Small Business Q&Awith Tim Knox

The Reasons Why Most People Will Never Find Online Success

2006-03-16T11:13:00.000-06:00

Q: Tim, I have spent the past few months trying so hard to start an ecommerce business. I have read virtually everything you have written. I have listened in on more than one of your teleconferences.

I have clicked and spent and clicked and spent and clicked and spent. I filled the laundry basket and sold on eBay. I became a Clickbank affiliate (I think I am an affiliate of almost the entire Internet).

I know that it's ironic that I want to make money on the Internet considering I have not one drop of technical skill in my body, but I am a single mom: bottom line is my kids NEED me... and I really and truly am relentless when it comes to getting what I want (in other words, what I lack in technical skills I make up for in persistence.)

Please, please, please...just give me one word or sign or anything...that this CAN be done by the little people (such as myself). Otherwise, I will return to my 5am job that exhausts me so much I can't even tell my children apart anymore (which isn't flattering to a daughter and son that are almost 5 years apart in age!).

This Internet thing is kicking my butt and from what I have studied, you are the "Dr. Phil" of the ecommerce wannabe's, successes and everything in between. (Please don't be offended by the comparison with Dr. Phil....I merely use this in the most pop-culture way possible).

I swear, I am ready to sacrifice my PC in the backyard firepit and return to my old typewriter: that is how frustrated I am. Thanks for letting me vent (must be an estrogen thing).

-- Mary (real name withheld)

A: Hi Mary, The first thing you need to do is close your eyes, take a deep breath and let it out slowly. (repeat as necessary :o).

First, let me say that I understand your frustration, but it has been my experience that most people in your situation (including yours truly when I was first starting out) create much of their own frustration because they put themselves under too much pressure to succeed quickly. Their situation is not a happy one and they want to change it TODAY. When that doesn't happen, frustration and anger can set in.

Everyone wants to hit home runs the first time at bat. They want big money and they want it fast. When results don't come as quickly as they think they should they say, "This Internet thing doesn't work and those who claim to make money are scammers!"

I have been an Internet marketer for 3 years now. The first year I did miserably. I lost about $5,000 trying to figure it all out on my own. One day it occurred to me that succeeding would be much easier if I knew what the heck I was doing.

You see, I, like so many others, didn't take the time to educate myself on Internet marketing. I saw others making money online and figured if they could do it, I could, too.

I just found the crowded pool and dove in head first. As you expect, I almost drowned because I had not taken the time to learn how to swim. Heck, I couldn't even float...

So I stopped what I was doing and became a student instead of practitioner. I discovered that I was making every mistake in the book because I had not taken the time to learn what to do, and more importantly, what not to do.

After losing a ton of cash, time, and sleep, it finally started to make sense.

I remember finally making $100 profit from eBay in one week for sales of my own ebook (CD Money Machine).

I had made hundreds of thousands of dollars in other ventures, but that $100 was the hardest money I had ever made. That's why it meant so much to me. It told me that FINALLY I was doing something right.

I took that $100 and plowed it into more auction listings and just kept repeating the process.

Then I moved beyond eBay to my own website.

Then I started to concentrate on developing more products, creating my own affiliate program, pursuing more joint ventures, expanding my marketing campaigns.

Success came to me, BUT ONLY AFTER I stopped doing everything wrong and learned to do a few things right.

Like so many people before me and like so many of you now reading these words, I wasted a year of my life and thousands of dollars because I did not take the time to learn first, then do.

I had unrealistic expect ions of myself and the business. I expected big bucks and fast results and when they did not come I looked for someone other than myself to blame.

It took me taking a step back and reassessing my entire thinking to finally learn how to succeed.

And I succeeded in baby steps, not giant leaps.

There were no home runs.

There were a lot of foul balls and finally base hits.

That's how you succeed.

Here's the bottomline:

There is no such thing as a real get rich quick opportunity. If someone tells you that you can start with no money and no experience and make hundreds of thousands of dollars overnight they are lying to you and you are a fool for believing them. Yes, you can make lots of money in a short period of time as an Internet marketer, but you're not going to get rich this week unless you hit the lottery or your rich uncle dies. And you have a better chance of getting hit by lightning than either of those things happening. Be realistic, be smart, be logical. If it sounds too good to be true, it is.

An Internet business is no different from a brick and mortar business: both take hard work, dedication, perseverance, and an investment of time and money. Just because your business is "virtual" that does not mean that you don't have to put some time and effort into launching, building, and running it. Yes, there are many things you can do to automate the process, but you have to build the business before expecting it to run on autopilot.

You must have patience, realistic expectations, and the ability to keep plugging along even if you are not getting the results you expected at first. The problem with we humans is that we are an impatient species. We expect our grand ideas to play out quickly and effortlessly. We expect things to happen at lightspeed. We are a microwave society: nothing happens fast enough for us. In business, nothing happens quickly. Until you understand that, you will drive yourself to failure every time. You will start ventures and quickly abandon them. You will grow frustrated and you will fail.

This is the biggest lesson you can learn here, so read this several times and ask yourself: Is he talking to me? When someone is unhappy with their current situation they are prone to desperation, which leads to unrealistic expect ions, which leads to failure, which leads to anger, which leads to a dead end.
I know because I hear from them all the time. I receive emails like:

"Tim I'm broke and in debt and if I don't make $1,000 by Friday they will take my house! Tell me what to do! You are my last hope..."

And...

"Tim, if you don't tell me how to make $500 today my wife is going to leave me. You have to save my marriage..."

These are not made up statements. I am not trying to be funny.

These are actual quotes from emails I've received.And I receive hundreds like this every month.

There is nothing I can say to these people (other than "I'll mail you a check") that will make them feel better about themselves and their situation.

When I reply with the truth, that I am not their salvation and they need to study and work a plan of action, often these same people reply with hate mail.

If I don't tell them what they expect to hear or offer to solve their problems I am the villain. I become the target of their venting. And that's fine. They have to blame someone if they aren't willing to take responsibility for their own lives.

The difference between you and these people, Mary, is you are really trying.

You're learning and practicing and testing and TAKING ACTION.

That puts you in the 1% of people who actually have a chance to make it.

You tell me the things you've done, but you don't tell me anything about your results.

Have any of your efforts paid off, even in small ways?

Large success is built upon a foundation of many small successes.

Have you taken the time to actually learn about Internet marketing, affiliate programs, pay per click, etc.?

It's one thing to signup with a bunch of affiliate programs. It is another thing entirely to know what you should do after you sign up.

Other than listening to me and other so called gurus, what have you done to educate yourself on the Internet marketing business?

What books have you read? What websites have you visited? What forums have you been to?

Education is the first step.

I'll say it again: you must learn to swim before diving in the big pond or you will drown.

No one is going to throw you a life jacket.

No one is even going to notice that you're drowning.

It's sad, but it is entirely true; you are on your own.

Here is my best advice for you: Stop trying to make money until you learn all you can about the Internet marketing industry.

Read books, study the successful marketers, do a Google search for 'Internet marketing forums' and spend time reading what others have posted. You will find people in those forums who have been there, done that. Post questions, ask for advice, join the community. You will find kindred spirits and people more than happy to help you learn and grow.

Finally, if technical ability was a prerequisite for Internet success 99% of the so called big dogs (this pup included) would be back working day jobs.

The key to Internet success is not technical, it is mental.

You can hire someone to write an ebook or hack together programming code for you, but you can't hire someone to do your thinking for you.

Success is about having a plan of action and working it through to the end.

It is about learning to effectively market your products.

Remember, you can have the greatest product in the world, but if you lack the ability to market it, no one will ever know.

On the other hand, you can have a horrible product, but if you are a master marketer you will sell a ton.

Ever heard of Microsoft?

It's easy to find products to sell. The key lies in having the ability to market them, and that is a skill that must be learned before you do anything else.

Don't give up on your dreams, just slow down.

Stop putting so much pressure on yourself.

If you don't make a million dollars by Friday guess what: life goes on. Your kids will still love you, even if you can't tell them apart.

Set goals in baby steps, not giant leaps.

Think long term success, not short term efforts.

Instead of getting frustrated with yourself, pat yourself on the back and say "Dang girl, you are taking action... You are doing things to give your kids a better life!"

Did that sound like Dr. Phil?

I have more hair, he has more money. :o)

Keep the faith and don't give up.

Tim Knox

11 Ways To Find Products To Sell On eBay

2006-03-16T11:12:00.000-06:00

I was part of an eBay Roundtable discussion recently with six other experts and we all agreed that the number one question most new (and even old) eBay sellers ask is:
"Where do I find things to sell on eBay??"

To help answer that question I have compiled 10 ways that anyone can use to find products to sell on eBay. This is by no means a definitive list and depending on your situation, some of the ways may not apply to you. However, if you're a beginner and don't know where to start, this list should help you get on track.

1. Look Around The House:
We all have items lying around the house that we no longer use or need. Have you grown or shrunk in size? If so, you have clothes you can no longer wear and can sell. Did you get a gift for Christmas or your birthday that you will never use? If so, slap it on eBay (just don't let the person who gave you the gift find out). Do your kids have toys they no longer play with? Just looking around your house and garage should give you plenty of things to get your eBay ball rolling.

2. Garage Sales and Flea Markets:
When it comes to eBay, remember this old adage: One man's junk is another man's treasure. Now this is not to say that you should sell junk on eBay. You should only sell products in good condition. The point is you can find items in good condition at garage sales and flea markets that you can pick up cheap and resell for a profit. Remember, nobody wants to buy your old Beanie Babies that no longer have eyes and noses, but they may buy "gently used" items if they're in good shape and offered at a good price.

3. Talk To Your Friends and Relatives:
After you've gone through your own in-house inventory, contact your friends and relatives and tell them you have started an eBay business and will sell their items for a piece of the sales price. Chances are they have as much excess stuff lying around their house as you did. Offer to list the items for them and if they sell, take half the profits. You will probably have to pay the eBay fees out of your pocket up front, but you can then deduct the eBay fees from the sales price before slicing up the pie.

4. Consignment Sales:
Consignment sales are a great way to find a wide range of products to sell on eBay. Consignment selling means that you offer to sell an item that belongs to a company. In exchange for your trouble you get a percentage of the sales price. You can charge up to 50% plus fees for smaller items like clothing, lamps, jewelry, etc. and around 15% for larger items like cars, boats, and bulldozers (yes, I said bulldozers).

Contact every business in town and offer to list their excess goods on eBay for a piece of the action. Most businesses have returned items, liquidated products, used equipment, etc. that they would love to get rid of, but don't have the time to do so. Many will see you as their hero if you can help them get rid of this merchandise and you'll make a pretty profit for your efforts. For business customers you should have them pay the eBay fees on the front end, not you.

5. Thrift Stores:
Thrift stores are an excellent place to look for things to sell online. Stores maintained by the Salvation Army and non-profit organizations are best. Many church thrift stores price their goods at almost retail level, so you may not find too many bargains there.

Much of the merchandise you will find at thrift stores has been donated by middle to upper income families, so many times you can find high quality merchandise in excellent condition. And don't be afraid to make them an offer, especially if you are buying in bulk. Nobody pays sticker price at thrift stores.

6. Mini Storage Unit Sales:
Mini storage companies are everywhere and most of them are filled with stuff that people no longer want, but have no other place to store. Did you know that if someone who is renting a mini storage unit fails to pay the rent the owner can confiscate their stuff and sell it? This is bad news for the renter, but great news for you. Call every mini storage company in your area and ask that they notify you if they ever have items to sell. Many will put you on a notification list for their upcoming sales. Some may even say, "Sure, come on over!"

7. Local Auctions And Estate Sales:
I'm a live auction nut. I'm not talking about the hooty snooty art auctions. I'm talking about the good old fashioned auctions with hard benches and hot dogs and cheap, good stuff. I love going to auctions and digging through boxes and bidding on things. My problem is I don't know when to quit buying. It's just so dang much fun holding up that little paddle and winning a sale, even if it's something you don't really need.

Check your area for auctions and sales you can attend. Just make sure you don't pay more for something than you should. Your goal is to buy low and sell high. Don't get so caught up in the bidding that you pay more than a product is worth (voice of experience here). 8. Closeout Stores:
You can find some great bargains at the big warehouse closeout stores. Look for liquidated items or items you can buy in bulk. And don't be afraid to make them an offer. I never pay sticker price at closeout stores and neither should you. Call the manager over and ask him what he'll take for the entire box of something you're interested in. You may be surprised to find him more than willing to deal.

9. eBay And Other Online Auctions:
Did you know that you can find great deals on products you can buy and resell on eBay and other online auctions? If a seller does a lousy job on his ad chances are he will get very few bids and you can snap up the item at a deal, then create a great ad and sell it for a profit.

You can also find wholesale bulk lots on eBay that you can buy and piece out for sale one at a time. This requires the cash to buy the inventory and a place to store it, but this is the best way to get the lowest price on most wholesale goods.

You should also visit the other online auction like Yahoo and Ubid.com to look for bargains. These sites do not have the traffic and customer base that eBay has, which means auctions there get fewer visitors and lower bids. Do a Google search for "online auctions" to hunt for treasure there.

10. Wholesalers and Dropshippers:
Once your eBay business is rolling you can move it up a notch by establishing relationships with wholesalers and dropshippers who can provide you with merchandise to sell. You will get the lowest price by buying in bulk from wholesalers, but that is a level you should build up to. Don't buy a truckload of liquidated products until you are sure you can sell them.

11. Contact The Manufacturer:
If you find a product that you think would be a good seller just pick up the phone can call the company that manufactures. Tell them you are interested in the product and were wondering if they had a distributor in your area. If they do, contact the distributor and inquire about buying the product wholesale. If the company does not have a distributor in your area simply say, "How do I go about becoming your distributor."

There may be costs involved that makes if prohibitive for you to become a distributor, but you never know until you try. Again, research the market thoroughly to make sure there are customers who will buy the product and if you do have to invest money to get started, only invest the minimum allowed and consult an attorney if there are legal forms you're asked to sign.

Is Bad Customer Service Killing Your Business?

2006-03-16T11:10:00.000-06:00

It's time to beat the old bad customer service drum again. I know, I'm sick of beating the drum, too, but as long as bad customer service runs rampant through so many businesses I feel it is my entrepreneurial duty to bring it to your attention. So grab a pew and prepare to listen to the sermon I've preached before: bad customer service is the bane of business. If the Almighty smote down every business that dispenses bad customer service the world would be a much friendlier, albeit much sparser place. Consider a world without malls and fast food joints… would it really be so bad?

What puzzles me most is if bad customer service is such a death knell for business, why do so many businesses allow it to go on? Don't they read my column, for Pete's sake? I think the problem is that most bad customer service is doled out (or at least condoned) by business owners and managers who have ceased caring what their customers think. When you stop caring what your customers think it's time to close the doors. Go find a day job. You'll make someone a wonderfully disgruntled employee. My latest parable of lousy customer service was actually experienced by my better half while attempting to buy my daughter a pair of basketball shoes. I won't mention the name of the sporting goods chain store in which the bad customer service took place, but I will tell you that its name is similar to the sound a frog with hiccups might make.

As my wife waited for someone to assit, the four or five teenagers who had been charged with manning the store stood in a clump at the cash register giggling and flirting with one another as if they were at the prom instead of at work. When my wife pointed out this fact, one of the employees, a cheeky lass of 16 or so, put her hands on her hips and said, "How rude!" The males in the group didn't react at all. They were too busy arguing over who could take a break so they could chase other cheeky lasses about the mall.

Needless to say my lovely bride, who has the ability to instill fear into the hearts of even the most worthless employees, left the gaggle of giggling teen idiots standing with their mouths open in disbelief. How dare a customer tell them to do that with a pair of basketball shoes?

As much as I bemoan bad customer service I celebrate good customer service. It should be applauded and the purveyor of said good customer service should be rewarded for actually delivering satisfaction to the customer above and beyond the call of duty. So let me tell you the story of my new hero, Ken. I won't tell you the name of the store in which Ken works, but let's just say they started out selling radios in a shack somewhere long, long ago.

I first met Ken when I went into the store to buy a mixing board for my business that records audio products for the Web. In a nutshell, you plug microphones into the mixing board then connect it to the computer and you can record audio directly to digital format. Totally beside the point of this article, but I didn't want you thinking that I was purchasing non-manly cooking utensils. When I got the mixer installed it didn't work. So I boxed it up and headed back to the store to return it. When I told Ken my problem he didn't just grunt and give me my money back as so many bad customer service reps would do. Instead he asked, "Do you mind if I try it?"

"Knock yourself out," was my reply, confident that if I couldn't get it to work, neither could Ken. Ken took the mixer out of the box and went about hooking it up to one of the computers on display. He started pulling power cords and cables off the display racks and ripping them open and plugging them in. He tore open a new microphone and an adapter and kept going until he had the mixer hooked up and working. Yes, I said working. It turns out the mixer was fine. I just had the wrong power adapter.

Ken could have just given me my money back and been done with me. Instead he spent 15 minutes and opened a number of other packages that I was under no obligation to buy just to help me get the thing working.

I was so impressed that I not only kept the mixing board, I also bought another $50 worth of products. And the next time I need anything electronic guess where I will buy it? Even if it costs twice as much, I'll buy it from Ken.

Now here's the moral of the story: if you are a business owner who has a gaggle of teenagers in charge of customer service at your store you would be better off replacing them with wild monkeys.

At least monkeys can be trained.

It's All Up To YOU

2006-03-16T11:09:00.000-06:00

Well, folks, we've made it to the end of the year and what a ride it has been. 2005 was a great year for me personally and professionally. I saw my business grow almost as fast as my kids. Both gave me great joy and just enough trouble to keep me on my toes.

I heard from people this year who were making tremendous progress building their eBay and online businesses and I heard from others who were just getting started.

I heard from people who were thriving and I heard from others who were struggling.

I heard from some who were making thousands of dollars a month and others who were fighting to pay the bills.

Some people asked for my advice.

Some people asked for my money.

Some damned me because I am successful and they are not.

My message to them all was the same:

It's not up to ME. It's all up to YOU.

YOU Have To Keep Moving Forward
In business as in life, you must keep moving forward to be a success. You must have goals and you must have a plan. There is no such thing as an "idle success." Successful people are not satisfied to just stay in one place. They are not satisfied with what they have. They know that when you become satisfied with what you have, you will always have just that. Successful people are always looking toward the future and moving forward.

YOU Must Never Give Up
When life knocks you down it's easy to wallow in your own sorrow. Life becomes a pity party and you are the star. Finding a successful wallower is like trying to find Bigfoot: there is no such thing. When you fall off the horse, get back on. When life knocks you down, you have to get back up. In the words of my friend, comedian Ron White, "When life gives you lemons find someone life has given tequila and have a party." Never, ever give up.

YOU Can't Let Your Circumstances Dictate Your Outcome
At one time I was dead broke and working 3 jobs just to survive. I was living on coffee and cigarettes and sleeping 3 hours a night. It would have been very easy for me to let my circumstances get the best of me, but I refused to give up. I set goals for myself. I created a plan. I took action that would get me out of those circumstances, not keep me there.

Only YOU Can Truly Motivate YOU
The only person who can motivate YOU to take the action necessary to be a success is YOU. Too many people are looking to others for motivation when only self-motivation really works in the long term. When you were a kid your mother motivated you to get out of bed and go to school and make good grades and come home on time. Well, you're a grown up now and you have to be your own motivator. You have to make yourself take action. You must have the drive and determination to do things on your own. Without motivation and action, you will fail and it will be your own fault.

No One Can Do It For YOU
The only person who can make YOU a success is YOU. Others can provide you with advice and tools to help make your journey more fruitful, but in the end it is up to YOU to make YOU a success. It is up to YOU to start your business and learn to market your product. It is up to YOU to make sales and carry the money to the bank. If YOU won't do it for yourself, no one can do it for you.

YOU Make Your Own Luck
Finally, remember this: there is no such thing as luck. YOU make your own luck. Luck occurs when opportunity and action collide. So if you're waiting for Ed McMahon to show up on your doorstep and proclaim, "This is your lucky day!" you are going to have a long, miserable wait.

Ed can't make you a success.

I can't make you a success.

It is all up to YOU.

Now get off the couch and make 2006 a Great Year!

Santa: The Consummate Entrepreneur

2006-03-16T11:08:00.000-06:00

Most people think Santa Claus only works one night a year. Nothing could be further from the truth. Sure, product distribution takes place on one magical night, but Santa's operation runs year round and is one of the largest manufacturing and distribution operations in the world.

You've probably never considered the fact that Santa is the CEO of a large organization that not only distributes a vast assortment of products throughout the world, but does so in a single night with just a sleigh and eight tiny reindeer. Sam Walton would have killed to have Santa's logistics manual.

Do I believe in Santa? You bet your red longjohns I do. I especially believe in Santa's entrepreneurial spirit. Just consider all he does from an entrepreneurial point of view and I think you will start to believe, too.

Santa Is His Own Company Spokesperson
Santa is a brilliant marketer and knows that his image is the best marketing tool he has. No other face is as recognizable and no other entrepreneur has inspired so many songs. You'll never hear "An Ode To Jack Welch" on the radio ten times a day.

