6 thoughts on “Another new small business opens…”

  1. I’m going to do what she is doing and work on launching a business. I sit here with many skills such as website design, instructional design, marketing, broadcasting, journalism, public relations, video, audio editing and so much more and yet unemplyed. Supposedly many of these skills are in demand then why can’t I find a job?

  2. One reason that you are having trouble finding a job is that companies don’t want to keep people on full time. It might be cheaper for them to contract out building a website, with some sort of follow-on contract for maintaining it.

    Many people who are sole proprietors price their work too low, and wind up taking a beating on the job. As you’ll find with looking for a job, doing a job really does cost “that much” if you are paying even minimum wage and expecting the person to provide their own materials. You might not be getting the 125% overhead (general and administrative) rates on top of labor that I see routinely in proposals, but everything costs more than you would like it to cost.

  3. The only way to break even for any work you do for a client is to charge them labor. Mechanics do it all the time — why not us, as small business people?

    Any item that I make and give a friend takes at least ten hours to do. I couldn’t charge a client a flat fee for just that product; there would have to be a labor charge involved.

  4. How to deal with the cost of your time is a basic part of running a service business. You have two basic approaches:

    1. Agree at the outset to a time and materials effort, where you bill for your time at a specified rate. In this case, the client assumes the risk of your taking longer than anticipated, but the flip side is that your invoice has to include a time statement.

    2. Set a fixed price for the effort, including the materials and the cost of your time. I try to estimate my time a little high when proposing a fixed-price effort, knowing that the client will want to negotiate. In this case, invoicing is simpler: ‘I accomplished X: pay me.’ But then you assume the risk of overage.

    But either way, the cost of labor (i.e. your time) must be covered. In my business, the cost of supplies is negligible. But if you’re supplying a more expensive item, don’t be afraid to honestly assess your effort and include it in your proposed price. If a prospective client says, ‘Why are you charging me $400 for something that I can buy for $40 at Home Depot?’ he’s not worth your trouble.

    Both ways work, but you need to decide beforehand which is the best approach for a particular client and task. I prefer the fixed price when the work to be done is clearly defined, and the time-and-materials when the task is more nebulous.

  5. Madness that is true, and my field is moving more and more into contracting. The skills I have aren’t unfortunately ones that are now needed fulltime with many companies. So it looks like my choices are work contract jobs or go back to college. I am looking into fields I can make a good living with now while I concentrate on working for myself.

  6. I recently hired a guy to tidy up my lawn and clean out the crawlspace of my house. He badly underestimated the amount of time that it would take to do the work, and I knew it at the time that he made the offer. Hoping that I would be wrong, I came home the next day and told the guy that I would put him on an hourly rate, and in exchange, I expected him to put forth a good effort even though I couldn’t be there to supervise him. I paid him for that day’s work at the rate that I offered and he accepted, and he worked a couple more days until the job was finished. He was really surprised that I left him a cooler of drinks the first day. I provided the materials that he needed, like bags and various tools.

    I did have a surprise: he turned out to be diabetic, and hadn’t eaten one morning. I took him to a restaurant as quickly as I could and got him something to eat because I didn’t want to take the time to cook. I have friends who have diabetes, and he was starting to shake like they do when they need to eat.

    I spent sometime explaining to him that he needs to be better at estimating a job, and that it pays to be somewhat pessimistic about the amount of time that he will need. An estimate of $X based on Y hours at $Z per hour is a reasonable thing to offer someone. He mows a lot of lawns, so he can give people a valid price there, but anything else and he is out of his depth.

    He needs to be licensed to do the work that he does, because he solicits business door to door. The law of the town where I live states that if you do something for pay once, you are in business and require the license.

Leave a Reply