a teenager to manage along with schoolwork and other extracurricular activities.

Check out my books today and start your own micro business for success! Available for purchase on Amazon, Amazon Kindle, Createspace, and as a PDF eBook on my website.

Carol Topp CPA

Rachel Coker is 18 and has 4 micro business! Copy her!

 

RachelCoker2

Rachel Coker is 18 years old and runs three micro businesses: author, piano teacher, photographer and now she’s adding writing coach!

You should copy her!

Watch the video below as Rachel discusses to a group of parents and teens at the Cincinnati Home School convention, how she started each business. She shares tips and ideas that you can use to start a micro business.

Did Rachel inspire you that you could take your interests and turn them into a money-making micro business?

A micro business is a small, simple and fast to start-up, sole-proprietor business that usually consists of one worker, the owner. Micro Businesses are usually low-risk and easy enough for a teenager to manage along with schoolwork and other extracurricular activities.

Check omicro-mid-1ut my books today and start your own micro business for success! Available for purchase on Amazon, Amazon Kindle, Createspace, and as a PDF eBook on my website.

If you do publish (or self-publish) a book, then you’ll benefit from reading my book Business Tips and Taxes for Writers, because writing is a business!

Carol Topp CPA

Rachel Coker, published author at 16. How did she do it?

RachelCokerHave you ever thought about writing a book?

Rachel Coker started writing a book when she was 14 and she became the youngest author to be published by Zondervan, a major Christian publisher.

Watch the video below as Rachel discusses to a group of parents and teens at the Cincinnati Home School convention, how she became published.

Did you know that publishing a book is really a micro business?

Cover250pix-189x300It is!

If you do publish (or self-publish) a book, then you’ll benefit from reading my book Business Tips and Taxes for Writers, because writing is a business!

 

A micro business is a small, simple and fast to start-up, sole-proprietor business that usually consists of one worker, the owner. Micro Businesses are usually low-risk and easy enough for a teenager to manage along with schoolwork and other extracurricular activities.

Check omicro-mid-1ut my books today and start your own micro business for success! Available for purchase on Amazon, Amazon Kindle, Createspace, and as a PDF eBook on my website.

 

Carol Topp CPA

Video: Should You Sell Services or Products – Starting a Micro Business

Should You Sell Products or Services?Are you wanting to start a micro business, but aren’t sure whether to start a product based business or a service based one? In the video below, I explain the differences between the two.

The biggest reason you might want to consider a service based business over a product based one is because they are easier to support and much more manageable.

As I explain below, product based businesses can be very successful, sometimes too successful. This can lead to a major problem, keeping a stock of inventory.

Watch the video below as I discuss to a group of parents and teens at the Cincinnati Home School convention, the differences between service based businesses and product based businesses:

micro-mid-1Have you ever had a great idea and thought about starting a micro business? If so, you should check out my book series, Micro Business for Teens. In my books, you’ll gain valuable insight for starting a micro business.

A micro business is a small, simple and fast to start-up, sole-proprietor business that usually consists of one worker, the owner. Micro Businesses are usually low-risk and easy enough for a teenager to manage along with schoolwork and other extracurricular activities.

Check out my books today and start your own micro business for success! Available for purchase on Amazon, Amazon Kindle, Createspace, and as a PDF eBook on my website.

Carol Topp CPA

Video: How to Start a Micro Business with Little Money

How to Start a Micro Business with Little MoneyStarting a micro business doesn’t mean you should take on debt! In fact, you can start a micro business with the things that you already own such as: your computer, you lawn mower, your camera, your oven, and even the knowledge inside your brain.

Here’s an example: Lucas wanted to start a micro business mowing lawns. He want a riding lawnmower for the business, but didn’t have enough money. So instead Lucas worked delivering papers and eventually bought a lawnmower at a garage sale. His lawn mowing business is now quite successful and was started debt free!

Watch an excerpt from a workshop I did at the Midwest Home School Convention called, “The Best Micro Business for a Teenager to Start”. Here I explain why it’s best to start a micro business with little money:

micro-mid-1Have you ever had a great idea and thought about starting a micro business? If so, you should check out my book series, Micro Business for Teens. In my books, you’ll gain valuable insight for starting a micro business.

A micro business is a small, simple and fast to start up, sole-proprietor business that usually consists of one worker, the owner. Micro Businesses are usually low-risk and easy enough for a teenager to manage along with schoolwork and other extracurricular activities.

Check out my books today and start your own micro business for success! Available for purchase on Amazon, Amazon Kindle, Createspace, and as a PDF eBook on my website.

Carol Topp CPA

Starting a business selling products with multi-level marketing.

sales_funnel_

Ever thought of trying to start a business that uses a multi-level marketing (MLM) plan?

Here’s the story of one guy, Josh Day from Australia, who tried to sell Herbalife.

I asked permission from Josh to share his story.