Santa's Customers Love Him
Just say his name around a group of kids and watch their little faces light up like Rudolph's nose. You will never see Bill Gates get that kind of reaction. Heck, he can't even make his own kids smile.

Santa Sets The Bar For All Entrepreneurs
When you list the traits of the perfect entrepreneur, Santa gets the highest marks. He has passion for his work. He loves his customers and will go to great lengths to make sure they are happy. He has the ability to spot consumer trends and bring products to market quickly. He can lead a large organization with a wink of his eye. He inspires those around him. He is tireless. He is dedicated. He is loyal. He is persistent. And above all, he is jolly. Name another jolly entrepreneur (other than Dave Thomas of Wendy's fame). I bet you can't.

Santa Is A Great Leader
Can you imagine trying to manage a few hundred giddy elves who are shut in year round and spend their off hours drinking spiked hot chocolate and doing who knows what with fairy dust? It would be enough to drive even the best of entrepreneurs to hide out at the North Pole. Somehow Santa manages the task without pulling his whiskers out. I expect he has a management system that promotes from within. The hard working elves get into management. The slackers are stuck cleaning up after the reindeer.

Santa Perfected "Just In Time" Manufacturing
Santa heads up one of the largest, most diverse manufacturing operations in the world. His product lines range from rag dolls to toy trains to rocking horses to baseball gloves for the little kids, to iPods and cellphones and diamond rings for us big kids. Santa's factory runs year round, twenty four hours a day, seven days a week and never, ever suffers from cost overrun or production shut downs. Santa perfected the "just in time" method of production that is used by many of the world's largest manufacturers today.

Santa Pioneered Global Product Distribution
Santa is the king of single channel distribution. How else could he deliver millions of presents to good little girls and boys all around the world on a single night? Santa's distribution process is a closely-guarded secret (elves and reindeer are required to sign iron-clad nondisclosure agreements), but I expect it involves a highly detailed logistics plan and the best CRM software on the planet. You never hear about Santa calling up a kid and telling them a present is backordered until July.

Santa's Delivery & Tracking Systems Are Second To None
If you think FedEx is number one at tracking packages think again. Santa's track record is spotless. He has never, ever missed a single delivery or left a box sitting on the porch in the rain. Every package is delivered in perfect shape, right under the tree.

Santa Wrote The Book On Customer Satisfaction
Santa proudly boasts a 100% perfect customer satisfaction rating. You never hear about class action lawsuits and Better Business Bureau complaints against St. NIck. Santa makes sure that his customers are happy and if they aren't, he'll come back next year to make things right. If JD Power could find him, I'm sure they would give Santa their Christmas Customer Satisfaction Award.

Santa Claus Is Watching You
Not everyone believes that Santa is the perfect entrepreneur. There are those kids who complain that Santa never brings what they ask for, but we grown ups know that Santa brings the gift that is deserved, not necessarily the gift that is asked for.

Here's a little Christmas tip from your Uncle Tim, boys and girls, ladies and gents: If you get a lump of coal in your stocking this year it's because you were bad and that's what you deserved.

It was not because Santa dropped the ball.

Merry Christmas everybody!

The Entrepreneur's Checklist

2006-03-16T11:05:00.000-06:00

I was asked the other day what personality traits I thought were important to entrepreneurial success. I immediately gave my preprogrammed reply about passion and dedication and hard work. After taking some time later to ponder the question a little deeper (I normally operate in shallow waters), I came up with a more detailed checklist for entrepreneurial success. This is by no means a definitive list, but I'd be willing to bet that if you don't have at least a majority of these traits, your chances of business success will be greatly diminished.

You must be self motivated.
If you don't have the wherewithal to bounce out of bed each day without your spouse drenching you with cold water, chances are you don't have the self motivation or discipline required to be an entrepreneur. Business demands that you take action based solely on your own volition. You have to do a hundred things every day that will not get done unless you make yourself do them.

You can't be afraid of hard work.
If you think working for someone else is hard work, try starting your own business. You will be required to give every ounce of blood, sweat, and tears you can muster and then some. You will have to work long hours and be on call 24/7, at least in the beginning. If the mere thought of hard work makes you tired, maybe you should just keep your cushy day job.

You should have experience in the type of business you plan to start.
If you can't locate your car's engine you have no business buying an oil change franchise. The most successful business owners have prior experience in the industry in which they have set up shop. Consider working in an industry at least part time for a year before jumping in with both feet.

You must be able to climb back on the horse.
I always say: "If business was easy, everybody would do it." Starting a business is hard work and the odds for failure are against you in the first few years. If you want to ride herd on your own business, you must be willing to fall off your horse and get back on a few times without giving up.

You need the support of your family.
When you start a business you may have to spend more time away from the family than you like. The business may also put a strain on you financially. You will have enough obstacles in your way without having to worry if you have the support of your family and those closest to you

You must have a thick skin.
If your feelings are easily hurt, keep your non-threatening day job because business is not for you. Many days in business, rejection waits around every corner and you must be able to handle rejection without taking it personally.

You must interact well with others.
Being an entrepreneur requires interacting with a variety of people, from your own employees to vendors to customers to investors. You must have the ability to effectively manage people without offending them; the ability to accept good advice from mentors and politely discount the bad; the ability to overlook mistakes or quietly rectify them; and the one I have trouble with: the ability to tolerate incompetence without losing your cool (at least not on the outside).

The deeper your pockets the better.
The number one cause of business failure is a lack of money. Before you start your business you should have access to enough capital to see you through until the business can sustain itself.

You must be able to delegate.
Running a business requires the performance of dozens of simultaneous tasks and it's foolish to try to handle them all yourself. You must learn to put your trust in others. If you can't dish out responsibility without worrying over the result, your business growth will be limited.

Previous business ownership is a plus.
Prior business ownership is not a prerequisite, but it can't hurt. Many successful entrepreneurs have the skeletons of past businesses rattling around in their closet.

Another of my sayings:
Business is a lot like marriage: you learn a lot from the first one that may come in handy the second or third time around.

With that kind of advice you can see why I didn't go into marriage counseling.

Here's to your success!

Tim Knox

Which Affiliate Programs Do I Personally Recommend?

2006-03-16T11:04:00.000-06:00

I personally receive over a dozen checks and commission payments every month from various affiliate programs that I promote.

Last month, those checks totaled more than $10,000 and some months they have been as high as $25,000.

Given my success as an affiliate marketer, I'm often asked what affiliate programs I personally recommend.

The answer is easy because it's actually a pretty short list.

First, let me explain what an affiliate program is.

Affiliate programs are used by monster companies like Amazon, eBay, and many others to recruit resellers (affiliates) to help bring customers to their websites.

But the affiliate programs I prefer are those offered by smaller companies that sell digital products online. Those are the programs that pay up to 75% commission, while most larger companies may pay just a few percent.

You can join an affiliate program usually by applying online at the company's website. Being accepted into the program gives you the right to market the company's products as an independent reseller and receive commissions when you make a sale.

I've looked at hundreds of affiliate programs over the years and have come up with my own personal Top 10 Affiliate Programs that I actively participate in and heartily recommend.

Some of these programs require that you pay a membership fee and some do not. The reason some programs charge a fee (including my own affiliate programs) is because you get more value as an affiliate.

In most cases you get a full-blown website from which to sell the products and copies of most - if not all - of the products you'll be selling. For example, I charge $124.50 to join my program, but you get access to over $500 in products.

To make my list of the Top Affiliate Programs is not an easy task.

First of all, I have to personally be an affiliate of the program and must have earned considerable sums to prove its validity.

To make my list the program must also:

Offer quality products that offer real value, no fluff
Offer high commissions (30% minimum, 50% preferred)
Offer 2 tier commissions (if the 1st tier payout is substantial, I can live with a single tier)
Have a proven track record of success
Have a spotless reputation
Pay commissions on time, every time
Have well-known affiliates who will vouch for the program
Be more than 6 months old
Have a low rate or returns
Be referred to me by someone I trust.
That last one's a biggie for me. If one of my peers recommends a program, I know it's going to be good.
So, here is my personal Top 10 Affiliate Programs that make me thousands of dollars every month and with a little time and effort, there is no reason they can't do the same for you.

These are the programs that I personally participate in and recommend. If you're serious about starting your own affiliate marketing empire, take a close look at these.

Internet Marketing Center
IMC was founded by the late Corey Rudl and is now headed up by Derek Gehl, Corey's right hand man. IMC racked up $40 million in sales and pays out hundreds of thousands of dollars a year to their affiliates. Their products are top notch, as is the support and the commissions. I regularly get checks from IMC that range from $3,000 to $7,000 a month. This program is free to join.

Click for details
DropshipDesign Turnkey Websites
This is the only turnkey dropship website company that I recommend and I have been their affiliate for 2 years now. I regularly earn $500 to $1,000 week as an affiliate and also have my own turnkey dropship product site that brings in revenue from orders placed by customers. You must sign on as a customer first, but doing so gets you your own turnkey website and affiliate marketing rights.

Click for details
Hot Item Finder
Dave Guindon is one of the nicest guys you'll ever meet online. He's also one of the most talented programmers and product creators. His flagship product, Hot Item Finder, helps users identify what's hot and what's not on eBay. It's one of the best eBay related products I've ever seen. Dave's affiliate program is also tops in my book. His product converts like crazy and his support is second to none

Click for details
1stPromotion.com
No one knows affiliate marketing better than Rick Davies and his brother Ron. They are considered "The Masters" at making a six-figure affiliate income from home with affiliate marketing. Using that expertise, the brothers Davies have created 1stPromotion.com, which is quickly becoming the top Clickbank affiliate site on the planet. Their turnkey system is great for beginners at an extremely low cost.

Click for details
CBMall (Clickbank Mall)
I personally earn several thousand dollars in passive income every month with this system and there's no reason you can't do the same... and the great thing is, you don't even need a website to get started! No monthly charges. Great for beginners.

Click for details
Automatic Money Machine
Howard Mooreland's Automatic Money Machine has proven itself to be one of the top programs. Howard offers big commissions and his sales pages convert like mad. I never fail to generate hundreds of dollars anytime I promote Howard's products, which help users build a web site in just a couple of hours that can literally start generating money instantly.

Click for details
Emergency Cash Generators
James Jones always delivers by providing his affiliates with excellent products that sell like mad. I have done so well promoting James' new book, Emergency Cash Generators, 101 Profit Generating Techniques, that it jumped into my Top 10 after just one month. You can't miss affiliating with James.

Click for details
MyClickPages.com
MyClickPages.com is the program I created specifically for Clickbank affiliates. MyClickPages.com gives you a complete, professionally designed website from which you can sell my Clickbank registered products. I pay 50% commission on all sales. It's free to join, but please only do so if you are serious about affiliate marketing.

Click for details
DropshipWholesale.net
Naturally I have to recommend my own affiliate program. Yes, I charge for the affiliate license, but I also give affiliates a full blown website and copies of all my products and my track record is 2nd to none. I signed checks last year that paid out over several hundred thousand dollars to affiliates in 2004, so I know it works.

Click for details
Prosperity & Profits
My P&P affiliate program is one of the top programs on the web for serious internet marketers. As a P&P member and affiliate you get access to every section of the P&P website, including the wholesale database, the business opportunity and franchise database, the extensive ebook library, and more. Commissions are 50% of sales and paid monthly by check.

Click for details
There you go, my personal Top 10 Affiliate Programs, but don't think that is the definitive list. There are tens of thousands of products and companies that you can sign on with as an affiliate and earn commissions.

You can find most of them listed at Clickbank or Commission Junction.

Visit Clickbank now
Visit Commission Junction now

Please Don't Buy Anything From Me

2006-03-16T11:02:00.001-06:00

This has been an interesting week. My company has thousands of customers around the world, so my team and I are used to dealing with customer support issues and do everything possible to make sure every customer gets exactly what they paid for.

And 99.999% of the time our customers are extremely happy.

Then there is that other .001%...

This week I had one customer threaten to hunt be down and shoot me like a dog.

Another said that if she could get her hands around my neck she'd strangle the life out of me.

And still another sincerely hoped that I "burn in Hell for all eternity."

What did I do to deserve these threats?

Nothing. Absolutely nothing.

Why then are these people who I assume are otherwise nice, normal human beings wishing me such ill will?

Here's the full story...

It's because they ordered something from one of my websites and they did not receive the confirmation email in a timely manner.

That's it. An email didn't reach their inbox.

And being human, which is the most suspicious and non-trusting species on the planet, these wonderful folks decided that since they didn't receive the email as quickly as they felt they should, I was a scammer out to steal their money and that I should be shot, strangled, and condemned to Hell for all eternity.

All because they didn't receive an email.

And was it my fault that they didn't receive the email?

Nope, not at all. My entire system is automated and works like a charm.

Did they take the time to logically think about the possible reasons that the email was not received?

Did it ever occur to them that the blame might lie in their own email filters or their ISP's filters?

Did it ever cross their mind that the email might just be sitting in their spam folder (as was the case in each of these examples)?

Nope, instead they decided - within MINUTES of clicking the buy button - that your old buddy, Tim, was the spawn of Satan and a scam artist just out to steal their money.

And do you think it ever occurred to these good, decent folks to click the customer service email link that is clearly shown on their sales receipt to request that their information be sent again?

Nope and nope again. That would have made too much sense.

Do you think they took the time to read the long explanation on the sales receipt and the order "thanks page" that explains that sometimes email filters block delivery of download emails and they should contact customer service if they have a problem?

Nope,nope, and nope.

Instead, they somehow found my personal email address and started sending me death threats.

Let me tell you, nothing warms the cockles of your heart (did you know your heart had cockles?) like receiving an email from a customer who actually has the word "God" in their email address who hopes that you burn in HE-double hockey sticks because he didn't receive an email with his order information.

So this leads me back to the beginning of my story.

Please Don't Buy Anything From Me...

At least until you read the rest of the story...

First, let me explain the mechanics of online ordering.

When you come to one of my websites and click a button to purchase a product, here's what happens.

1. My website adds the product to a shopping cart.

2. When you click to proceed you either pay by credit card or are taken to Paypal, where you can log in to an existing Paypal account or set up a new account.

3. On the last page of the checkout process there is a button labeled "CONTINUE." When you click the CONTINUE button you are taken back to my website to the product download page.

4. The credit card processor or Paypal transmits a signal back to my system that lets me know that you made a purchase.

5. My system displays the link to your order information on the download page and at the same time sends your order information to the email address you used to place the order.
The entire process is instantaneous and automated.
And it works extremely well. At least on my end.

It is when my system attempts to deliver the email to the customer's email address that problems sometime occur.

It's estimated that only about 25% of emails get past ISP spam filters now.

Especially if the recipient uses a free email system like Hotmail, Yahoo, Gmail, and MSN.

And many ISPs, namely AOL, Comcast, Cox, Earthlink, and Juno, just to name a few, also heavily filter their user's emails without the user ever knowing it.

Of the 25% that the ISP actually lets through, the user's email program filters out another 3/4 of those.

So every now and then an email sent by my system does not end up in the customer's inbox, but gets blocked by the ISP or filtered by the user's email program to a junk or spam folder.

And when that happens most customers are sane and polite and simply request that their information be sent again, which we are more than happy to do.

Then again, some customers immediately think that they have been scammed and that I should be put to death.

People. Gotta love 'em...

So the next time you buy something from me or any other reputable online vendor and the email doesn't hit your inbox as quickly as you think it should, instead of pulling out the torches and pitchforks and screaming for blood, check your spam folder to see if the information is there.

If it is, problem solved. Put your pitchfork away.

If it isn't, don't blow your top and start sending death threats.

Just politely ask that it be sent again.

Email is an imperfect medium.

Remember that the next time you threaten to shoot, strangle, or condemn to Hell someone who has done you no wrong.

What's Your Company's Email Policy?

2006-03-16T11:02:00.000-06:00

Does your company have an email policy? Did you even know there was such a thing? Well, there is, and if your company doesn't have one you are not only risking the professional image of your firm, but also risking potential liability issues that may arise from the misuse of your company email system.

Having a published email policy accomplishes three objectives.

First, it teaches your employees how to use email in a professional manner. What's that? You've never really given much thought about the emails your employees send out? Well, you should, because ill-composed and unprofessional emails not only reflect on the employee, but on you and your company, as well.

Chances are most of your employees don't even spell check the emails they send to your customers and partners. Chances are even greater that they are sending other items through your company email system that may get you sued.

Consider this: if one of your male employees sends an email to a female employee that might be considered harassing in nature, you may be judged to be just as liable for damages when her attorney comes calling with harassment suit in hand.

Creating a company email policy also helps lay out the ground rules for personal use of company email. When an employee is on your clock, using your computer equipment, and your network, and your resources they should understand that personal emails should not be sent or received using the company email system.

This can be a hard rule to enforce, given that kids now email their moms at work after school and soccer coaches email everybody, but as a rule, personal use of the company email system should not be allowed.

An effective company email policy also helps cover your corporate backside against liability. Take the example above of the potential harassment suit caused by an insulting email. If your company has a clearly-stated email policy that details what is considered inappropriate, you can minimize the company's liability by proving that employees were trained in the proper use of email.

If you can prove that employees knew that sending such emails were not acceptable under company policy, your liability can be greatly lessened.

Having a good email policy can also give you a competitive advantage over the competition. As email becomes the professional communication medium of choice, composing professional, thoughtful emails can truly put your company ahead of the pack.

I can tell you from experience that I have actually won contracts simply because the customer was impressed that I replied to his email quickly and professionally. In other words, I've made thousands of dollars just because I respond quickly and use a spellchecker. Is this a great country or what?

How do you create an email policy? If you have other existing policies in place, such as those that pertain to business communications, access to confidential materials, personal use of the telephone, sexual harassment, etc. you should be able to establish an email policy using the existing policies as guidelines.

If you need to start from scratch you can still write the policy yourself with a little time and research, however, many companies rely on professional consultants to do the job for them. When you realize the importance of an email policy and understand the ramifications of not having one, you'll probably agree that its money well-spent.

An email policy doesn't have to be a long, drawn out document. Most policies are no more than a few pages long, written in plain English that every employee can easily understand.

The key to the success of your company email policy lies in the training of your employees. You can't just establish a policy and expect everyone to follow blindly. Once the policy is written it should be distributed to employees and can even become part of future employment contracts. Explain the policy to your employees and have them read and sign to signify that they understand and will adhere to the rules.

Many companies are now realizing the importance of email and are putting on training seminars that not only teach their employees how to stick to the policy, but how to compose and respond to emails, as well.

Here's to your success,

Tim Knox

What Do Your Business Emails Reveal About You?

2006-03-16T10:57:00.000-06:00

I am a huge fan of email. In fact, if you do business with me the bulk of our communication will not be through the telephone, but via email. Email is quick. Email is convenient. Email takes less time than long-winded telephone conversations. Most importantly, email gives me an electronic record of my communications with clients, employees, partners, and vendors; which makes it easy for me to refresh my quickly-aging memory by easily referring back to our electronic conversations.

As someone who receives and sends a couple hundred emails a day I have to tell you that I am constantly amazed at how poorly written and unprofessional most business emails are. I receive emails every day from fellow entrepreneurs that don't even contain full sentences. They are often rife with spelling and grammatical errors or typed in all capital letters, and sometimes, are virtually illiterate.

One email I recently received from someone trying to sell me an expensive piece of equipment actually read, "tom-- what you think -- ready to buy?" First off, the name is "Tim" and secondly, what I think is: I will take my business elsewhere. Thank you, drive through.

Why should you worry about how your emails are reviewed by their recipients? Because in business, you are constantly being judged by your customers, your employees, your investors, your partners, and your peers. If your emails give the impression that you don't put much thought into the composing of the message or that you're too busy to be bothered or that you are a total idiot who can't even use a spell checker, what do you think that says to the person on the other end?

Email is quickly becoming the business correspondence medium of choice for the reasons I covered above, and if you don't take the time to learn how to effectively use email in a professional manner, it will come back to haunt you.

There are rules that should be followed when sending business emails. The website Email Replies gives 32 tips for email etiquette. Culling from that list and adding a few of my own, here are Tim's Top 10 Rules of Email Etiquette that every entrepreneur, executive, and employee should follow.

1. Make It Short And Sweet
An email isn’t a letter from camp, so don’t drone on any longer than necessary. Keep in mind that reading an email on a computer screen is harder than reading printed communications, so keep it brief and to the point.

2. Use Proper Spelling, Grammar & Punctuation
This is not only important because improper spelling, grammar and punctuation give a bad impression of you and your company, it is also important to make sure your message is not misconstrued. Emails with improper punctuation (a comma and a period every now and then would be nice) are difficult to read and can sometimes even change the meaning of the message. And, if your email program has a spell checker do everyone a favor and use it.

3. Include a Signature Block In Every Email
A signature block in an email is the same as the signature block you would use to end a letter. You should include your name, title, company name and address, telephone number, email address and website address.

4. Reply Quickly
This is my number one pet peeve: people who take forever to answer email. Fast response is especially important if the email is from a customer or contains time-sensitive information. Customers send an email because they wish to receive a quick response. If they did not want a quick response they would send a letter or a fax or talk to your voicemail. Each email should be replied to within at least 24-hours, and preferably within the same working day. If the email can't be answered in full immediately you should at least send a reply saying that you have received their email and that you will get back to them ASAP.

5. Read Every Email Before You Send It
There's no better way to embarrass yourself than through a hastily sent email. A lot of people don't even bother to read an email before they send it out, as evidenced by the many spelling and grammatical errors most emails contain. Apart from this, reading your email through the eyes of the recipient will help you send a more effective message and avoid misunderstandings and inappropriate comments.

6. Do Not Discuss Confidential Information
Sending an email is like sending a postcard. Once it leaves your computer, the end user can do whatever they want with it, so if you do not want a documented record of your comments or the information shared with others, don't send it. Moreover, never make any libelous, sexist or racially discriminating comments in emails, even if they are meant to be a joke. There have been court cases where email correspondence was used as evidence. That's a road you do not want to go down.

7. Don’t Use ALL CAPS
In email terms, IF YOU WRITE IN CAPITAL LETTERS IT SEEMS AS IF YOU ARE SHOUTING, so please tone it down. ALL CAPS are hard to read and can trigger an angry reply if the recipient mistakes the intention of your email. Emails should be written in standard sentence style. Turn the Caps Lock off and back away from the keyboard.

8. Avoid Abbreviations and Emoticons
In business emails, try not to use abbreviations such as BTW (by the way) and LOL (laugh out loud). The recipient might not be aware of the meanings of the abbreviations and in business emails these are generally not appropriate. The same goes for emoticons, such as the smiley :-) and his depressed pal :-( . If you are not sure whether your recipient knows what an acronym means, it is better not to use it.

9. Don’t Use Backgrounds or Silly Graphics
I actually received an email from a fellow entrepreneur that had an animated smiley face waving a gloved hand in his signature block. If the email had come from Walt Disney I wouldn’t have been shocked. Coming from a small technology company, I had to wince. Not much to smile about there.

10. Remember That Email Is A Formal Business Communication
You wouldn’t send a formal letter to a customer that lacked a salutation, a well-thought out body of text, and a signature. You should use email in the same manner. A proper business email should be structured like a short letter. It should have a salutation, the body of the message, a sign off, and a signature.

Next time we’ll discuss email issues that should be a concern to larger companies. If your company doesn’t have a formal email policy, you should. Tune in next week to find out why.

Here's to your success,

Tim Knox

The 8 Things You Must Know To Build A Great Website

2006-03-16T10:56:00.000-06:00

Last week we talked about how a bad website can do your business more harm than good. That column brought several emails asking what is the key to building an effective business website. I replied with the same answer I always give: building an effective business website is a simple matter of definition.
Before the first graphic is drawn or the first line of code is written, you must define the website's budget, purpose, target audience, design, navigation, and content. And when that's all said and done you must define the marketing that will bring visitors to your site.

It sounds easy, but you'd be amazed at how many really bad business websites there are out there. Yours might even be one of them. If so, listen up. For nearly ten years now my company has been building and rebuilding websites for every kind of business you can imagine: from mom-and-pops to multinationals. We've designed (or redesigned) a couple hundred websites and along the way I have come to the conclusion that most business websites do a pitiful job of working for their owners.

What's that, you didn't know your business website should work you? You think it should just sit on a server somewhere taking up digital space and collecting digital dust?

Wrong. Every website, business or otherwise, must serve a purpose, and that's usually where most websites falls short. They serve no purpose because the website owner never gave much thought to it. It's not the website's fault. A website is inanimate. It is only what you make it. The only life a website has is the one given to it by its designer and owner. If the human element doesn't do a good job of defining the building blocks, the website will serve no purpose and eventually die a digital death.

Building an effective business website isn't brain surgery, thank goodness, since that's how I make a nice percentage of my living. Building an effective, well-designed website that works for its owner, that actually serves a purpose, is all about definition.

Define the Budget
Every website, no matter how large or small, must have a realistic budget, with "realistic" being the key word. I can't tell you how many times I've sat with a potential client as they listed off the eight million cool things they wanted their website to do, only to find out that their budget was just a few hundred dollars. I always feel like saying, "Well you just wasted three hundred dollars of my time, so here's your bill…"

Define the Purpose
Every website must have a purpose. Purpose drives everything: the audience, the design, the navigation, the content, and the marketing. I could do an entire column on purpose, but suffice it to say that there are five categories of purpose under which most websites fall: the purpose to inform, to educate, to entertain, to generate leads, to sell, or a combination thereof. If you fail to define the purpose of the website, all else is just wasted effort.

Define the Target Audience
Your target audience refers to that segment of the public that you hope to attract to the site. For example if you sell shoes, your target audience would be anyone with feet. Taking it a step further, if you only sold women's shoes, your target audience would be women (with feet) Why is defining your target audience so important? If you have no idea who your audience is, how can you expect to design a website that will appeal to them? Your target audience could be customers, investors, job seekers, info seekers, etc. Define your target audience, then figure out how to serve them.

Define the Design
Website design theory has changed over the last couple of years, primarily because the search engines now ignore graphic heavy websites and give preference to those that take a minimalistic approach to design. If you look at some of the big boy websites like GE, Oracle, Raytheon, HP, and others you will see that in many cases the only graphic on the homepage is the company's logo. Search engines now give higher preference to websites that offer keyword-rich text over flashy graphics. Don't fight the design trend. You will lose.

Define the Navigation
Bad navigation is the number one reason website visitors abandon a website. Navigation refers to the chain of links the visitor uses to get around your site. If your site has an illogical navigational hierarchy or too few or too many links or is simply impossible to get around, you've got problems. We live in a microwave society. We stand in front of the microwave tapping our foot and glaring at our watch wondering why it takes so damn long for a bag of popcorn to pop. Why can't a three-minute egg be done in thirty seconds? If it takes a visitor more than 3 clicks to get to any page on your site, your navigation needs improvement.

Define the Content
Content refers to the information on your website, be it graphics, text, downloadable items, etc. Since the top search engines no longer use HTML Meta tag data to index websites, it is vital that your website content be text heavy, succinct and well-written to appeal to the search engine spiders.

Define the Build Method
Next, who will build the website for you? Will you do it yourself using one of the point and click website builders or will you hire the kid next door? Will you hire a freelance designer or a professional firm? Budget usually dictates the build method, but be warned, when it comes to website development, you get what you pay for. Sure, the kid next door will throw up a site for you if you buy them a pizza or make your daughter go to the prom with them, but you will end up a with a website that looks like and performs like it was designed by the kid next door.

Define the Marketing
If you build it, will they come? Not on your life, at least not without a good marketing campaign. Your website should become a part of all your marketing efforts, online and off.

Put the website address on your business cards, brochures, letterhead, and all collaterals. Include the address in your ads; print, TV and radio. If you prefer to do online marketing, figure out where your target audience surfs and advertise there.

If marketing is foreign to you, do yourself a favor and call in an expert. Many businesses fail because they simply do not know how to market their products and services effectively. This is also the downfall of most business websites.

Here's to your success,

Tim Knox

The Bad Guys Are Phishing For Your Personal Information

2006-03-16T10:55:00.000-06:00

Do you know what "phishing" is? No, it doesn't mean you grab a phishin’ pole and head to the nearest phishin’ hole to catch some phish.

Phishing has a much more sinister connotation. The official Webopedia definition of "phishing" is as follows: The act of sending an e-mail to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that will be used for identity theft. The e-mail directs the user to visit a Web site where they are asked to update personal information, such as passwords and credit card, social security, and bank account numbers, that the legitimate organization already has. The Web site, however, is bogus and set up only to steal the user’s information.

Phishers are also on the prowl for your business information. Your business credit card number, for instance, is like gold to a phisher. Same for your bank account number, lines of credit information, financial data, purchase order numbers, etc.

Phishers prey on ignorance, fear, and emotion. They also play the numbers game. The more bait they email out, the more phish they'll catch. By spamming large numbers of people, the "phisher" counts on his email being read and believed by a percentage of people who will volunteer their personal and credit card information.

One group that is constantly baited by phishers is the eBay community, i.e. the tens of millions of people worldwide with eBay accounts. There’s not a day that goes by that I don’t receive an email supposedly from eBay asking me to update my account information. I know better than to fall for this scam, but I have to admit, the latest scam email is pretty convincing. Even this old Powerseller did a double-take before realizing that the phishers were at it again.

The sender of this email is listed as: eBay Member and the email subject line reads: Question from eBay Member. The email begins: "Question from eBay Member -- Respond Now. eBay sent this message on behalf of an eBay member via My Messages. Responses sent using email will not reach the eBay member. Use the Respond Now button below to respond to this message."

The email then takes on a threatening tone. It reads: "Question from rivernick: I'm still waiting payment for my item for about 7 days. What happened? Please mail me ASAP or I will report you to eBay."

The recipient is then prompted to respond to this rather disturbing email by clicking a "Respond Now." button.

Listen to me: DON'T TOUCH THAT BUTTON! Of course the email was NOT sent by an eBay member or sent via eBay's messaging system, as it appears. Doing so will take you to a website designed to look like eBay where you will be prompted to login using your eBay user name and password.

Once you pass this point you will be asked to update your account information before proceeding. Unknowing souls will offer not only their eBay password, but personal and credit card information, as well, without even knowing that they are about to have their identity stolen.

The one thing that makes this scam so effective is the threat by the supposed eBay member to "report you to eBay."

The email preys on the fear of most eBay members that they are in danger of receiving negative feedback. Many eBayers would rather have you cut off a pinky than leave them negative feedback. It is this emotion that the new phishers are hoping to hook and I expect it is working well.

The phisher is betting that most people will either be horrified by the threat of being wrongly reported to eBay or they will be ticked off that some jerk is threatening them by mistake. Either way the phisher is counting on a percentage of people to have a knee-jerk reaction and login to the phisher’s fake eBay website to clear matters up.

I've never seen statistics on the percentage of people who take the bait after receiving phishing emails, but if a phisher gets a mere 1% of recipients to turn over their personal information, he will consider his phishing expedition a success.

I've warned you about these phishing scams before, but let's review it one more time.

NEVER reply directly to an email that appears to have come from eBay, Paypal, Amazon, or anyone else asking you to click a link in the email to update your account information. If there is any doubt in your mind whether or not the email is really from eBay, for example, open a browser and type in the URL http://www.ebay.com. NEVER click a link within the email to respond.

NEVER believe that an email supposedly from another eBay member is for real. Again, do not click an email link to reply. Open a browser and go to eBay directly and log in. If the email was from a real member, there will be a record of the inquiry in your My eBay account.

You must be aware that there are bad guys out there who do nothing but spend time trying to come up with new and innovative ways to steal your personal and business information.

Be paranoid. Be aware. But don't be fooled.

The phishers will cast their line, but you do not have to take the bait.

Here's to your success,

Tim Knox

Why A Good Credit Score Is Important To Your Business

2006-03-16T10:53:00.000-06:00

Do you know your credit score is?
Do you even know WHAT a credit score is?

Don't feel bad.

Most people don't.

Your credit score tells lenders the type of borrower you will likely be based on your credit history. Scores in the United States run between 300 and 950.

The higher your score the more likely is it that you will be approved for loans at favorable rates and payment terms.

You might think your credit score is not a big deal unless you are trying to get a home mortgage or a new car loan, but in business your credit score is just as important.

Consider this:

You may want to apply for a personal loan to fund the startup of your business.

As your business grows you may want to set up a line of credit with a bank to help manage cash flow.

You may need to purchase a building of your own.

You may need to establish lines of credit with vendors and suppliers

Even if you just want to apply for a credit card to charge your company car gas purchases to, your credit score is important.
So back to my original question: Do you know your credit score?

Neither did I until I was referred to a new website that offered to calculate my credit score just by going through a brief survey.

This website provides a free credit score to United States consumers by invitation only.

This survey is not open to the public without a referral.

Since I was invited to participate in the survey I can now invite you to do the same.

Whether you're in business or an individual, you should have an idea of what your credit score is, even if you're not currently applying for credit.

Knowing your credit score and occasionally checking your credit reports also helps you protect yourself from identity theft and credit fraud.

I was personally the victim of credit card theft recently and the fraudulent activity ended up as a ding on my credit and it was a PAIN getting it removed.

And I didn't even know it had happened until I applied for a car loan and the misinformation turned up on my credit report.

If you'd like to complete the survey to get your credit score go to the link below.

Learn More Now

The Time To Consolidate Your Student Loans Is Now

2006-03-16T10:52:00.000-06:00

I don't know if you're a fan of financial guru and radio show host Dave Ramsey, but I certainly am.
I listen to Ramsey every day and find his advice to be based on common sense principles for getting out of debt and building wealth.

One thing that Ramsey recommends is that if you have high interest student loans, you should refinance and consolidate them now to lock in a reduced interest rate and lower your monthly payments.

Other financial pundits agree. Most agree with Ramsey that the sooner you consolidate and refinance old high interest student loans, the better off you will be.

I don't have student loans (no college would have me :o), but many of my friends do.

I live in a very high tech area with lots of degreed engineers and programmers and scientists, many of whom owe tens of thousands of dollars in old school loan debt.

If you have student loans the time to think about refinancing is now.

Federal student loan interest rates are at an all time low, but that can't last forever.

By refinancing your student loans now, you lock in the interest rate for the duration of the consolidation loan.

The first thing you need to do is find out if you are eligible for student loan consolidation.

On a referral from a friend, I found one online organization that offers a free survey that will tell if you are eligible for a federal student loan consolidation.

This organization says their average customer saves $150 a month or $1,800 annually. That can add up to one heck of a savings over the life of a 5 to 10 year loan.

Simply complete the online survey found at the link below to see if you are eligible to consolidate your student loans.

Learn More Now

Dropship Your Way To eBay Success

2006-03-16T10:51:00.000-06:00

Dropshipping is a topic that I first addressed in my column way back in April, 2003, which is decades ago in Internet years. But with the continuing growth of eBay and it's positioning of itself as a viable way for anyone looking to launch an ebusiness, the topic of dropshipping is now hotter than ever. It is also now more misunderstood than ever.

Dropshipping has been around since Sears first started selling goods from its mail order catalogs over a hundred years ago. However, the idea of dropshipping still confuses many people who don't understand exactly how the process works.

By definition, dropshipping is a method of selling and distributing goods wherein the distributor or supplier of the product (the dropshipper) ships the product directly to the end user (your customer) on the retailer's behalf (that's you).

The process of dropshipping involves three parties who take a product from manufacturing to market. They are a manufacturer, a distributor, and a reseller.

Let's use a blue widget as a sample product to demonstrate the process:

Blue Widget Manufacturing (manufacturer): This is the company that manufactures blue widgets. Blue Widget Manufacturing does not sell directly to the public or supply the retailers who ultimately sell the blue widgets to the end user. They prefer to use distributors to handle the task of taking their blue widgets to market. Blue Widgets sells blue widgets by the truckload to distributors who pay $5 per blue widget.

A1 Distributing (distributor/dropshipper): A1 Distributing is the company that purchases blue widgets in bulk from the manufacturer and supplies them to resellers at a cost of $7 each. The distributor does not ship blue widgets to the reseller, but ships orders directly to the reseller's customers as the widgets are sold.

Big Bob's eBay Widget Store: Big Bob sells blue widgets to the public from his eBay store. Bob orders the blue widgets from A1 Distributing as he sells them (usually one at a time) and has A1 ship the blue widget directly to his customer. Bob sells blue widgets to the public for $10 each, which means that for every blue widget sold he nets $3.
How The Process of Dropshipping Works

Here are the seven steps involved in starting a dropship ebusiness:

STEP 1: Choose A Product To Sell The very first step in any sales process is deciding what product to sell. There are many factors that should be considered before deciding on a product to sell, but for now let's say that you decide to sell CD players on eBay.

STEP 2: Locate A Supplier Who Will Dropship For You Using a research tool like Google, Thomas Register, or an industry-specific resource like The Ultimate eBay Dropship Power Pak (see Resources at that back of this book), you search for and find a company who will dropship CD players for you. The company offers you a 35% mark up over cost, which means that they will supply the CD players to you for $100 each and you should be able to retail them for $135. You make sure that the dropshipper has a good stock of CD players on hand so you don't end up selling a product that must be back-ordered.

STEP 3: Set Up An Account With The Dropshipper You contact the company that can supply the CD players and set up a reseller account with them. This can often be done online or by phone, but some companies will require that you complete and return a reseller application to open an account. Some companies may also require a tax ID and business license.

STEP 4: Advertise The Product For Sale On eBay Now that you have your supplier lined up and know that the product is in stock, it's time to make a sale. You advertise the product using an eBay auction. Since you know what you must pay the dropshipper for the product, you know what the minimum amount you will take for the product. In this case you start your auction at $100 since that is your cost. If you are confident that you can get more than $100 for the product you can start with a lower price, but remember that if the product goes for less than what it costs you to fill the order, you will lose money. Also remember that the dropshipper will charge shipping, so you should figure that into your sale.

STEP 5: The Product Sells Great news: your CD player sells for $135 and your customer pays you with a PayPal instant payment. I highly recommend that if you are selling on eBay you use PayPal or some other online processor to accept instant payments. This allows the customer to pay you faster, which lets you place the order with the dropshipper faster, which gets the product to your customer faster.

STEP 6: Place The Order With The Dropshipper After your customer pays you, you should contact the dropshipper immediately to order the product on your customer's behalf. The dropshipper then ships the order to your customer under your company name and address.

STEP 7: Follow Up After The Sale This is where many new ebusiness people drop the ball. Just because your customer has paid you and you've placed the order with the dropshipper does not mean that you are out of the loop. Quite the contrary, if there are problems with the order you are the one that will be held responsible in the eyes of your customer.
Be proactive in your customer relations. Follow up with your customer to let them know that the item has been shipped. Offer yourself as the personal contact for any

Many people are afraid to use dropshipping as a method of sales due to the horror stories that fill the Internet about unscrupulous dropshippers who take the money and don't fill the orders, merchandise that is eternally back ordered, unscrupulous middle men posing as dropshippers, etc. Make no mistake, the dropshipping industry - like most other industries - does have its share of shady characters who would rob you blind given the chance, but there are also hundreds of honest dropshippers who can help you build a profitable eBay dropship business.

Dropshipping is a complex topic that can't be completely addressed here. For that reason I have written a detailed report on dropshipping that is available to Entrepreneur.com readers for free. It's called SPECIAL REPORT: eBay Dropship Profits and you can download your free copy at the link below:

Download Now

How To Make Big Money On eBay Selling Other People's Stuff

2006-03-16T10:50:00.000-06:00

Since eBay launched the Trading Assistant program last year, over 50,000 eBay sellers have registered as Trading Assistants to help other people sell their goods on eBay.

As a result, eBay consignment businesses have sprung up all over the United States and are now starting to appear in Germany and the UK.

Consider this:

There are 35 million users on eBay's US site and 50 million users of eBay's international sites and that number grows every day.

Even with those numbers, there are still millions of people who know very little about eBay or are afraid to try it.

There are millions more who know about eBay, but just don't have the time or inclination to sell items themselves.

Hundreds of people in your very own neighborhood have tons of things lying around the house that would sell on eBay, but they don't have the time or know-how to get them listed and sold.
This means opportunity for you.

Time To Start Your Own eBay Consignment Business

As we've discussed many times before, the biggest problem eBay sellers have is finding merchandise at a low enough price to sell on eBay.

With an eBay Consignment Business, people give you merchandise to sell with no risk on your part. You auction the goods on eBay and pay the consignor (the person who gave you the goods) the proceeds of the sale less your commission and fees.

If something doesn't sell, you simply return the item to the consignor.

If you can find people to consign goods to you, then you have created an unstoppable money machine.

How Much Can You Earn?

eBay consignment professionals charge fees ranging from 10% on very high priced items up to 40% on consignment items that sell for less than a few hundred dollars.

One business in the San Francisco Bay area charges 40% and is successfully closing hundreds of auctions per week.

Another business in Florida has been so successful they are franchising their system for $15,000.

Done correctly, this business has no risk and low start-up costs, yet can produce thousand of dollars of income per year for you and your family.
If you are interested in starting your own eBay Consignment Business I highly recommend that you learn how to do it right.

You don't want to wing it or learn as you go because that will cost you time, money, and countless mistakes.

Here's the only resource I recommend for starting an eBay Consignment Business:

"How To Start & Run an eBay Consignment Business" by eBay Expert, Trainer, and Powerseller Skip McGrath.

Learn More Now
Skip has been selling on eBay almost since day one and is a member of "The eBay Elite," an organization representing the top 500 sellers on eBay.
"How To Start & Run an eBay Consignment Business" will teach you the correct way to start and run what Skip calls, "the perfect eBay business."

"How To Start & Run an eBay Consignment Business" is not an e- Book or a CD.