 

So over the years I’ve tried all sorts of different business ideas and the first one that Ii really lost any money on was when I tried to sell Herbalife. If you don’t know, Herbalife is a weight loss product with an MLM (multi-level marketing) type structure of selling. I was 17 and decided that if it was to make some serious money I’d have to invest so I started talking to a Herbalife distributor and after a couple of weeks I paid him the $550 to get started in the business.

I’m a good sales person and I’ve always know that, so I thought I could sell anything. Well, being a 17 year old who has never even come close to being overweight makes it very difficult to sell weight loss products, especially since most of their marketing ideas are about sharing your own stories and being a success story of the product.

So after a few weeks of trying to sell off this product I only ended up making around $300 in sales (which was only around $100 profit) and I had exhausted all the ways I knew possible to sell this product.

The lesson I learned here is that just because it’s a highly sort after item, doesn’t mean its going to sell easily unless you know how to market it. I’m sure if I tried to get into it again being older and knowing a different crowd I’d probably be more successful, but to make back that $550 would be quite a task.

I met Josh on the Teen Business Forum, a great website for serious teen entrepreneurs. Check it out.

Starting_small-259x300

 

If Josh had created a marketing plan, as I show in Starting a Micro Business, he might have chosen a different product to sell as a 17 year old.

Grab a copy of Starting a Micro Business today and avoid the mistakes Josh made.

What do I need to know about crowd funding and taxes?

crowd surfer © by Photos by Mavis

Question: I’m interested in accepting donations from a crowd funding website. What do I need to know about the taxes?

I’ll do my best to answer your questions, but I have to include this disclaimer:

The Internal Revenue Service hasn’t published specific guidance on the tax consequences of receiving money through crowd funding sites like Kickstarter.

I’ll also explain that I am a very conservative CPA. I do not take risky or unsupported positions. You may get a different answer from another CPA or tax professional.

As the term suggests, crowdfunding is funding from a crowd of people; that is, many people provide small amounts of money to finance something. Crowdfunding has its roots in charitable causes, including the advent of microfinancing to provide financial services to poor people, but has progressed to the online funding of creative and other projects via sites like Kickstarter and Rockethub.

Crowd funding income can be treated as the following:

  1. A donation to a 501c3 tax exempt charity.
  2. Investment in a business by an investor seeking a share of ownership (called equity owners)
  3. Gift given by an individual to an individual. Gifts are typical when no business or potential profit motive is evident. Examples of gifts include a wedding, funding an adoption, helping a family whose house was destroyed by fire or a person with a medical illness.
  4. Taxable income for a for-profit business. Most businesses give a reward in exchange for the income. This reward may be considered a sale of a good and subject to sales tax in your state (and you thought all you had to worry about was federal income tax!)

 

For a micro business owner, #1 and #2 do not apply. It is my opinion that #3 Gift does not apply to micro business owners either

#4 taxable income is the only option that applies to micro businesses launching a crowd funding campaign.

 

Carol Topp, CPA

Here is my disclaimer:

Nothing contained in this email was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code, as amended; (2) any written statement contained on this website relating to any federal tax transaction or matter may not be used by any person to support the promotion or marketing or to recommend any federal tax transaction or matter; and (3) any taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor with respect to any federal tax transaction or matter contained in this website. No one, without our express written permission, may use any part of this website in promoting, marketing or recommending an arrangement relating to any federal tax matter to one or more taxpayers.

 

Using crowd funding to raise money for your book, music CD or film project

Credit http://banklesstimes.com/2013/01/10/kickstarter-vs-indiegogo-tale-of-the-tape/

wrote a blog post over at Publishing Basics on

Pros and Cons of Kickstarting Your Project

Kickstarting (or, more broadly, crowd funding) as Phil explains, is  “an Internet-based program where creative people can pitch potential supporters to raise funds to produce a short- or feature-length film, record music, publish a book, and many other products.”

Here’s an excerpt from Phil’s article:

Other People’s Money – Maybe you don’t have the cash or credit to fund your own book, but if you can convince others that your book is worthwhile, you might be able to raise the money. You can remove your risk by raising all of the funds you need.

Don’t underestimate the value of helping others feel good. You’re helping others pay it forward. There is great value in allowing others to help you reach your dreams.

Pre-selling With a New Spin – Pre-selling is tough enough. With Kickstarter you’re basically pre-selling copies of your book (and recognition for the assistance) to your network of friends, family, co-workers, and anyone looking for a way to help.

Read the other pros and cons of crowd funding  here.

 

That got me to thinking (with my CPA-tax mind): How does the IRS see income from crowd funding sources like Kickstarter?

The accounting software company, Outright.com, has an informative page about taxes from crowd-sourcing income.
http://outright.com/blog/accounting-for-crowd-funding-what-you-need-to-know-before-starting-a-kickstarter-campaign/

The IRS will probably see income from crowd funding as exactly as Phil described: pre-selling books. That means the income from Kickstarter is taxable to a micro business owner selling a book or CD.

Sorry, to be a downer here, but you need to know that there is no free lunch when it comes to crowd funding!

Carol Topp,CPA