It is a 200 page, three-pound, step-by-step, printed instruction manual that is delivered to your door bound in a custom binder and contains everything you need to start and run a professional eBay consignment business.

Skip not only shows you the steps to start your business, he also provides all the sales and contract materials you will need to get started.

Skip includes pre-written classified ads, posters and flyers, blank forms to record inventory and calculate fees and the all- important consignment contract.

Skip has even created a CD with all the documents, blank forms, advertising posters and sales letters in Microsoft Word files, so you can customize them with your information and print them out.

Learn More Now
Once you start your business, "How to Start & Run An eBay Consignment Business will show you how to grow it into a full- time enterprise that can make thousands of dollars per year.
A properly written consignment agreement (contract) is critical to the success of your business and Skip has spent a substantial sum of money in legal fees to construct the perfect consignment agreement. This agreement is included with your purchase of the manual.

The consignment agreement alone is worth more than the cost of the manual. It would cost you several hundred dollars in legal fees just to create a basic agreement.

Skip is also known for putting his money where his mouth is.

That's why "How to Start & Run An eBay Consignment Business" comes with a 90-day, NO QUESTIONS ASKED, ironclad money-back guarantee.

Skip will refund not only the cost of the book, but your shipping charge as well. That's an unheard of guarantee.

If you think an eBay Consignment Business might be your key to online success, check out Skip's manual now.

"How To Start & Run an eBay Consignment Business"

Learn More Now

What Makes A Good Leader? Ask Uncle Sam

2006-03-16T10:49:00.000-06:00

What do the major generals who are leading the war efforts in Iraq have in common with executives and entrepreneurs who are conducting business back home? When it comes to leadership, the answer is probably a lot more than you think.

In a recent study conducted by the Army War College, subordinates of the major generals who are leading the war efforts in Iraq were asked to rate the performance of their superiors.

The survey revealed that the best leaders:

* Keep cool under pressure
* Clearly explains the missions, sets standards and priorities
* See the big picture; provides context and perspective
* Make tough, sound decisions on time
* Adapt quickly to new situations; can handle bad news
* Give useful feedback; sets a high ethical tone
* Are positive, encouraging and realistically optimistic

According to retired Gen. Walter Ulmer, coauthor of the study, “The study showed that even when tactical and technical competences are excellent, interpersonal skills are critical.”

What’s that? People skills are critical in fighting a war? General Patton must be spinning in his four-star grave.

According to Ulmer the survey revealed that it is easier to teach technical skills than to teach people how to gain trust and build teams. In other words, trained tacticians are important, but the worth of a true leader may best be measured by how he leads, motivates, and treats his troops.

The study further showed that many key behaviors these generals exhibit were learned by example. Their former superiors displayed people skills and whether intended or not, taught those skills to their subordinates. This means that good leaders produced good leaders. I’m sure the flipside is just as true. Bad leaders often produce the next generation of bad leaders. We see it in business everyday. The recent rash of corporate scandals didn’t just involve the bad guys at the top. They often involved subordinate executives who were following the leader’s example and carrying out his not-so honorable plans.

Not surprisingly, the same traits found in the generals leading the effort in Iraq are the same traits found in many successful executives and entrepreneurs.

Keeps cool under pressure

Contrary to what many believe, being an entrepreneur is not always a walk in the park. There is constant pressure coming from many fronts. Pressure to make a sale, to meet payroll, to keep the doors open, to keep the employees in line, and on and on. The best entrepreneurs learn to thrive under pressure. Pressure becomes a motivator, not a detractor.

Clearly explains missions, sets the standards and priorities

Successful entrepreneurs understand that the organization runs smoother, better, faster if everyone is on the same page. A good leader makes sure his subordinates understand the mission at hand. He makes sure that everyone understands the expectations, goals and objectives. He shares his vision and lays out the plan of attack.

Sees the big picture; provides context and perspective

Many executives and entrepreneurs can not see beyond the edge of their desk. Great leaders not only see the big picture, they make sure their team sees it, as well. They share their vision and perspective for the long haul, not just the battle being waged today.

Makes tough, sound decisions on time

One trait of the successful entrepreneur is the ability to make decisions soundly and quickly. You must weigh your options and choose a direction with minimal consideration time. Procrastination has no place in battle or in business. Procrastinating entrepreneurs will quickly become someone else’s procrastinating employees.

Adapts quickly to new situations; can handle bad news

In business some days are diamonds and some days are coal. Successful entrepreneurs are prepared to deal with the day no matter what it brings. They do not stick their heads in the sand and wait for the bad news to go away.

Gives useful feedback; sets a high ethical tone

A good leader listens more than he speaks. He takes input from the team and makes decisions based on that input and his own expertise. He sets the example that he expects his team to follow.

Is positive, encouraging and realistically optimistic

A good leader never lets his team see him sweat. He does not broadcast his negativity because he knows negativity is contagious and will spread faster than the plague. A good leader encourages his team to perform no matter the odds. He is the positive force that keeps everyone motivated to win.

Every entrepreneur should take a lesson from these generals, as should every corporate executive. I’m sure it would cut down on the time many of them are now spending in the stockade.

Here’s to your success!

Tim Knox

How To Create Your Own eBay About Me Page

2006-03-16T10:48:00.000-06:00

Regular readers of this newsletter and my newspaper column know that I am a big fan of eBay's About Me Page feature. This is a special page you can create as part of your eBay account that is linked from your eBay ID (with a little About Me icon).

You can use your eBay About Me Page as a sales tool. Customers can click on your About Me icon to get to your About Me page, which you can set up to include information about you, your interests, and even links to your website.

It's a great way to get personal with your customers and drive traffic to your website or other online businesses.

eBay does not approve of blatant advertising on your About Me page, but you can include links to products and services that you think will be of interest to the eBay community at large. If these links just happen to be affiliate links to products that pay you a commission, more the better. :o)

Your About Me page can be as simple or as detailed as you like.

Here's my eBay About Me page (if the link wraps in your email program cut and paste it in a browser address window:

http://cgi3.ebay.com/ws/eBayISAPI.dll?ViewUserPage&userid=dropshipwholesale*net

Here's how to create your own eBay About Me page.

1. Register for an eBay account. If you're already an eBay member you can skip this step. If you don't have a fr** eBay account click the signup link below to register now.

--

2. Once you are registered, log into your eBay account by clicking the "My eBay" link at the top of any eBay page. Enter your eBay user name and password.

3. Once you're logged in, click the "Personal Information" link under "My Account" in the left hand menu.

4. At the Personal Information page click to create your About Me page. Or you can go directly to the Create An About Me Page link shown below:

-- http://cgi3.ebay.com/ws2/eBayISAPI.dll?AboutMeLogin

5. Once you're at the About Me creation page simply follow the directions. You can use the About Me wizard to create the page or paste in custom HTML as I have done with my About Me page.

Once you have your About Me page set up, you should include a link to your About Me page in every auction and sale you do.

It's free advertising, so use it!

What Is The Best Selling eBay Book Of All Time?

2006-03-16T10:47:00.000-06:00

As a bonfide eBay expert and junkie, I read every eBay book that comes down the pike. Some, like Tim Mina's new book, "The Online Auction Expert's Bible to Selling on eBay," are excellent and should be read by anyone interested in selling on eBay.

Others are not so excellent, and that's putting it kindly.

I really can't say which one is the best selling eBay book of all time, but I can tell you there is one book in particular that I have been recommending for over a year now and the reason is that it is, quite simply, packed full of useful information that will not only increase your eBay sales, but bring more customers to your website, as well.

That ebook is 'The Silent Sales Machine Hiding on eBay' written bymy good friend and eBay guru, Jim Cockrum. Jim has just completed
a major update of the ebook and added almost 100 pages of new content.

If you sell on eBay or are thinking about doing so, I strongly recommend that you get yourself a copy of Jim's ebook. Despite the increase in content, Jim hasn't increased the price.... yet, but I am sure he will do so very soon like he always does. This is the fourth major update of this best seller and the price goes up every time!

Jim's ebook has been a top seller on Clickbank pretty much since he published the first edition back in 2002, so if it's not the best
selling eBay book of all time it's certainly in the top 5.

Jim offers a 'no questions asked' money back guarantee so this really is a 'no risk' purchase.

For more information just click on over to:

-- http://hop.clickbank.net/?powerpak/silentsale

For Tim Mina's new book visit:

-- http://www.dropshipwholesale.net/powerseller-toolkit.php

Do I Really Need A Business License and Tax ID?

2006-03-16T10:45:00.000-06:00

I've gotten quite a few emails recently from ebusiness owners who seem to think that just because their business is conducted online or from the comfort of home that the rules and regulations that govern brick and mortar businesses do not apply to them.
The ebusiness questions I get most often do not involve building websites or conducting ecommerce.

They are more what I call the "Do I Really Have To" line of questions, such as:

"Do I really have to get a business license?"

"Do I really have to get a tax ID number?"

"Do I really have to pay taxes on income from my website?"
The answers are usually: Yes, yes, and yes.

Do I really have to get a business license?
This is one requirement that many ebusiness entrepreneurs think they can skirt because they don't have a brick and mortar establishment.

Sorry Charlie. Operating an ebusiness out of your office or out of your home does not get you off the hook when it comes to licensing.

Depending on your location you may need a city and county license.

Luckily, such licenses are relatively easy to obtain and are not expensive. For local licensing requirements, contact your city or county government offices.

Home businesses are also subject to zoning laws that regulate how property can be used and may restrict various activities. You should check local zoning requirements and property covenants.

You can find this information at the court house or by calling your local license department.

Legalities aside, the best reason to get a business license is it allows you to set up a business bank account using what's called a DBA.

"DBA" stands for "doing business as."

A DBA is another name that you use in the operation of your business instead of your personal name. For example your name might be Joe Jones, but you might use "Jones Internet Services" as your business name. Having a business license will enable you to set up a business account and get checks printed with your business name, giving you that all important air of professionalism that many ebusinesses lack.

Do I really have to get a tax ID number?
Online companies with a physical presence, or nexus, in a state are required to collect and report taxes on sales of taxable goods made to customers living within that same state.

For example, if your online business is based in California, you must collect and report sales tax derived from fellow Californians making purchases on your site.

For this reason you will be required to have a tax ID number if you're selling taxable goods (most services are not taxed).

Getting a tax ID number is usually a simple process of filling out a form and paying a nominal fee. You will file quarterly reports and remit any sales tax that is due.

One word of warning: many entrepreneurs have gotten themselves into deep trouble because they saw fit to spend the sales tax they had collected instead of sending it to Uncle Sam. This can mean death to your business and jail time for you. Many times this mistake is innocently made when a business owner comingles funds collected as sales tax with their normal business checking account.

Open a separate bank account and deposit sales tax monies into the account and do not touch it until the time comes to send the money in with the quarterly report.

Do I really have to pay taxes on income from my website?
We've talked about this before and the answer is still the same: Just because your income is derived from an ebusiness does not mean that the income is not taxable.

It's not manna from Heaven. It's income so report it.

The point to remember is this: the "e" on the front of "e-business" does not stand for "exempt."

In the eyes of the law your ebusiness is susceptible to the same laws and regulations that govern the corner mom and pop, so make sure you conduct your business as such.

How To Make Money As A Self-Improvement Guru

2006-03-16T10:43:00.000-06:00

The self-help business is one of the fastest growing industries on the planet. If you go into any bookstore you will find that a multitude of shelf space has been dedicated to self-help and self-improvement books, tapes, and videos; everything from dieting and building self esteem, to improving your love life and learning to be a better parent.

The trick for savvy entrepreneurs is to learn how to make money with this growing industry even if you are not a self-help guru yourself.

Enter Russell Brunson and Gary Ambrose, two of the Internet's sharpest minds. These guys have built fortunes spotting trends and jumping onboard before anyone else saw them coming.

As a result they have made themselves, and their customers, hundreds of thousands of dollars.

Russ and Gary recently held a teleconference for over 2,000 attendees called:

-- "How To Make Money As A Self-Improvement Guru"

This is what the call revealed.

First: The "self help" industry is huge. Just check out how many people were searching for this information last month alone:

- Self-Help & Self-Improvement - 202,000 searches
- Stop/Quit Smoking - 416,000 searches
- Time Management - 60,000 searches
- Motivation -150,000 searches

...and I have a list of about 30+ more of these.

Second, to create an info product for any of these niches is VERY profitable, but usually runs from about $600 to $1,000 for each product you develop (and this isn’t counting cost of graphics and sales letters). With that said, you can usually recover your investment in under a week because the industry is so hot now.

And third, Russell just created a site that will give you private label rights to "self-help" products that are already researched, already written and with the sales letters already written and ready to go.

You get private label rights to two self-help products each month for as long as you remain a member, but if you are one of the first 200 new members, then you will get 8 products this month.

So, if you’d like private label rights to 8 already developed products, just click for more information:

-- http://www.thesecondtier.com/timwknox/sim

As I said, time is money, so if you're interested act fact. If you are one of the first 200 subscribers you can get 8 products the first month instead of just 2.

-- http://www.thesecondtier.com/timwknox/sim

How To Boost Your Bottom Line With Just Two Little Words

2005-07-26T22:48:00.000-05:00

I hate to sound like one of those cheesy get-rich-quick commercials, but this week I am going to let you in on a little secret that is so powerful that it will immediately change the way you do business.

In fact, this little secret is so powerful that you will be amazed at its immediate effect on you, your employees, and your bottom line. This little secret is guaranteed to improve your relationship with current customers and if used wisely, can get you lots of new customers without spending a dime on marketing or advertising.

Do want to know what this little secret is?

Before I let the cat out of the bag let me ask you one question: What are the two little words you can say to every customer that will immediately endear them to your business and guarantee that they will be your customers for life?

OK, here goes: the little secret is this; whenever you have contact with your customers, whether it’s in person, or by phone, fax or email, always use their name. Likewise the answer to my question: what two little words can drive your business through the roof: your customer’s name.

When you use a customer’s name the business experience becomes personal. And when the business experience becomes personal your customer becomes vested in the relationship and thereby becomes your friend. When you use the customer’s name they become as concerned about your success as you are.

At the sound of his or her name your customer becomes your champion. They will toot your horn and defend your honor. They will recommend you to their friends and be loyal to you to the end, even when they can get the same product or service elsewhere for less money.

Unfortunately, 99% of business owners and especially their employees fail to realize the importance of personalizing the business relationship. While they are happy to take my hard-earned dollars, most businesses could care less what my name is. That’s why so many businesses fail: they see their customers as numbers, not names. The 1% of businesses that understand the impact of personalizing the business experience are the ones that will flourish for many years to come.

Case in point: I’m the one at my office who goes through the mail every day, pulls out the checks, opens the envelopes, signs the checks, makes out the deposit slip, and takes the deposit to the bank. Sure, I could have someone else do this for me, but making the bank deposit is my absolute favorite thing about being an entrepreneur. Seeing numbers on a deposit slip validates my efforts. It is proof that I am doing something right.

So I go to the bank a lot. So much so that the young lady at the drive through, whose name is Karen, knows me on sight and always seems genuinely happy to see me pull up.

“How are you today, Mr. Knox,” she always ask.

I can be in the lousiest mood of my life, but when I hear my name come through that speaker my mood immediately brightens. I always smile and chirp back: “I’m fine, Karen, how are you?”

And it’s even better if I have someone in the car with me. I have gone through that drive through with business partners and customers in my car and when they hear “How are you today, Mr. Knox?” they are highly impressed, simply because Karen used my name.

“Wow,” they always mutter. “They know you here, huh.”

“Yep,” I say proudly, ego adequately stroked. “I have all my accounts here: personal and business checking, savings, lines of credit, merchant account. This is the best dang bank on the planet. In fact, you should move all your accounts here…”

Over the years I have probably recommended a dozen new customers to this bank, just because Karen, the wonderful drive-through teller who understands the value of good customer relations, uses my name every time I drive in.

Here’s another example of how using a customer’s name can add dollars to your bottom line. I was in Kansas City recently and stopped in at a Ruth’s Chris Steakhouse for dinner. When I asked for a table the host asked for my name before showing me to a table.

A few minutes later a young man came by to fill my water glass and asked, “Can I get you an iced tea, Mr. Knox?”

The host had obviously told the waiter my name and the waiter used it immediately to make me feel at home. A few minutes later another young man delivered bread to my table and said, “Here’s your bread, Mr. Knox.”

Before the night was over four different service people had visited my table and each used my name in a respectful manner. By the end of the meal I had spent $75 on dinner and dropped another $50 on tips.

Was it because the food was delicious? In part, but primarily it was because I felt like I had just had dinner with friends.

And do you think I now tell everyone I meet about this restaurant with the great food and the amazing service?

I’m telling you about it, aren’t I?

Here’s to your success!

Tim Knox

How To Create Multiple Streams of Online Income E-course

2005-07-18T22:45:00.000-05:00

Do you know what an E-course is? An E-course is an "electronic course" that you receive by email or take at a website.

An E-course is the modern day equivalent of the old correspondence course concept. The difference is that instead of taking the course by mail, you do it online or by email.

E-courses are one of the best ways to continue your education, especially if you are interested in making money online.

I love the E-course concept because it gives you the opportunity to learn from the comfort of home. There are no heavy books to lug around, no rushing off to class, no smelly dorm roommates :o)

I am putting together an entire series of free E-courses for my subscribers on topics like:

* How To Create Multiple Streams of Online Income
* Setting Up Your Own eBay Business
* How To Make Money With Affiliate Programs
* How To Build Your Own Website For Next To Nothing
* And More...

All of these E-courses will be online soon and I will keep you posted. The great news is the first E-course is online now and you can start your education today. All it takes is the click of your mouse.

The "How To Create Multiple Streams of Online Income" E-course will teach you how to create multiple streams of online income quickly and easily, with little or no out of pocket cost to you.

The How To Create Multiple Streams of Online Income E-course includes:

Part 1. How To Create Multiple Streams of Online Income
Part 2. Making Money With Affiliate Programs
Part 3. How To Choose An Affiliate Program
Part 4. What Is The Best Product To Sell Online?
Part 5. How To Create Your Own Info Product
Part 6. How To Start A Successful Ebay Business
Part 7. How To Dropship Your Way To Online Success

To receive this 7 part E-course click the link below to subscribe.

http://www.prosperityandprofits.com/ecourses/multiplestreams/

Part 1 will be delivered to your inbox right away. If you do not see it there check your Spam or Junk folders as most ISPs now filter automated emails without the user's knowledge.

You should also add the email address the following email address to your address book or accepted senders list:

--> ecourses@prosperityandprofits.com

Signup and learn today!

Here's to your success!

Tim Knox

How To Profit Using eBay's Saved Search Feature

2005-06-24T18:52:00.000-05:00

Did you know that eBay will help you locate products you can buy cheap, then flip for a quick profit? No? Then listen up, because I am about to let you in on a little known feature of eBay that can literally stuff wads of cash in your wallet in less than 24 hours.

This is an eBay tool that I use every day to locate products that I can buy and resell or buy cheap and keep for myself and my family. And the great news is you can use it, too.

What is it? It's eBay's Saved Search feature and you can use it to start making money tomorrow.The Saved Search feature that will let you set up a saved search criteria and eBay will let you know when an auction that matches your search criteria has been posted.

Let's say you're on the lookout for a Pete Rose card to complete your collection. You could troll eBay every day on your own and to see if anyone has listed such a card or you can set up a saved search and make your life a lot easier.

Here's how it works....

Got to eBay.com and sign into your account. If you do not have an eBay account all you need to do is set up a free buyer's account.

After you're logged in, type in your search criteria into a search window. For this example we will type in Pete Rose. Click submit and you will get a page of search results that match your search criteria.

At the top right of the search results listing you will see a link labeled "Add To Favorites." Click the link.

On the next page you will see "Create a new search" or "Replace an existing search."

If this is a new search select the "Create a new search" button, give this search a name (the search term you used will be in the Search Name box by default, in this case "Pete Rose").

You can select to receive a daily email if there are new items listed that match your search criteria.

Click "Save Search."

Now you will receive an email every morning with new items that have been listed that match your saved search criteria.

If the search term Pete Rose is too broad you will receive notifications for every auction that has the term "Pete Rose" in the title or description. You can always narrow the saved search by adding "Pete Rose Card" or something more specific. Just don't get too specific or you may miss items that you'd be interested in.

How can you use the saved feature to make money on eBay?

Easy, you set a saved search to let you know when something has been listed for sale that you might buy and sell for a higher profit. For example that Pete Rose card might have been listed by someone who is willing to sell it cheap or doesn't know its real value. You could buy the card, make them happy, then sell it for a higher price yourself. This is how commerce works, folks. You buy cheap, you sell high.

Let's look at another example. Let's say you have an eBay shop that sells designer shoes. Naturally you would want to know when someone else lists designer shoes for sale because they may be a competitor you need to monitor or just an individual who has a closet full of designer shoes to sell cheap.

You set up a saved search with the keyword "designer shoes."

Each time an auction is posted with the term "designer shoes" in the title or description, eBay will let you know.

You can immediately check out the auction and if the shoes can be scarfed up and sold for a higher profit, you made money.

I think you would be amazed at how many Powersellers are using this secret TODAY to find merchandise they can buy and flip on eBay.

You should do the same.

If you'd like to learn about other ways you can profit with eBay please visit this link:

http://www.dropshipwholesale.net/powerseller-toolkit.php

Here's to your success!

Tim Knox

Are You Mentor Material?

2005-06-17T15:28:00.000-05:00

Q: I’ve been approached by a young man who asked if I would be his mentor. I’m flattered by his interest, but I’m not sure I’m cut out to be a mentor. In your opinion what makes a good mentor?
- Kenneth P.

The mentor/mentee relationship is very much like that of a parent and child. The younger, less experienced child mentee will look to you, the older, more experienced parent mentor, for guidance, wisdom and advice. They will come to you with questions and expect you to have all the answers. They will bring to you their problems and expect you to solve them. And if you don’t give them the attention they think they deserve they may pout and complain about you to all their friends.

In short, if kids get on your nerves, Kenneth, don’t even think about being a mentor. Buy a goldfish or even better, a rubber plant. They require far less attention and everyone will be much happier in the long run.

Typically, there are three things every good mentor should have: time, patience, and a genuine desire to help another person succeed without expecting anything in return. If you have an abundance of those things, then being a mentor can be a highly rewarding experience. If not, please see the rubber plant reference above.

Why do some people make excellent mentors while others do not? It’s all about motive. Are your reasons for being a mentor unselfish or are they self indulgent? Are you considering becoming a mentor because you truly feel that a mentee might benefit from your wisdom and experience or is it because you like being the center of someone else’s adoration?

You should not become a mentor just to feed your own ego because you will be doing your mentee a great injustice because there will be no give and take to the relationship. I know many successful entrepreneurs who consider themselves mentors, but truth be told they simply revel in holding court and having younger entrepreneurs hang on their every word as if its gospel. They care less about hearing their mentee’s questions than they do about hearing the sound of their own voice.

As my mama would say, “If you talk just to hear your own head rattle,” then mentoring is not for you.

One of the keys to a successful mentor/mentee relationship is to set some ground rules and stick to them. Sit down with your prospective mentee and discuss the expectations of both parties, i.e. what do you and the mentee expect to get out of the relationship? It’s a given that the mentee is seeking your time, wisdom and advice, but if you as the mentor don’t also get some kind of mental satisfaction your interest in the relationship will quickly wane.

Discuss how often you will get together. Will you meet for lunch once a week or for an hour in your office several times a month? It is important that you create an actual meeting schedule and stick to it. Without a set schedule life will get in the way and you will cancel more meetings than you attend.

Next, set some guidelines and limitations. How often can your mentee call? Is it OK for them to call your cellphone or should they go through your secretary? Can they drop by the office anytime? Can they call you at home after 5pm?

Set some goals for the mentee. Assign them homework, give them a task. The relationship must be more than just chewing the fat. The point is to help the mentee grow, personally and professionally. Give them a list of books to read. Recommend seminars they should attend. Have them outline their business goals in writing, then you set milestones and hold them accountable for reaching them.

From your side of the fence, don’t be afraid to share your successes and failures. Let your experience be their guide. Help them identify opportunities and avoid pot holes that you may have hit along the way. Don’t be embarrassed to tell the truth, especially if it can keep your mentee from making the same mistakes you did.

As a mentor you should also introduce your mentee into your circle of friends and associates. Sponsor them into Rotary, take them to luncheons, and introduce them to others who might also help their careers.

Being a good mentor also means that you are a confidant; your mentee will share not only his business problems and goals, but also his personal feelings, his secrets, his plans, and his angst. Respect the mentee’s privacy. Your discussions should not be fodder for your next poker night. When something is told in confidence, respect that or get out of the mentor business.

One final point, a successful mentor/mentee relationship should not be a temporary relationship, but one that in ongoing, that grows and evolves until the day you are no long mentor and mentee, but peers.

My own mentor, who probably has no clue that he holds that spot in my life, started out as an investor in one of my companies. As our business relationship grew so did our friendship and I found myself calling on him many times for advice. We eventually became business partners and today we are peers.

I tell him he is the entrepreneur I want to be when I grow up.

He tells me to shut up and pay for lunch.

That’s how the process should work.

Here’s to your success!

An Entrepreneur and a Life To Be Remembered

2005-06-10T23:28:00.000-05:00

Small Business Q&A with Tim Knox
Copyright 2005

I was reminded of my own mortality today. I guess you can say I had a near death experience, though the death I experienced was not my own.

No, I was never in any danger, nor was my life ever threatened. In fact, I was sitting in the air conditioned comfort of my home office sipping a nice cup of coffee and watching the dogs run around the yard when the moment came.

The sun was shining. The birds were chirping. Life was going along just fine.

Death was the furthest thing from my mind.

Then the news came that Corey Rudl had been killed in a high speed crash at a race track in California. At the moment of his death at the young age of 34, Corey was a passenger in a Porsche that hit a retaining wall at over 100 miles per hour, killing him instantly and the driver shortly thereafter. The track had been rented by a local car club so that Corey and his buddies could take their expensive, powerful cars to the track to see how fast they could go.

Corey died doing what he loved. Those closest to him say he would not have had it any other way.

Corey Rudl was not a professional race car driver. He was an entrepreneur, and one of the best of his breed.

Most of you who read this column probably have no idea who Corey Rudl was or what he accomplished during his short life, and that’s OK. You also have no idea of the imprint he made on me and millions of others who make our living (at least in part) as online marketers. Again, that’s OK. For all his accomplishments, those who knew him well have said that Corey was more concerned about building his businesses than being a public figure. By those accounts, Corey never really cared about being in the public limelight, even though he was probably the most visible and successful entrepreneur in his field.

Perhaps that’s why Corey Rudl was so successful. He knew what was really important when it came to building a business. The limelight came easy to him, but his focus always seemed to be on making his business stronger, serving his customers better. He also knew that there was life beyond business, and he pursued that life with a passion and energy that most of us can only imagine.

Corey Rudl’s story is the classic entrepreneur’s tale. He started his business from his kitchen table just a few short years ago selling a homemade booklet he had written on how to get the best deal on a new car. From that modest start Corey built an internet marketing empire that has generated $40 million dollars in revenue in just a few years.

Corey was the definitive internet marketing guru. He was young, energetic, and highly passionate about his business and his industry. He wrote and spoke frequently on the topics of internet marketing and business success and that’s where he and I briefly crossed paths. We were both expert columnists for Entrepreneur.com and exchanged several polite emails, nothing really personal, mind you, mostly swapping compliments of each others work.

Much of Corey’s time in recent years was spent teaching others how to do what he had done: build a successful online business from scratch. For a man of just 34 years, he packed in decades of expertise and knowledge and he shared it with anyone who would listen, including yours truly.

I never personally spoke or shook hands with Corey Rudl, but I was his customer, his student, and ultimately an admirer. I can attribute much of the success of my own online business to Corey’s teachings and principles. He was one of those rare birds that you didn’t have to meet to feel like you were on a first-name basis with him. Everyone in my little circle of internet marketing friends simply referred to him as “Corey” and we spoke of him warmly, as a friend and mentor. He set the bar for all of us. We wanted to achieve his level of success. We wanted to hit his heights. We wanted to be the entrepreneur that he was.

Corey had just recently married the girl of his dreams. He was a millionaire many times over. He had a big house and fancy cars and a future so bright he had to wear shades. His business was thriving. Life was perfect. Corey Rudl truly had the world by the tail and there was no chance he’d ever let go. I imagine he was holding on tight until the very end.

The lessons we learn from the death of Corey Rudl are the same lessons we always learn when someone so young and vibrant is suddenly taken from us. As entrepreneurs we should take those lessons and apply them not only to our own lives, but to our businesses, as well.

Lesson One: live everyday as if it is your last, because it just might be. As entrepreneurs we often think that our businesses have to come first on our list of priorities. It’s not until a tragedy reminds us that life is too short that we think about making time for the things in life that are really important. Get out from behind your desk. Go play with your kids. Hug your wife. Call your mother.

Lesson Two: be passionate about business, but never let it eclipse your passion for life. Corey was a true entrepreneur whose passion for business was unparalleled, but by all accounts he also knew that a life devoted strictly to business was a life not lived to its fullest. Corey died doing what he loved. Some will argue that his passion killed him and in a way that’s true, but I have to believe that before he knew he was in danger Corey had a smile on his face a mile wide. He would not have lived his life any other way.

As I finish this column my oldest daughter has come in to ask if I’d like the honor of taking her out to Sunday brunch. She’s seventeen now. She has a job, a car, and a life that is very much her own. Chances to be graced with her presence grow rarer with each passing week. Still, any other day I might have weighed her invitation against the eight million business-related things that need my attention.

Today, however, the decision was easy.

I usually end my column with the words, “Here’s to your success.”

This week let me end with, “Here’s to your life.”

Tim Knox
Entrepreneur, Author and Speaker
http://www.prosperityandprofits.com
http://www.dropshipwholesale.net
http://www.smallbusinessqa.com

Achievements Outweigh Education and Experience

2005-06-09T11:03:00.000-05:00

Q: When it comes to succeeding in business, which do you think is more important: education or experience? -- Regina M.
A: Regina, have you seen the television show, Fear Factor? If you haven't seen it you've probably heard about it. Fear Factor is the show where they put contestants through all sorts of pseudo-death defying feats like bungee jumping off a bridge over a pool of crocodiles and driving a car through a wall of fire (you know, the stuff we did for fun in high school).
The contestant who overcomes their personal fear factor wins the cash and prizes (usually at the cost of their dignity, but I digress).
The highlight of Fear Factor is the eating competition. That's when contestants are invited to partake of all sorts of culinary fare. Yummy stuff like monkey brains, all manner of live bugs and spiders, moose intestines, old fruitcake (the horror!), and my personal favorite, live giant worms. At this point the competition becomes not so much who can overcome their fear actor, but who has the lowest gag reflex.
Your question makes me feel a little like those contestants, Regina, because no matter how I answer I am opening a can of giant worms that I will undoubtedly be forced to eat later.
My highly educated peers will argue that education is much more important than experience, while my highly experienced peers will argue that experience is more important. Either way, it's worms ala carte for me.
Oh well, I've eaten more than my share of crow over the years.
How much worse can worms be?
It's important to understand that the success of an entrepreneur is not measured by how much education he or she has or how many years of experience are under his or her belt. An entrepreneur's success is measured by achievements, not words on a resume.
By definition, an entrepreneur is a risk-taking businessperson: someone who sets up and finances new commercial enterprises to make a profit. Entrepreneurs start businesses. The smart ones then hire MBAs to run them.
Let's start with education. Is a Bachelor's degree or better required to succeed in business? Of course not. An MBA from Harvard might give you a leg up in a job interview, but it certainly doesn't guarantee that you will succeed in business. Nor does it automatically mean that you will be a better business person than someone who didn't finish high school. Knowledge is a good thing - if you know what to do with it.
Perhaps it is the academic environment itself that turns mere mortal nerds into budding entrepreneurs. The late '90s proved that college students with no experience beyond organizing a frat keg party could start businesses that would exceed all expectations.
Many would argue that the key to success for most of these ventures was that the founders (or the VC financing them) were smart enough to know that while they had an abundance of education, they needed experienced managers to really run the show.
Larry Page and Sergey Brin were college students when they started the company that would become Google. They were smart enough to bring in Eric Schmidt to be chairman and CEO when the business took off. Schmidt was the former CEO of Novell and CTO of Sun Microsystems. A PhD, Schmidt is a man of education and experience.
Jerry Yang and David Filo were candidates in Electrical Engineering at Stanford when they started YAHOO (Yet Another Hierarchical Officious Oracle) in 1994. They brought in Tim Koogle from Motorola to run things shortly thereafter and now the company is led by Terry Semel, who previously spent 24 years running Warner Bros.
Now on to experience. Is experience a prerequisite of business success? Again, not at all. Many experienced entrepreneurs gained their experience in failed businesses, so experience does not instantly translate to success.
So, when it comes to succeeding in business, which is more important: education or experience? While neither is as helpful as a rich relative, here's the answer that will hopefully help me avoid those worms: Both education and experience can play a large part in business success.
The more important question is can you succeed in business without one or the other, or even without both? And the answer to that one is: yes. Can I get ketchup with those worms?
Many successful businesses were started by first time entrepreneurs who never went to college. Natural talent, ambition, drive, determination, and good old dumb luck have fueled many success entrepreneurs, myself included. I don't have a degree (I drove past a college once. It looked hard, so I kept going). Would a degree have helped make my business trek easier? Perhaps.
Then again, I know people with advanced degrees who are flipping burgers at McDonalds. It's good experience, I suppose.
A combination of education and experience (and a variety of other things) is the best recipe for success. As the old saying goes, "There is no better education than that which comes from experience."
In the end, it really doesn't matter how much education, experience, talent, luck or money you have. It's what you do with it that matters.
Here's to your success.
Tim Knox

The Latest Email Scam Is Nothing New

2005-06-05T21:41:00.000-05:00

Q: I recently received an email that supposedly came from eBay that said someone had attempted to log into my eBay business account without authorization (whatever that means). The email instructed me to click a link to re-enter and confirm my account information to make sure that my account had not been hacked. Being naturally paranoid I contacted eBay directly and found that my account had not been hacked and that this email was actually from someone trying to steal my eBay account information. Is there nothing that can be done about this kind of thing?-- Wesley C.

A: The only thing you can do, Wesley, is be thankful that your paranoia kicked in because you were about to fall victim to just one of the latest attempts by thieves to steal your personal and credit card information.

As you discovered, the email you received was not from eBay, but from someone using a forged email address that gave the impression that the email was really from eBay. If you had clicked the link to “re-enter and confirm” your personal and credit card information, you would have been taken to a website that probably looked a lot like eBay, but was really a fake site created for the sole purpose of stealing your information. You would have been instructed to enter your eBay account information and other personal information, including your social security number, checking and savings account information, driver’s license number, and credit card number. In the end you would have supplied the thieves with everything they need to steal your identity.

The eBay scam is just the latest in a long line of sophisticated attempts to steal personal information through online means. Customers of PayPal, Amazon, Dell Computer, eTrade, Bank One, and many other online merchants have been the target of such scams in recent years.

The shear number of eBay customers is the main reason that eBay has become the most popular target of scam artists trying to steal personal information from individuals and businesses alike.

As we talked about way back in 2003, thanks to the Internet, stealing someone’s identity has never been easier. At any given moment, there are thousands of Internet thieves using all manner of high tech wizardry in an attempt to steal personal and business information from unsuspecting souls, and many times they can gain access to this information simply by asking the person to provide it through fraudulent means, like a fake email.

While most people are familiar with identity theft, most business men and women never think about it happening to them, at least on a professional level. Consider this: if a criminal can learn your business checking account number or the number of your company credit card, they can steal far more from your business than if they had simply knocked down the door and carted off your desk.

Here are a few ways to protect you from business and personal identity theft.

· Never give out your first name, last name, business name, email address, account passwords, credit card numbers, bank account information, PIN number, social security number, or driver’s license number.

· Change your online account passwords every 30 days. Believe it or not, a hacker who steals your personal information can often guess your online account passwords in about two minutes. If your Charles Schwab online account password is your birthday or the name of your first born or family pet, count on a hacker cracking that code faster than you can say “Open Sesame.”

· Never provide personal information in response to an email or telephone call. Just because someone calls and says they are from Dunn & Bradstreet and need to confirm your business information does not mean they are really from Dunn & Bradstreet.

· Never give your business credit card number over the phone to place an order with someone who has called you unsolicited. If you are interested in what they are selling get their number, check out their company, then call them back to place the order.

If you think that you have become the victim of identity theft or think someone is trying to steal your identity or personal information you should report them immediately to the Federal Trade Commission. You will find more information on their website at http://www.consumer.gov/idtheft/.

For more information on what to do if identity theft happens to you visit http://www.privacyrights.org/fs/fs17a.htm.

You should also remember that no reputable online company will ever ask you to log in and completely re-enter your account information. Think about it. They already have this information. Why would they ask you to provide it again? The answer is: they wouldn’t.

Be careful out there.

Here’s to your success.

Tim Knox

Is Brick and Mortar A Passing Fad?

2005-05-28T21:44:00.000-05:00

Q: Is the online world the best place to sell a product or service these days? My friends seem to think that brick and mortar stores will totally disappear in the future. I debate this all the time with them, but it seems to be heading that way. Your thoughts?- Alex H.

At last report, Alex, Sam Walton was still resting comfortably in his discounted grave, so I’d say brick and mortar is safe, at least for the next few years.

During the dot-com boom the mantra was “Brick and mortar is dead!” Then when most of the dot-com’s crashed like an elephant sitting on a wicker chair, the mantra suddenly changed back to “The Internet is dead! Long live brick and mortar!”

In both instances those doing the shouting were dead wrong (and highly annoying). The correct mantra should be “Long live ecommerce enabled brick and mortar!” It’s not as catchy, but a lot more accurate.

So to formally answer your question, Alex: I have to agree with you: brick and mortar is safe for many years to come. That’s not to say that online selling will not continue to grow and overshadow in store sales in the coming years. But smart retailers realize the potential - and limitations - of the internet and are making plans accordingly.

Smart retailers know that while the Internet has the potential of opening up new sales channels for them, they also know that not all customers will shop online, at least for another generation or two. Until every man, woman, and child on the planet can operate a computer as easily as a cellphone, there will always be consumers who will not buy online.

Smart retailers also understand that a successful online strategy depends on the mindset of the buying public. They understand that the internet is not erasing business models: it is changing business models. Those that adapt will succeed, those that do not, will one day close their doors.

When Amazon.com burst onto the scene with big plans to change the way people buy books, Barnes and Nobles did not close their brick and mortar stores out of fright. They also did not ignore the trend toward online shopping. Instead they directed resources toward building their own online sales arm to compete in the online marketplace.

Many large retailers that were slow to jump on the online shopping bandwagon are now getting serious about online sales. They are using the Web to launch new product lines and sell things you normally would not find in their stores. Wal-Mart for example, sells products online that would be too pricy for their retail stores, like $6,000 plasma TVs and expensive sports memorabilia.

Setting up an online shop is also cheaper than ever before. A web store that would have cost hundreds of thousands of dollars just a few years ago can now be built for less than $10,000. Online retailers can also stock more items than brick and mortar stores that only have so much shelf space.

As more consumers have access to broadband you will continue to see a rise in online shopping and a rise in the number of companies setting up online points of sale. One example is Sears.com, which saw online revenues skyrocket 40% in the past year. Forrester Research says US online sales will hit $145 billion in 2005, which translates to 7% of US retail sales. That’s a 26% rise in 2 years.

Wal-Mart will no doubt have a big effect on online sales as they bring their “lower prices everyday” mentality to the Web. Just as they muscled suppliers for the lowest prices in their stores, so will they bring their weight to bear online. This is great news for consumers. As more retailers go online consumers will have more choices and find lower prices.

One thing that may ensure that some brick and mortars never go away is what I call “The Try It On Factor.” If you have to try it on or want to see how you look in it, there will always be a need for brick and mortar stores. For example, I wear cowboy boots (I have a pointed foot) and I would never buy a pair of cowboy boots without trying them on first, so until some genius comes out with a way for me to hold my big foot up to the computer monitor and get a perfect fit, I will only buy my boots in the store.

I do believe that someday the majority of products will be purchased online. We are already seeing this trend in many industries. DVDs, CDs, videotapes (which will definitely go the way of vinyl records in a couple of years), books, cellphones, televisions, computers, stereos, etc. are all big sellers online. It’s also possible to buy a car from the comfort of home and shop for a house. I know because I’ve done them both several times.

When debating the death of brick and mortar you must also consider the fact that shopping is a social experience for many consumers, i.e. females, who happen to control the purse strings and make most of the buying decisions for their families.

Case in point: Every year my wife and her mother trek to Birmingham and Atlanta for annual shopping trips. When I point out that there are perfectly good malls right here in our own backyard, I am told that I’m missing the point. The point of these trips is not to buy anything. The point is to shop, to eat, to hang out, to bond. If a purchase is made, oh well. Scientific studies on these phenomena have concluded that “It’s a girl thing…”

For men, shopping is a chore. For women, shopping is an experience. So until my wife and mother-in-law can get the same satisfaction sitting in front of a computer monitor as they do exploring the malls, there will always be brick and mortar.

Here’s to your success!

Tim Knox

For Entrepreneurs A SIMPLE Plan May Be Best

2005-05-20T21:47:00.000-05:00

Q: I own a small decorating business and I’ll be the first to admit that I don’t know anything about taxes or retirement plans. I’d like to set up a 401(k) or an IRA or some other kind of retirement plan for me and my three employees. What are the various retirement plan options available for a small business owner and in your opinion, which would work best for me?-- Wanda S.

A: Wanda, I appreciate your confidence in my humble opinion, but asking me for financial advice is like asking Donald Trump for a recommendation on hair care products. I can tell you what works best for me and my business, but you’ll need to do your homework and seek professional advice to figure out what would work best for you. As a side note, I hear that Donald Trump is coming out with his own line of hair care product soon to be called “Big Head.” The formula is 1% mousse, 1% liquid nails, and 98% hot air. It should be a big seller among the high brow, comb-over crowd.

Here’s my best advice on retirement plans: find yourself a financial advisor (or financial planner) who is has experience working with small businesses and have him or her explain the options available and make a recommendation as to the type of plan best suited for you and your business. When I say “financial advisor” I’m not talking about your know-it-all brother-in-law or your accountant. I’m talking about a broker or financial planner (or other licensed professional) who has a proven track record of making his clients money and is an expert on IRAs, 401(k)s, mutual funds, etc.

The best way to find a good financial advisor is to ask for referrals from your most successful friends and associates. Find the richest, stingiest man in town and ask who his advisor is. Meet with several advisors, explain your situation, and ask for their recommendations. You should also make sure the advisor is a good fit for your personality and your business. If all goes well you will be doing business with this person for many years to come, so make sure the relationship feels comfortable to you and that you are confident in the advisor’s ability to manage your money.

Let me give you a quick overview of a few of the retirement plans available to small businesses so you at least have an idea of what’s out there before you start your search for a good financial advisor.

As a small business you basically have three types of retirement plans that you can take advantage of: the Self-Employed 401(k); the Simplified Employee Pension Plan or SEP IRA, and the Savings Incentive Match Plan for Employees or SIMPLE IRA. Each allows you to make pre-tax contributions to the plan, which lets you save for retirement and lessen your taxable income by the amount of the contribution. Your investments also grow tax-deferred until withdrawal.

A Self-Employed 401(k) is an option for self-employed individuals or business owners with no employees other than a spouse. The business can be a sole proprietorship, a partnership, or a corporation, including S corps. You can make salary deferrals to this type of plan of up to $14,000 for 2005.

Next is the Simplified Employee Pension Plan or SEP IRA. A SEP is an option if you earn a self-employed income from a full or part time business, even if you are covered by a retirement plan at your fulltime job. A SEP allows you to contribute up to 25% of earned income, up to $41,000 for 2004 and $42,000 for 2005.

My preferred type of retirement plan is the Savings Incentive Match Plan for Employees or SIMPLE IRA. The SIMPLE IRA was created to make it easier for small businesses with 100 or fewer employees to offer a tax-advantaged, company sponsored retirement plan.

With a SIMPLE IRA you and your eligible employees may contribute up to 3% of earned income (with a maximum contribution of $10,000) on a pre-tax basis to individual SIMPLE IRAs. You must deduct Social Security and Medicaid from your gross income, but you can then make your SIMPLE IRA contribution before other taxes are levied, effectively lowering your taxable income.

As the employer you must make “matching” or “non-elective” contributions into your employees’ SIMPLE IRA accounts. Matching contributions means that the business matches the elective deferral contributions made by employees. For example, if the employee opts to contribute 3% of his salary to the plan, the employer must match the 3% contribution.

At first you might cringe at matching your employees’ contributions, but as the business owner and an employee yourself this can be great news. As an employee of your own business you can contribute up to $10,000 to your SIMPLE IRA and the business can then match your contribution dollar-for-dollar, which means that you can put up to $20,000 in tax free dollars into the plan per year. The cost of the contributions is also deductible as a business expense.

The non-elective contribution option requires that the company contribute 2% of every employee’s earned income to the plan on the employee’s behalf regardless of whether or not the employee contributes to the plan himself. For 2005 the maximum contribution you would be required to make is $4,200.

Like a traditional IRA, you can withdraw money from a SIMPLE IRA at any time; however distributions within the first two years of participation are subject to higher early withdrawal penalties than traditional IRAs or Roth IRAs. Withdrawals within the first two years are subject to a 25% early withdrawal penalty. Withdrawals taken after the first two years are subject to a 10% early withdrawal penalty.

As the employer, the advantages of a SIMPLE IRA include: company contributions to the plan are tax deductible as a business expense; plan documents are simple and easy to administer; administration costs are low; and there is no government reporting required by the employer.

The advantages of a SIMPLE IRA for your employees include: contributions are immediately 100% vested; contributions and earnings are tax-deferred until withdrawal; employees can contribute 100% of earned income up to $10,000 for 2005; and employees can direct their own investments within the IRA.

This is a complex topic and I’ve just tipped the iceberg here, but hopefully this will give you enough information to get the investment ball rolling.

Here’s to your success!

Tim Knox

To Go or No Go, That Is The Question

2005-05-12T21:49:00.000-05:00

Last week we talked about a few of the ways to test the feasibility of a business idea to help determine if the idea really had merit or just looked good on the surface. To recap, I said don’t bet the farm on the opinions of friends and family, consult with knowledgeable business experts, and conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis. This week let’s take it a step further and talk about the creation of a formal Feasibility Plan which will help you determine the true feasibility of your big business idea.

A feasibility plan is just that: a written plan that is created for the sole purpose of validating the feasibility of a business idea. Some call it a “Go/No Go” plan, because the results of a well-constructed feasibility plan will tell you whether or not the idea has a chance for success (that’s a Go) or if this idea would be best left on the drawing board (that’s a No Go).

Many entrepreneurs would rather have their front teeth pulled without anesthetic than go to the time and trouble of creating a feasibility plan; often because they are afraid of what it will reveal.

The last thing an entrepreneur (particularly one without prior business experience) wants to hear is that their business idea won’t fly, so they put on blinders and resist testing the idea using real world information.

In an entrepreneur’s head every idea is a good one, every hit is a home run, and every story ends with the hero sitting on a beach drinking Mai Tai’s and lighting cigars with hundred dollar bills. No one wants to imagine the story ending any other way and many would rather bury their heads in the sand and hope for the best than to test out their ideas before execution. Trust me. I’ve been there, done that, got the T-shirt and paid the bill. Not a smart thing to do.

Writing a detailed feasibility plan will force you to take off the rose colored glasses and look at the idea honestly and entirely. It will help you define your market, identify your customers, potential partners and competitors, recognize opportunities and warn of potential threats.

Starting a business without testing its feasibility is like teaching your kids to swim by chucking them in the lake. It might be fun to try with your sister’s kids, but not your own… just not a good idea.

Writing a feasibility plan is much like writing a mini-business plan. The end result should be a formal document that includes an executive summary, a product or service plan, a marketing plan, a price and profitability plan, and a plan for further action. Let’s take a look at each section.

Executive Summary
The Executive Summary is the first section of the plan and sums up the high points detailed throughout the remainder of the plan. The Executive Summary should include a brief, but thorough description of the idea, an overview of the products or services to be offered, the target market and target customer, startup costs, and pricing and profitability. Keep the Executive Summary to one page. I have seen Executive Summaries that rambled on for pages and pages. Keep each topic to one or two tight paragraphs and go into further detail in the individual sections of the plan.

Product and Service Plan
This section details the product or service the business will offer. The point of the feasibility plan is not only to determine the Go/No Go result, but to get you really thinking about the idea from all angles. What is the purpose of the product or service? What stage of development is the idea in? What are the limitations of the product or service? Is there intellectual property involved? Are there government regulations or product liability issues to be considered? Are there opportunities for future expansion or spin offs?

Marketing Plan
The marketing plan is one of the most important sections of the feasibility plan because it is here that you identify your market, your customer, and your competition. You will need to do market research to gather the information required to develop a realistic marketing plan. Just opening up the Yellow Pages to see what similar businesses are listed is not enough. You must have a clear handle on the size of your market, growth potential, and trends. You should identify all manner of competition (direct and indirect), and detail the advantages and disadvantages that your idea has when compared to competitors. You should also profile your target customer and tell why the customer would buy from you and not someone else.

Pricing and Profitability
The pricing and profitability section should include information on how the price of your product or service was determined and the expected profitability. Many entrepreneurs have no clue how to determine the price for their product. Some use what I call the “Shrek Method,” whereby the price is pulled out of their ear (see the movie, get the joke). There are a number of ways to determine pricing, but that’s another column. Once you have pricing data in hand, include it in this section along with details on sales estimates, costs of goods sold, gross margins, operating expense estimates, start up costs, capital expenditures, etc. The pricing section is where many ideas are abandoned because the entrepreneur discovers that the cost to deliver the goods is just too high and the profit margins just too low to merit execution.

Plan for Further Action
This final section of the feasibility plan simply details the next steps in executing the plan if a “Go” decision has been reached. Do you need capital for start up expenses? If so, how much and where will it come from? Is there a location to consider and equipment to be purchased? What role will you play in the operation of the business? Is there a business plan in work? Are there licenses that must be obtained or legal tasks like forming a corporation to be taken care of? Are there partnerships to be formed or key team members to be recruited?

Finally, don’t fear the outcome of the feasibility plan. If the feasibility plan reveals that your idea was a dud, i.e. a “No Go,” it is better to know that before spending thousands of hours and tens of thousands of dollars executing an idea that would have been better off left bouncing around inside your head.

Writing a feasibility plan is a pain in the neck, but so is losing your house to a failed business venture.

Take the time to do the plan. If it helps, feel free to cuss me while you’re doing it, but remember to thank me when it’s over.

Here’s to your success!

Tim Knox

How Good Is Your Big Idea

2005-05-05T21:54:00.000-05:00

Q: I want to start my own business. I have tons of business ideas that all sound great to me, but my husband is not so sure. He says that we need to figure out a way to test my ideas to pick the one that has the best chance of succeeding. I’m ready to just pick one and go for it. What is the best way to determine if a business idea really is as good as it sounds?-- Hannah C.

A: Heather, I know you probably don’t want to hear this, but your husband is right (first time for everything, huh): before you just pick a business idea and go for it you should test the feasibility of your ideas to make sure they really are as good as you think they are.

Every business idea, no matter how good it sounds while bouncing around inside your head, should be put to the test before you invest time and money into its execution. Success lies not in what you think of your idea, but what the buying public will think. Many entrepreneurs find out too late that the public’s opinion of their idea differs greatly from their own. Wasted time and money aside, the last thing you want to do is hear “I told you so!” from your husband, so take a deep breath, slow down, and let’s look at the ways you can test the feasibility of your idea.

There are many ways to test an idea’s feasibility, though some ways are not nearly as effective or accurate than others. Most people start out by asking everyone they know what they think of their big idea. This is a good way to start the wheels turning because you may get feedback that you have not considered before, but be warned: this is NOT the best way to test the true feasibility of an idea. Never start a business simply based on what your friends and family think.

There are two things that will happen here. First, your mother will tell you what you want to hear and your best friends will be equally kind. No one who really cares for you will want to rain on your parade no matter how insane your parade might be, so take the wisdom you gain here with a hug and a grain of salt.

On the flip side, your coworkers and casual acquaintances will probably tell you the opposite of what they really think. If they think your idea stinks they’ll tell you it’s great and if they think your idea is great they’ll tell you it stinks. Please don’t preach to me about human kindness. Human kindness is often bested by human nature and we humans, by nature, are an envious lot. We hate to see anyone doing better than we are doing and we hate to see anyone who has the potential to leave us behind. Go watch the movie “Envy” and consider this: why would someone who is broke or stuck in dead-end job with no other prospects want to see you succeed? They wouldn’t. End of story.

Instead of conferring with friends and family you should run your idea past a number of neutral third parties who are knowledgeable about business and will give you an honest opinion. Contact the local Small Business Administration (SBA) or The Service Corps of Retired Executives (SCORE) offices and ask to speak with someone knowledgeable who has time to listen to your idea (don’t run it past the receptionist). Or speak with the small business liaison at the Chamber of Commerce. Or seek out a successful entrepreneur who is willing to listen and give you an honest opinion about your idea. Just remember, opinions are like belly buttons: everybody has one and they are all different.

A more accurate way to judge the feasibility of an idea is to create a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT analysis will not only help you gauge the feasibility of your idea, but also help you build on your idea’s strengths, identify and correct the weaknesses, and spot ways to take advantage of potential opportunities while avoiding potential threats.

Here’s how to perform a simple SWOT Analysis. On a piece of paper draw a vertical line down the center of the page. Then draw a horizontal line through the center of the vertical line. The paper is now divided into four quadrants. Label the upper left quadrant “Strengths.” Label the upper right quadrant “Weaknesses.” Label the lower left quadrant “Opportunities” and the lower right quadrant “Threats.”

Now fill in each quadrant based on what you see as the strengths, weaknesses, opportunities and threats of your business idea. You should repeat this process for every idea you have and each quadrant should have something written in. If you can think of no strengths, weaknesses, opportunities, and threats for a particular idea, that means that you do not have enough information to complete the SWOT analysis, which means you also do not have enough information to effectively execute that idea.

Strengths are those things that make your idea a strong one. Strengths can be personal or product-oriented and may include: prior business experience and success; sufficient funding to start the business; having a customer in hand; having a unique product or service to offer; having an established market; etc.

Next list all of the weaknesses of your idea. It is important that you are honest with yourself and list as many weaknesses as you can. Don’t pretend that your idea doesn’t have any weaknesses because every idea does. You will hurt no one but yourself if you pretend that your idea is bulletproof. Weaknesses might include: lack of capital to start the business; lack of business or management experience; a crowded market place; large competitors; etc.

Opportunities are those things that you can tap into that might fast track your business idea. We’ve talked about opportunities before and how smart entrepreneurs seek out new opportunities rather than waiting for opportunities to come to them. Opportunities might include: a potential partnership with someone who sells products in the same market; a prime storefront location that is coming available; a competitor going out of business, leaving a hole in the market that may be right for you; etc.

Threats are those things that threaten the success of your business idea. Threats might include: uncertain marketplace conditions; strong competitors in the market with lower prices; possible laws or taxes that may impact your idea; etc. Like weaknesses, it is vital that you are honest when it comes to identifying threats.

Once you have filled in all four quadrants, you should have enough information to begin testing the feasibility of your idea. Do the strengths of your idea outweigh the weaknesses or do the weaknesses outweigh the strengths? Are the opportunities available to you ample or nonexistent? Are the threats many or few?

With this information in hand, you can move on to the most accurate method of testing your idea and that is the creation of a detailed feasibility plan, which we will discuss next time.

Here’s to your success!

Tim Knox

Veteran Entrepreneurs Are Growing In Ranks

2005-05-01T21:57:00.000-05:00

When I’m not running my own business, writing articles about business, speaking to groups and organizations about business, or consulting with companies who want my advice about the running of their business, I teach a weekly class on the subject of (care to guess?) starting and running a business.

To quote my frequently-mentioned and wise-beyond-her-years teenage daughter, Chelsea, “Dad, you really need to get a life.” This advice coming from a child who believes all roads lead to the mall.

What my eldest offspring doesn’t understand is I have a great life. In fact, I am living the life I have always dreamed of living. My life just happens to revolve around Planet Business. I am an entrepreneurial addict, a business junkie. Business is my chocolate, my Krispy Kreme donut, my nicotine, my caffeine, my crack. Maybe I’ll start a 12 step program for entrepreneurs who want to kick the habit and charge a cover to get in. Hi, my name is Tim, and I’m an entrepreneur... Sounds like a great business idea to me.

Out of everything I do I get the most enjoyment from speaking and teaching. Maybe it’s the old stand up comedian in me, but nothing feeds my addiction like standing in front of a room of entrepreneurs talking about the ups and downs, the ins and outs, the do’s and don’ts of business.

My latest class of eager entrepreneurs is a special one in that it is made up almost entirely of U.S. Military Veterans: nearly two dozen men and women of all ages who either have a business idea in mind or are in the process of actually starting and running a business.

Going around the room, I asked each student to stand up, introduce themselves, and talk a little about their business idea and what they expect to get from the class. As I listened to each Vet speak, I was impressed at the passion the entire group exuded. Most new entrepreneurs love to talk about their business idea, but this group was somehow different. They were more precise in their thinking, more intense, more passionate than the average entrepreneur. This group was not only excited at the prospect of starting their own business. They were downright zealous about it.

As each Vet stood to talk about their idea and their expectations, the rest of the group hung on every word and was truly interested in what was being said. The typical entrepreneur is only interested in his own venture and has a hard time feigning interest in anyone else’s. That was not the case here. Each Vet not only listened intently, but empathized with the speaker, as if they were taking a vested interest in the speaker’s idea and were eager to help the speaker succeed. It was as if the group who had never met before, had come together as a single cohesive unit with one mission in mind: to succeed in business.

The theme became: No man (or woman) left behind, in battle and in business.

I supposed I should not have been too surprised. These were, after all, highly-trained, highly-disciplined individuals who have spent time in every corner of the globe in conditions most of us can only imagine. One young entrepreneur in particular was so freshly back from the Middle East that you could almost imagine sand on the floor beneath his boots.

They are an impressive group, indeed, and it is my privilege to serve as their leader for the next six weeks. I am learning far more from them about the human spirit than they are learning from me about business. I hope they see it as a fair trade.

Veteran entrepreneurs are emerging as one of the fastest growing segments of new entrepreneurs. According to a recent Small Business Administration (SBA) study there are approximately 4.2 to 5.5 million veteran-owned businesses in the United States. The study further revealed that 22% of veterans are either considering starting or purchasing a business in the near future or are in the business start up or purchase phase now.

The SBA study was done as a result of The Veterans Entrepreneurship and Small Business Development Act of 1999, which required the SBA’s Office of Advocacy to develop information on the various programs designed to assist veteran and service-disabled veterans succeed in business.

The SBA study found that:

More than one-third of “new veteran-entrepreneurs” and current veteran business owners had obtained skills from their active duty service that were directly relevant to business ownership. This should come as no surprise when you consider the intensity of the training and the emphasis on discipline that comes with military training.

Over the course of their career the typical longer-term Veteran receives at least cursory training in everything from time management to employee relations to supervisory techniques to dealing with subordinates (employees) to budgeting and accounting to supply chain management and so on and so on.

One organization that is working hard to promote entrepreneurship among Veterans is the Veteran’s Corporation. Headquartered in Alexandria, Virginia, the Veteran’s Corporation bills itself as “the complete business source for current and prospective Veterans and Service-Disabled Veteran business owners, and for companies interested in working with Veteran-owned businesses.” The Veterans Corporation is a 501(c)(3) non-profit corporation that was created in 1999 by Public Law 106-50, which also set a 3 percent goal for federal procurement to Veterans including Service Disabled Veteran-owned businesses.

The Veterans Corporation serves transitioning military personnel and all Veterans of the U.S. Armed Forces, National Guard and Reserve, seeking to link them with partners and purchasing agents in both the public and private sectors.

Membership to the Veterans Corporation is free and available to all transitioning military personnel and all Veterans of the U.S. Armed Forces, National Guard and Reserve. Members will find assistance in securing capital for a business, entrepreneurial education, access to markets and services, and business networking.

For more information or to apply for membership visit the Veterans Corporation online at http://www.veteranscorp.org/.

Opportunity Does Not Knock

2005-04-24T22:02:00.000-05:00

Q: I’m graduating this year with a degree in business and would like to start my own business rather than get a corporate job. I have a few business ideas, but none of them really gets me excited. Should I just put my business plans on hold and get a job until the right opportunity comes along?-- Carlton M.

A: Congratulations on the impending degree, Carlton. Never having attended a higher institution of learning myself, I have great respect for anyone who can withstand four years of non-mandatory schooling and emerge with sheepskin in hand. I drove by a college once. It looked hard, so I kept going. I do have a pair of sheepskin boots, but I don’t think they ever helped me get a job. They do make me taller, but that’s another story.

Seriously, I envy your position and applaud your efforts. You’re young, you’re educated, you’re ambitious, you’re probably much better looking than me, and soon you’ll leave the comfort and warmth of your tiny dorm room to go out into the big, cold, cruel world to seek your fortune and make your mark. The fun is just about to begin, my friend. I hope you’re ready for the ride. If you think college was tough, just wait until real life sets in.

Now on to your question: should you put your business plans on hold and get a job until the right opportunity comes along. I really can’t make that call for you. That’s a decision you’ll have to make for yourself, based on your situation, your goals, your finances, your responsibilities, your commitments, and all the other factors that make Carlton’s world go around.

I can tell you that as a breed, entrepreneurs are an impatient lot and many jump on the first business bandwagon that comes along just for the sake of being in business. That’s a big mistake that usually comes back to bite them in their entrepreneurial behinds.

You should always have a solid idea and a very clear plan of action before starting a business. It is the failure to plan that leads to the failure of most businesses. You didn’t plan on hating the business you’re in, you didn’t plan on needing so much money to get started; you didn’t plan on growing so fast; you didn’t plan on there being no market for your product; etc. A failure to plan is a plan to fail. Of course you probably learned that in “Old Business Adage 101.”

Starting a business simply because you have a business degree is not a smart thing to do. That would be like deciding to jump out of a plane just because someone handed you a parachute while standing on a street corner. Start your business career only when you get an idea or find a business concept that gets you so excited and so passionate that you can’t sleep at night. That’s when you go into startup mode and not a minute before.

Now on to the soapbox part of our program (you didn’t think you were going to get away without a sermon, did you?). Here’s a word or two about waiting for opportunity to come along.

I know you were just using an old expression, but you pressed one of my hot buttons because many wannabe entrepreneurs do just that: they proclaim themselves as entrepreneurs, then proceed to sit and wait for opportunity to come calling with a business idea and a bagful of money. These misguided folks better have a comfortable chair in which to wait because they are going to be sitting there for a very, very long time.

If just one more of these armchair entrepreneurs call me up and tell me that they are born entrepreneurs and all they need is the chance to prove how smart they are and will I please, please, please give them that opportunity, I think I’ll hurl (in a business-like manner, of course). This ain’t an audition for The Apprentice, folks. Who do I look like: Donald Trump? We both have great hair, but that’s where the similarity ends.

The truth is opportunity does not come along. Opportunity does not knock. Opportunity doesn’t even know where you live. Opportunity doesn’t know your name, your phone number, or your personal situation. Opportunity does not appreciate your talents, your skills, or anything else about you. Opportunity does not care that you are a great person who just needs a chance.

Real entrepreneurs know that opportunity is not delivered like pizza. Real entrepreneurs do not wait for opportunity to come along. Real entrepreneurs seek out opportunity. They get up off the couch or get out of their cubicles, go out the door, and run up and down every street in town knocking on every door they come to. Sometimes opportunity answers the door, sometimes not, but real entrepreneurs keep knocking.

Real entrepreneurs know that you can knock on a thousand doors and never find opportunity waiting on the other side. They also know that opportunity might be waiting just at the next stop, so they keep finding doors and they keep knocking.

When people ask where I went to school I give the old reply: The School of Hard Knocks! But I don’t mean that life has beaten me up on my way to where I am today. I mean that I went up to a lot of doors and knocked as hard as I could and every now and then, opportunity answered.

So get your degree and catch your breath, Carlton. You have your whole life ahead of you. Then, when you’re ready, get off your duff and go knock on some doors.

If opportunity is out there, you’ll find it.

Here’s to your success!

Tim Knox

Teaching The Big Boys To Think Small

2005-04-19T22:05:00.000-05:00

Last week I told you about a recent report from The Conference Board that has a lot of big company CEOs concerned about competition from smaller, more innovative and entrepreneurially-minded companies. To refresh your memory, The Conference Board's CEO Challenge 2004 reported that 87% of the 540 global businesses surveyed cited innovation and enabling entrepreneurship as priorities for their companies, and 31% considered these issues of "greatest concern.”

These CEOs understand that their big company status no longer guarantees that they will win contracts and retain market share based solely on their size and track record. They understand that the greatest threat to their businesses is not coming from the boardrooms of their largest competitors, but from small companies born in garages, on kitchen tables, and in tiny, rented offices.

It’s a fact that smaller companies, by need and design, are more innovative, more flexible, more decisive, and faster to move than their larger brethren who are entrenched in operational processes and corporate procedures. Small companies are typically not led by career executives for whom every decision must be predicated by hours of meetings and mounds of documentation. Most small companies are led by their founders; men and women who were cut from an entrepreneurial cloth that has yet to fade. It is when a company grows to the point that the founder steps aside to make way for professional managers that the company loses its innovative nature and entrepreneurial flair.

The good news for large companies is that they have definite advantages over small companies, especially when it comes to resources and funding. Turning a Goliath into a raging horde of David’s is never easy, but it can be done if the company is willing to make changes to internal processes and attitudes, and commit the time, money, and personnel to make it happen.

Since size and number of years in business are no longer differentiators in the competitive marketplace what must large companies do to become more innovative and entrepreneurial? To begin they must do three things: shorten the process time, cut through the red tape, and promote innovative and entrepreneurial thinking from the top down. If the board, the CEO, executives, managers, supervisors, and employees are not dedicated 100% to making the changes necessary to transform the company, the effort will fail and the giant will lumber on.

Shorten The Process Time
At large companies everything is done by the book, i.e. by established processes and procedures. Very little gets done at large companies without what I call the “Multiples of M.” Multiple Meetings to discuss the issue; Multiple Memos to reiterate the issue; and Multiple Management approvals required to sign off on the issue. To become more innovative and entrepreneurial large companies must streamline the decision-making process down to a single set of M’s: Move on or Make it happen.

Cut Through The Red Tape
Here’s a true example from my corporate days that illustrates how procedures and red tape get in the way of efficient operations A fluorescent bulb in my office blew, which made the other bulb in the fixture flicker like a strobe light at a discotheque (causing flashbacks that we won’t discuss). I assumed getting a new bulb would be a simple matter of calling down to the facilities office and reporting the problem. My assumption was wrong. I was told that I would have to come to the facilities office, which was in another building 2 miles away, fill out a facilities request form, and take the form back to my immediate supervisor, who was required to stick his head in my office to confirm that the bulb was indeed out before signing the form. I assume this was to make sure that I was not trying to commandeer a fluorescent bulb under false pretenses.

Once my supervisor confirmed that I really did need a new bulb, he signed the form and I took it back to the facilities office, foolishly thinking that they would hand me a bulb that I could take back to my office. Oh no, that would have been too simple. I was told that once my form was approved by the facilities manager a maintenance worker would be dispatched to my office and would replace the bulb for me. Great, I said. When can I expect that to happen?

“I can have someone over there a week from Tuesday between noon and 5pm,” the man at the facilities desk replied. I suddenly felt like I was dealing with the cable company. How many big company employees does it take to change a light bulb? I lost count at four.

Encourage Innovation and Entrepreneurial Thinking
Next, you must create an environment in which innovation and entrepreneurial thinking are encouraged and rewarded. If your employees feel that their opinions, thoughts and ideas don’t matter, they will not submit them to you, but may take them elsewhere.

Again, based on my own experience, I can tell you that innovation, especially innovation that occurs below the management level, is often ignored, ridiculed, and in some cases, used as an excuse to give employees the boot. The perfect example of this was when I took an idea on how to improve an internal system to my manager and was told, “Knox, you think too much.” Now this was a new one on me. I had been accused of thinking too little and of not thinking at all, but never had I been accused of thinking too much. I do recall my dad telling me when I was young, “Son, if you had a brain you’d be dangerous.” I suppose my manager was simply trying to relay the same message. “Shut up and go to your room/cubicle like a good little boy/company drone before you get on my nerves and get spanked/fired.” Within a few months I decided to take my overactive brain and put it to work for myself. After 10 years of business success, I think I made the right decision.

To promote innovation and entrepreneurship big companies must encourage everyone to think like innovators and entrepreneurs. Make it a company policy that such thinking is required, expected and rewarded. Pose these questions: (1) How can we improve our current products and services; (2) What new uses can you think of for current products or services; (3) What new products and services can you think of that would be good additions to our current offerings or perhaps even launch a new line; (4) What new opportunities do you see in the market place that might be worth pursuing?

Get Outside Help
Most large companies find it difficult to develop and implement an innovation plan simply because they refuse to devote the time and resources to getting it done. And since most executives have never been entrepreneurs, they do not know how to encourage entrepreneurial thinking among their ranks. If your company needs help with innovation and entrepreneurship, bring in someone from the outside to direct and manage the effort for you.
You should never be embarrassed to ask for help, no matter how big you are.

Here’s to your success!

Tim Knox

Teaching Large Companies To Think Like The Little Guys

2005-04-14T22:09:00.000-05:00

Q: I am an executive at a large company and in our industry we are seeing a trend wherein smaller companies are gaining market share at an alarming rate. Our CEO believes the reason for this is that smaller companies are more prone to innovation and more entrepreneurial than larger companies. He has instructed me to form a committee to study this trend and make recommendations on how we should deal with it. I’m an executive, not an entrepreneur. Any advice would be very much appreciated.-- Name withheld by request

A: Your question reminds me of the time my teenage daughter tricked me into doing a chemistry project for her under the pretense of asking for my advice. “But, daddy, you’re just so smart…” The result was that her/my experiment got a C instead of an A and almost started a fire in the chemistry lab. Reckon daddy wasn’t so smart after all: at least that was the opinion of the principal, her teacher, the fire marshal, and ultimately, my manipulative, yet adoring daughter.

However, you’re in luck, Mr. X, because I know considerably more about innovation and entrepreneurship than mixing combustible chemicals.

Judging by your use of the buzzwords “innovation” and “entrepreneurial” I’d bet your CEO’s opinion (which I believe is dead-on, by the way) may have come from the Conference Board's CEO Challenge 2004, which reported that 87% of the 540 global businesses surveyed cited innovation and enabling entrepreneur- ship as priorities for their companies. Furthermore, 31% of companies surveyed considered these issues to be of the "greatest concern.”

FYI, the Conference Board is an 88 year-old, not-for-profit, global, independent membership organization that "conducts research, convenes conferences, makes forecasts, assesses trends, publishes information and analysis, and brings executives together to learn from one another. "

What many Conference Board members are learning is that they are getting their big corporate behinds kicked by smaller, more innovative, entrepreneurial companies that are not burdened by the need to have a meeting once an hour or to bury every great idea under a mound of red tape. You said it yourself: your CEO told you to set up a committee to study the trend. You might as well paint a big black hole on the wall and have everyone take turns trying to run through it. Committees and superfluous meetings are the biggest wasters of time and money in the corporate world and rarely produce anything even remotely resembling results and they are indicative of why smaller companies are gaining ground on their larger brethren.

The fact that innovation and entrepreneurship run rampant in smaller companies, but is often suppressed in larger companies is nothing new. Management guru Peter Drucker first addressed the issue in his 1985 book, Innovation and Entrepreneurship. Drucker wrote that one of the most often-asked questions in many a 1985 boardroom was, “How can we overcome the resistance to innovation that plagues most organizations?”

The question they should have been asking in 1985 and the question that you should be asking today is not only how can you overcome the resistance to innovation and entrepreneurship within your own organization, but how can you make your organization more receptive to innovation and more open to entrepreneurial practices?

Therein lies the key to your recommendation. To compete with the small boys, the big boys must create an environment in which innovation and entrepreneurship run rampant. Everyone in the organization, from the CEO to the executives to the managers to each and every employee must become innovation generators and entrepreneurial thinkers. You must create an environment where shooting for the stars is the norm instead of the shooting down of ideas.

To put it simply, you must turn your lumbering giant Goliath into a raging horde of Davids. Now I don’t mean that you should arm your employees with slings and rocks and turn them loose on upper management, although that could be really fun to watch. What I’m talking about is turning your organization into an innovative, entrepreneurial machine where everyone from the CEO to the janitor works to make the company more competitive and profitable.

One reason that large organizations are resistant to innovation is that everyone is so busy just keeping the wheels in motion and putting out fires and dealing with the day-to-day drama of big business that no one has the time to even think about innovation. And Heaven forbid they have to think like entrepreneurs. No one has time to even consider the opportunities that innovation and entrepreneurial thinking might bring. They are too busy to see that their product is becoming dated and their market share is becoming smaller. They are too busy to see the smaller, more innovative companies speeding up in their rear view mirrors. Competitors in your rearview mirror are larger than they appear…

So, here’s how you begin. First off, you should develop an innovation plan that outlines how the process of innovation will work within your entire organization. If someone has an idea for a new product, for example, the innovation plan would explain the process by which their idea should be brought to the attention of management and how it can be shared with others throughout the organization. The plan should also detail how entrepreneurial employees will be rewarded if their idea is accepted and further rewarded if their idea brings future profits to the company. Here is where most big companies drop the ball. They take a great idea, brush aside the person who thought of it, then hand the idea off to upper management so it can be buried under a mound of red tape, never to be heard from again.

This is a key point: to make innovation work you must reward the innovators monetarily or by letting them take a key role in bringing their idea to fruition. It’s my opinion that you should do both: pay them and promote them.

Secondly, innovation and entrepreneurship must be promoted within your organization as the norm, not the exception. There must be a clear understanding that the best way to preserve and perpetuate the organization is through innovation and entrepreneurial thinking. If you can get everyone in the organization thinking like entrepreneurs, innovation will soon run rampant.

This is how you create the raging horde of Davids.

Next week we’ll talk more about how large companies can become more innovative and entrepreneurial so they can compete with those pesky little guys.

Here’s to your success!

Tim Knox

Don't Be Afraid To Give Problem Customers The Boot

2005-04-06T22:12:00.000-05:00

Q: In a recent column you made the point that the customer is always right, which I agree with. However, in the same column you also said that it is sometimes necessary give problem customers the boot. If the customer is always right, at what point do you think they become so problematic that you should stop doing business with them?-- Gary M.

A: That column brought a number of emails similar to yours, Gary, requesting that I clarify the line between "the customer is always right" and "sometimes you have to give a customer the boot." Here's the bottom line: if you, as a business owner or service provider, are willing to take a customer's money in exchange for providing him with goods or services, then the customer has what I call "the right of expectation." This means that the customer has the right to expect you to deliver everything promised in the transaction between you. For example, if you own a restaurant the customer has the right to expect that their meal will be prepared and served to their satisfaction. If you are a dry cleaner the customer has the right to expect that you will launder their clothes without returning them in shreds. If are hired to perform a service the customer has the right to expect that the service will be provided to their satisfaction within the terms of the defined task.

As the business owner, it is your responsibility to meet the customer's expectations and provide
good customer service. Even if your business does not involve a formal contract that spells out to the letter what should be expected, there is generally a clear understanding of what the customer expects and what you are willing to deliver. If you back peddle on your end of the bargain, let's say by serving a bad meal or losing a customer's laundry and refusing to make things right, then you are guilty of not meeting the expectations of your customer and thereby are guilty of providing bad customer service.

Unfortunately not every entrepreneur puts emphasis on delivering good customer service. They are in it for the money and damn the customer if they have a problem. Such entrepreneurs were the topic of the column you mentioned, the point of which was, if you make a habit of not meeting your customer's expectations, you will not be in business for long.

Now let's look at the flipside. Just as the customer has the right to expect that he will get his money's worth when doing business with you, you have the right to expect that your customer will not demand things that are beyond the scope of realistic expectations (or the contract). If a customer orders hamburger, he shouldn't expect it to taste like steak unless you have advertised it as such. If a customer brings you a cotton shirt to launder he should not expect a silk shirt in return. It's when the customer's expectations get out of sync with what should realistically be expected that you will have problems.

We have all had customers who expected far more than was their due: customers who were unreasonable, overly-demanding, condescending, hard to please and sometimes, even dishonest in their dealings with you. When a customer's reasonable expectations become unreasonable demands you must decide whether or not that customer is doing more harm to your business than good.

So here is the line in the sand between the "customer is always right" and "sometimes you have to give the customer the boot" - if a customer crosses the line from being an asset to being a detriment to your business, you should consider giving that customer the boot.

This is easier said than done if that customer constitutes a large chunk of your revenue, but even then you have to consider what your business might be like if that problem customer was not in the picture. Would the time you spend dealing with the problem customer be better spent on sales calls that might expand your client base and grow your business (a business that is dependent on one client is a house of cards)? Would your employees be happier not having to deal with this customer? Would you sleep better nights knowing that you don't have a dozen phone messages from him on your desk every morning?

The easiest way to decide how much trouble a customer is worth is to look at the amount of revenue this customer brings in versus the time and expense of meeting his expectations. If this customer pays you $1,000 a month, but costs you $2,000 in time spent keeping them happy, this customer is actually costing you money. Just a handful of these kinds of customers will put you out of business fast..

For example, I once had a client whose business was worth several thousand dollars a year to my software company's bottom line. However, this client proved to be problematic from the second the contract was signed. He and his employees called our office ten times a day and dominated my tech support team's time with IT problems that were not even related to the service we were contracted to provide. It got so bad that my employees cringed every time the phone rang because they were afraid it was this client calling again.

When the time came to renew this client's contract it wasn't hard for me to decide to give him the boot. I simply did the math. This client had added thousands of dollars to my company's bottom line, but had cost me at least that much in handholding and support, not to mention the mental anguish he had caused my employees. I opted not to renew the contract and politely invited the client to take his business elsewhere.

The perfect customer relationship is win/win, meaning that your customer benefits from your product or service and your company prospers by delivering the product or service. The relationship must be built on mutual respect and honest intention. It is when the relationship becomes win/lose that you must be ready to take action. If the customer thinks he can hold you over a barrel and get more out of you than he has paid for, the relationship and your business suffer for it.

Look, you don't need me to hit you in the head with a stupid stick on this one. You know who your problem customers are and you know that you will eventually have to deal with them. You have to consider the value of every customer in the long run, not just their value today.

Is the customer making demands that are beyond the scope of what should be reasonably expected? If the customer constantly demands more than they are entitled to and gets angry when you refuse to comply, consider giving them the boot.

Is the customer taking advantage of your good graces? Some customers may mistake your willingness to please for weakness and try to wring more out of your relationship than they should. If the customer has a record of trying to take advantage of you and plays every angle to get more from you than they deserve, consider giving them the boot.

Is this customer a threat to your reputation? Let's face it; there is nothing more harmful to your reputation than a dissatisfied customer with a big mouth. And it does not matter who is at fault in the disagreement, a disgruntled customer is going to bad mouth you in the end - especially if they were at fault. If you suspect a customer might be the sort to one day air dirty laundry in public, consider giving them the boot.

Does the customer pay in a timely manner? If you have a customer that is consistently 90 to 120 days late in paying even when your contract clearly outlines your payment terms to be otherwise, it may be indicative of other problems to come. If you feel the client is a payment risk, consider giving them the boot.

What's the best way to avoid a customer booting? The best answer is to have a contract that clearly spells out the specifics of the relationship. The contracts I use in my various businesses clearly define the services to be provided, the cost of those services, and the timeline and terms under which those services will be rendered. If there is a deviation from the contract, we write an addendum that details any changes and their effect on the contract. Do I still have to give some customers the boot? You bet, but not very often. It's hard for a customer to cry foul when everything is there in black and white right above his signature.

What if your business doesn't use contracts? Then hang a poster in your shop or have a hand-out that clearly defines what your customer can expect from your business and then deliver what you promise. If you have a poster or hand-out that clearly outlines your services, your rates, scheduling, return policy, etc., there should be very little that the customer can complain about.

I know, famous last words.

Here's to your success!

Tim Knox

Cut Start-Up Costs By Using a Dropshipper

2005-03-31T22:15:00.000-06:00

Q: I'm starting an online specialty shop that sells gifts and home accessories. I want to be able to have items dropshipped to customers through my site. I already have a Web site and a domain reserved, but I don't have a lot of money to get this going. Can you offer any insight?

A: Setting up relationships with companies who will ship merchandise directly to your customers for you-- dropshippers, as they're called --are an excellent way to start your e-business and, if done properly, don't have to be a costly endeavor. There are literally hundreds of companies out there that will dropship products for you, everything from gifts and housewares to power tools and furniture.

In a nutshell, here's how dropshipping works. You set up an account with a dropshipper (or multiple dropshippers who offer different kinds of products) who provides merchandise that you can sell on your Web site. The dropshipper typically supplies you with images and product descriptions that you can use to build your online store or feature on static HTML Web pages.

You can locate dropshippers using an online service like http://www.ultimatepowerpak.com.

When a customer places an order for the product on your site, he or she pays you for the product. You, in turn, place the order with the dropshipper and pay them for the product. The dropshipper then ships the item directly to your customer under your company name. To your customer's knowledge, the product was shipped by you.

Dropshipping offers many advantages to the shoestring online start-up. You don't have to pay for an item until it sells, and your customer pays you, so your personal cash outlay for the product is zero. You never have to handle or warehouse the merchandise, as order fulfillment is handled by the dropshipper. You can also offer a wide variety of items from multiple dropshippers, and your end customer is none the wiser.

Dropshipping does have its downsides. Since you do not actually stock the products featured on your site, you have no control over inventory management, product availability, order fulfillment, shipping processes and so on. Still, if you do your homework and establish a good relationship with a reputable dropshipper, the problems you experience should be few.

Your goal should be to find a dropshipper that will ship items one at a time instead of requiring that you purchase a fixed minimum number of items each time (single-unit purchases vs. minimum-order purchases). With this arrangement, you don't have to invest your limited cash reserves in inventory that might not sell (and that sits in your garage for months).

Thanks to the stiff competition the Web has created, many dropshippers will now do business with you without requiring that you pay a setup fee or have a tax ID number. You simply set up a reseller account (you're the reseller) and start marketing the products on your site. Account registration can often be done online at the dropshipper's Web site. With this process, you can literally be selling products within minutes of setting up your reseller account.

Be warned, however, that some dropshippers are not as reliable as others. Also, be aware that some companies who claim to be dropshippers are really middlemen who have positioned themselves between the online merchant (that's you) and the real wholesale merchandise distributor. These middlemen will eat into your profits and usually don't offer much in the way of customer support and service. They can actually hurt your business more than help it, so make it a point to do business only with--and directly with--established, reputable dropship companies.

Spend the time to research the dropshippers doing business in your particular product category, and try to get feedback from their current customers. Remember that your customer doesn't know (or care) that the product they are purchasing from you really comes from a dropshipper. If there is a problem, your customer will come back to you for resolution, not the dropshipper, so make sure that the dropshipper you use has a policy for resolving problems quickly.

Setting up an online store that offers merchandise from dropshippers doesn't have to be expensive or time-consuming. However, this brings up the age-old question: If I build it, will they come? The age-old answer is: Only if you let them know you are there, but that's another column.

Here's to your success!

Tim Knox

Build A High Profit Business With Online Affiliate Programs

2005-03-23T22:19:00.000-06:00

Q: I am considering starting an ebusiness using affiliate programs, but there is so much hype out there I can't figure out which programs would work best for me. Everybody claims their program is best. I'd really appreciate some guidance here.

A: Affiliate programs can be an excellent way to start an ebusiness. Before we dive into the specifics, let me explain how an affiliate program works.

An affiliate program simply means that you sign on as an affiliate marketer for someone else's product. It's your job to market the product, send the company customers, and get a cut each time a sale is made from your efforts. Affiliate program commissions can range from as little as 2% for high ticket items up to 50% for ebooks and informational type products.

As an example, let's say you sign up with Amazon.com's affiliate program. You are assigned an affiliate code which you use to promote Amazon's books on your website. When someone clicks to purchase an Amazon product from your website, your affiliate code is included in the URL and you get a commission for the sale. Some folks have built elaborate websites that sell nothing but Amazon.com's books, and each time they make a sale they get a piece of the pie.

At dropshipwholesale.net we are affiliates for many products that fit our entrepreneurial niche. We market mostly ebooks and software, but we do have an Amazon page for business books.

One of the most appealing aspects of affiliate programs is how quickly you can begin making money. You can literally sign up as an affiliate and begin making money in minutes. I've done it, I know it works.

Admittedly, I am not an affiliate program expert, so I sought out the person that many call the Ultimate Affiliate Program Authority, Rosalind Gardner.

Rosalind Gardner began making money with affiliate programs in 1997. She has since grown her affiliate business into a $400,000 a year business and is now considered the authority on the subject. Her book 'The Super Affiliate Handbook: How to Make a Fortune Selling Other People's Stuff Online' has been out since March and is already considered by many to be the affiliate marketers bible.

I ordered Rosalind's book as research for this article and I have to tell you I found it to be one of the best books on the subject I have ever read. It's a hype-fr*e approach to what affiliate marketing is really all about and how to make it work. The book is 270 pages and leaves no stone unturned. For anyone serious about making money with affiliate programs, I highly recommend this book.

The bottom line is this: you can make a lot of money with affiliate programs, if you pick the right product and do your part to promote it. As for which programs would be best for you, I advise that you concentrate your efforts on one or two products instead of starting with a shotgun approach. Pick only top quality products that hold some personal interest you. Never pick an affiliate product just because you think you'll make a ton of money with it.

Remember, you are starting a business. If it's not a business that holds your interest, you won't be in business very long.

For more information on affiliate programs check out:

THE SUPER AFFILIATE HANDBOOK by Rosalind Gardner Read the amazing true story of how one woman, with no previous business experience, earns 400,000+ per year selling other people's stuff online!--- http://hop.clickbank.net/?tknox/webvista2

CLICKIN' IT RICH by Michael Campbell If you are ready to fire the boss and set up a profitable home business, I'll tell you exactly how I make over $200,000 a year in affiliate revenues.--- http://hop.clickbank.net/?tknox/dmcorp

Here's to your success!

Tim Knox

Is Your Website Credit Card Friendly?

2005-03-10T22:25:00.000-06:00

In my last column I discussed the process of credit card enabling your brick-and-mortar business. I pointed out that research has shown that accepting credit cards can help increase revenue and enhance cash flow. I also pointed out that you may have to look beyond your local bank for help in getting things set up. This week we will look at setting up an online payment system for your business website. If you think hooking up a brick-and-mortar location with a credit card system stymies most bankers, try asking them how to do it on your website.

If you'll recall, the question that spurred this topic came from a lady who went to her local bank for help in setting up a credit card acceptance system for her business and her banker wasn't very knowledgeable on the subject. I pointed out that her banker's ignorance of the subject probably wasn't a reflection on his skills as a banker, but a reflection on the compartmentalization of the credit card aspect of banking.

The fact is, most banks can provide you with the merchant account needed to accept credit card payments, but beyond that have little to do with the process. Even larger banks may only have a single person on staff who is tasked as the "credit card expert" and if that person ever goes on vacation, you're pretty much out of luck (voice of experience talking here, folks).

I have helped many clients set up online credit card processing systems and more than once I've had to sit down with the bank issuing the merchant account and educate them on how online payment systems work. Don't believe me? This is a direct quote (here's the Bible, here's my hand) from the bank employee who was in charge of processing internet merchant account applications, "When someone pays online how do they swipe the credit card in their computer…"

Much like a brick and mortar credit card processing system, you will need the following to accept credit cards on your website: (1) an electronic shopping cart system that allows the customer to select products and checkout when ready; (2) a payment gateway service to get approval or declination of the credit card; (3) a credit card processor who will process the transaction; and (4) an internet merchant account issued by an acquiring bank in which processed funds are deposited.

We covered most of these elements last week. Here's a quick refresher for those who missed the basics, then we'll talk about a shopping cart system.

Payment Gateway Service:
The payment gateway service comes into play when a customer submits their credit card information to the webpage form. Think of the gateway service as the middleman in the process. The website's shopping cart checkout system electronically submits the credit card to the gateway service who then routes the information to the processor for approval. Depending on the reply from the processor, the gateway service will return an approval or declination for the purchase. This entire process takes just seconds to perform.

Credit Card Processor:
The credit card processor is an electronic data center that processes the credit card transactions coming from the gateway company, ensures that the charge is valid, then settles the funds in your merchant account.

Internet Merchant Account:
An Internet merchant account is a bank or financial institution account in which funds from online sales are deposited. Merchant accounts are usually issued by banks who are associated with the major credit card services like Visa and MasterCard. Be aware that many banks will not grant merchant accounts to Internet merchants as they are often categorized as "high risk ventures." This policy varies widely and in the end, the granting of the merchant account will come down to economics from the bank's point of view. If the bank sees even the smallest iota of risk, you will not be granted the account. Fortunately, the growth of online sales has given rise to an entire industry of merchant service bureaus that will grant you a merchant account and everything else you need to accept online payments. The fees are usually higher, but it's better than not having an online payment system at all.

Shopping Cart System:
To accept online payments you must have what's called a "shopping cart system" that allows your customer to choose and purchase products. Adding a shopping cart system to your website can be simple or complex, cheap or very expensive. It depends on the product you're selling and the options you wish to offer your customers. As in everything, you get what you pay for.

A shopping cart system typically consists of three components: a product catalog, the shopping cart, and a checkout/payment system. The product catalog is your inventory component and displays the items you have for sale on the website. The checkout/payment system is the part of the program that allows your customers to "add this to my cart," and the checkout/ payment system is the component that allows the customer to checkout and pay for their purchase.

There is a wide variety of shopping cart software on the market and the price is dependent on the features you want. Shopping cart systems range from simple HTML form insertions to full- blown catalog and inventory systems like those used by Amazon or Dell.

You can spend from zero to tens of thousands of dollars. Some of them you can set up on your site yourself while others should be set up by someone who knows what they're doing.

You can get a free Paypal.com shopping cart system which is the most simplistic in nature, but the easiest to implement. Using Paypal also alleviates the need for a bank merchant account because everything is handled by Paypal, for a fee of course. You insert HTML forms into your website code and when an item is purchased.

There are also numerous online companies who will assist in the setup of your ecommerce / credit card system. These companies charge several hundred to several thousand dollars for their services, so it would be wise for you to have an idea of exactly what you need before calling them into play.

Customer submits credit card. The site sends the transaction to the gateway. The gateway sends the info to the processor. The processor contacts the issuing bank of the customers credit card. The issuing bank returns the result of the processor. The processor routs the result to the gate. The gateway passes the result to the website. The website displays the result.

One thing to remember when setting up an ecommerce system on your site is this: online it's all about security and privacy. Though online credit card processing has been around for years there are still many people who are uncomfortable giving their credit card number online. These are the same folks that do not hesitate to give their credit card number over the phone to a complete stranger or hand their credit card to a waiter who disappears with it for ten minutes. Online credit card processing is much less susceptible to fraud and abuse than either telephone processing or giving it to a waiter.

Eighty-five percent of internet users surveys said that a lack of security made them uncomfortable sending credit card information over the Web.

It's up to you to instill a sense of security and make the customer comfortable shoving their card into their computer.

Here's to your success.

Tim Knox

Business Is No Guarantee of Riches

2005-03-02T22:32:00.000-06:00

Q: I'm thinking about starting a business since that seems to be how most rich people get rich. I don't have any business experience or much money, but I'm a fast learner and have lots of energy. Any free advice?Peter J.

A: I 'm full of free advice, Pete, and here's your dose of complimentary wisdom: don't quit your day job.

No offense my energetic friend, but to consider starting a business with no experience and no money is a little like playing football with no playbook or pads. Your various body parts will be pounded into the ground by better-equipped players and you will lose the game.

Now let's address your other point concerning rich people who got that way in business. Anyone who thinks that going into business is the key to riches needs to hear the story of the boy who asked the rich old man how he made his money.

The old millionaire fingered his Rolex watch and said, "Well, son, it was 1932: the depth of the Great Depression. I was down to my last nickel. I invested that nickel in an apple. I spent the entire day polishing the apple and, at the end of the day, I sold it for ten cents.

"The next morning, I invested those ten cents in two apples. I spent the entire day polishing them and sold them later for 20 cents. I continued this system for several years and soon I had a thriving apple business."

"And that's how you got rich?" the boy asked. "In your own apple business?"

"Oh, heavens, no!" the old man replied. "I lost my shirt in the apple business, but a few years later my wife's father died and left us ten million dollars..."

Moral of the story, Pete: you'd be better off finding a nice girl with a sickly, rich daddy than to count on starting a business that will make you rich. Of course finding a nice girl with a sickly, rich daddy is easier said than done (trust me on this one), but one can always hope.

That's certainly not to say that you can't get make a great deal of money in your own business or even get so filthy rich that wide-eyed youngsters beg you to tell them stories of how you built your fortunes. But most people who start a business do not get rich. To the contrary, most make so little money that they decide that going into business was not such a great idea after all and then run screaming back to the security of the job they once could not wait to leave.

While it is true that more millionaires got that way from their own business ventures than through any other means, to summarily assume that starting your own business puts you on the road to riches is foolhardy.

Many entrepreneurs build solid businesses that provide a very comfortable living and many others do indeed get rich. Others simply find out that they have traded one job for another and still others discover that business really wasn't for them.

What should you really consider before starting a business? Asking yourself the following questions will help you make a wise decision.

Are you really cut out to be an entrepreneur?This is the first question you must ask yourself because the grass on the other side of the entrepreneurial fence is not always greener (despite all the entremanure).

Ask yourself: Do you have a burning desire to own your own business? Do you have the initiative to get out of bed in the morning and be your own boss? Do you have the energy to work around the clock? Can you persevere in the face of adversity? Can you turn problems into opportunities? Can you work alone without support? Can you get used to the idea of life without a steady paycheck? Are you passionate about your product or service? Are you prepared to run the company, do the books, sweep the floors, empty the garbage, and do whatever it takes to make the business a success?

If not, you're not cut out to be an entrepreneur. Learn to love your cubicle.

Do you really have a "great idea?"The key phrase here is "great idea." All businesses - those that make their owners millionaires and those that make their owners paupers - start with an idea. The problems begin when that great idea turns to mush. Share your idea with others and ask for honest feedback. You might find that great idea is not so great, after all.

Is the timing right?
Is this a good time for you to start a business? Maybe you've just retired or left a job and have the time to devote to a business. Or maybe a rich uncle left you a bundle and you are now financially sound enough to venture out on your own. If the timing is not right, don't start a business.

How's your personal life?
Money and timing aside, your personal situation should be the deciding factor on whether or not you start your own business. Is your health good? Is your family supportive? Are you willing to sacrifice current lifestyle for long term success?

How well do you handle failure?
Since the vast majority of businesses fail within the first 5 years this is the most important question you must ask yourself. No venture is foolproof. Even with a rich relative (alive or dead) no business success is guaranteed. If the business does go belly up, can you still land on your feet? If not, RUN!

So Pete, there's your free advice. Good luck finding a rich father-in-law.

Here's to your success!

Tim Knox

Do You Pay Taxes On eBay Income?

2005-02-25T22:36:00.000-06:00

Q: I read your last column about paying income tax on eBay sales if you are doing it as a business, but as someone who only sells on eBay occasionally I'm still confused if the IRS rules apply to me. Can you tell me more?-- Norman L.

A: Last week's column on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.

Several folks argued that just because their little eBay hobby generated a little cash, that didn't make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I've always been amused by folks who try to impress me with talk about their "little side business" but when the subject turns to taxes they suddenly refer to it as "my little hobby."

All kidding aside, the conclusion that I came to after reading each email was always the same: while you may think selling on eBay is just a fun pastime and the money you're making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you.

It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you're going to come to the dance you have to pay the fiddler.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay.

In its most basic sense, the IRS rules can be interpreted to mean that if you buy an old vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.

In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to let loose an army of agents to collect taxes on the few bucks you make. However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.

As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business.

These factors include: - Do you carry on the hobby in a business-like manner? - Do you spend considerable time working on the hobby? - Do you depend on income from your hobby for your livelihood?

If the answer to any or all of these question is yes, you're running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.

What's eBay's take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS.

Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.

Furthermore, under it's current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.
You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.

Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Here's to your success!

Tim Knox

Credit Cards, Merchant Accounts, and Your Bottomline

2005-02-18T22:38:00.000-06:00

Q: I'm opening a gift shop and want to be able to accept credit cards. I talked to the branch manager at my bank, but he didn't seem to know much about how it all worked. He did say that I would need something called "a merchant account" and something else called "a credit card processor." Beyond that he seemed as clueless as I am. I'm thinking about going to another bank. Can you explain how that all works? -- Mary Ann G.

A: Mary Ann, I'm going to give your banker the benefit of the doubt and say that a lack of knowledge regarding the specifics of credit card processing is not necessarily a reflection of the banker's competence. I have found over the years that most bankers, no matter how experienced or knowledgeable about the banking business they my be, don't really know much about how credit card processing and acceptance really works. That's because the task of accepting and verifying credit card purchases is handled by third party service companies who process and deposit (or settle) the funds into a bank merchant account.

The decision to accept credit cards is a wise one for any retailer. I agree with financial guru Dave Ramsey's teachings regarding the use and abuse of credit cards. Many people dig deep holes with credit cards that are hard to climb out of.

But, from a practical business point of view, any retail business that does not accept credit cards is leaving money on the table. Research has shown that accepting credit cards increases revenue and helps with cash flow since you receive the money within a couple of days instead of waiting up to a week for a check to clear.

Credit cards don't bounce, as some checks have a tendency to do. Credit card users are also more likely to buy on impulse and spend more when they do. Bad news for them, but good news for you. If you have a social conscience concerning the use of consumer credit cards, a retail operation probably isn't the business for you.

To accept credit cards at a brick and mortar location you typically need four things. The requirements may vary a little, but the following applies in most cases.

You will need: (1) A way to enter the customer's credit card information into a verification and processing system. This can be done with a swipe terminal, point of sale system, or by calling the credit card in by phone; (2) A credit card gateway company to verify the credit card's validity and process the payments; (3) A credit card merchant account in which the gateway company will deposit payments made to you; and (4) A business bank account into which the settled funds will ultimately be deposited for your use.

Here's how the process works: (1) You make a sale and the customer pays by credit card. (2) Using a card swipe machine or telephone, you contact what is known as a "gateway company" who takes the card information you submit and verifies that the card is valid and the charge can be made against the card account. The gateway company returns an approval code for the purchase.

With a swipe machine or point of sale terminal the verification process happens in a matter of seconds. If you're doing telephone verification it can take a couple of minutes. You call the gateway company, give them the credit card number and expiration date and they give you an approval code that you write on the credit card charge slip. Either way, the money is typically deposited in your merchant account within 24 to 48 hours (less fees, of course).

You'll also need to apply for merchant status with each credit card company whose card you want to accept. To do business with American Express and Discover all you have to do is fill out an application, but to accept Visa and MasterCard you must have a merchant account. A merchant account is a special bank account set up for the expressed purpose of accepting credit card payments processed by the gateway company. Merchant accounts are usually associated with banks, though you can also use credit card merchant account service companies to perform the same function if you can not get approved for a bank merchant account.

Applying for a merchant account at a bank is much the same as applying for a loan. The only difference is sometimes a loan is easier to get. There is the prerequisite paperwork to complete and pledging of the first born, followed by an approval process that can take up to several weeks. And you are not guaranteed that the bank will approve your merchant account, even if you have been a favored customer for many years. Banks have strict regulations regarding the granting of merchant accounts and if issuing you a merchant account in anyway puts the bank at risk of losing money, you will be turned down. Banks always make decisions based on economics, not relationships (no matter what your banker tells you).

Requirements for qualifying for a merchant account varies among banks, but in general the bank will look at the following criteria:

How long have you been in business? Business longevity suggests a history of stability, efficient management, and good financial health.

What is your product or service? Does your product lend itself to a high rate of returns and chargebacks? A chargeback is a disputed credit card charge that is refunded to the buyer and charged against your account. You are accessed a chargeback fee that can be as much as $20 per event. If your business lends itself to high chargebacks, you will not get the merchant account.

How's your credit report? Banks always look at how much you owe and how you pay your bills, so it's important to have good financial and trade references. If you have a history of late payments or defaults to vendors, it will count against you.

What is your anticipated volume of sales and average transaction amount? The more money you make, the more money the bank makes. If you anticipate just a few credit card charges per week it may not be enough to justify the merchant account in the bank's eyes.

Is your business categorized as a "high risk merchant?" High risk merchants are those with the highest instances of credit card fraud and chargebacks. High risk merchants include many types of internet-based businesses, telemarketers, travel and cruise businesses, and membership clubs. Being a high risk merchant dramatically decreases your chances of getting a merchant account with a bank.

Being a high risk merchant doesn't mean that you can't get a merchant account from somewhere else. Thanks to the growth of ecommerce in recent years there are a number of alternative companies that will provide you with a merchant account, sometimes with more perks than a traditional account, but almost always with higher fees.

Also, not all banks support internet merchant accounts. If yours does not, shop around for one that does. We'll take a look at accepting credit cards online in next week's column.

Here's to your success.

Tim Knox

What's In A Name? When It Comes To Your Business, Plenty!

2005-02-10T22:43:00.000-06:00

Q: How important is the name of a business? Should the name of a business reflect what the business does or is it better to come up with something catchy and easy to remember?-- Randy P.

A: What's in a name? When it comes to your business, Randy, a lot more than you might think. In fact, deciding on a business name is one of the most important decisions you will ever make. The right business name can help you rise above the crowd while the wrong business name can leave you trampled in the rush.

With the economy in a slump and competition on the rise, now more than ever it is important that you put considerable thought into coming up with the perfect name for your business.

Unfortunately, this is a task that is easier said than done. It seems like all the good business names are either married or… no wait, that's a different subject, but the analogy holds true.

We live in an age when a business called "The Body Shop" might repair wrecked cars or sell skintight jeans to teenagers, so before you send your letterhead to the printer, consider the following points to help you select the business name that's right for you.

The first thing you should do is conduct a little research to determine if the name is already in use by someone else. You would be surprised at how many entrepreneurs forget to research this point and open a business with a name that is already in use. Check with the county clerk and the secretary of state to make sure the name isn't already licensed for use or incorporated with the state. Also check with the U.S. Patent and Trademark office to see if the name is already trademarked, i.e., owned, by someone else. Using another company's trademarked name exposes you to legal action by the trademark owner. Even if your name is just similar to the trademarked name, you may find yourself in court defending your right to use the name. And odds are it's a battle you will lose.

If the name you choose is not in use, you should immediately reserve the name with the secretary of state (if you plan on incorporating) and apply for a trademark to ensure your legal ownership. If you do not trademark the name someone can come along later and attempt to steal the name out from under you. Imagine spending years building up your business only to have some upstart trademark the name and engage you in a legal battle over rightful ownership. This is one fight you don't need, especially when the hassle could have been easily avoided with a few bucks and a few forms.

Another important thing to consider is the domain name for your business. The domain name is the website address a customer will use to find you on the Web. Is the domain name for your business name available? If not, is there a domain similar to the business name you're considering?

You will undoubtedly discover that securing a suitable domain name is actually harder than choosing a business name. Most logical domain names are already reserved, but you might get lucky. Keep in mind that domain names should be short and descriptive, and preferably have the .com or .net extension. You can use other extensions (I've even used the ".to" extension on occasion) if necessary, just keep in mind that you will need to put forth a little extra marketing effort to promote the website address as people typically assume a .com extension as the norm. Whatever you do, don't use a domain name that is a confusing amalgam of letters and numbers that is hard to remember and even harder for your customer to type in.

One good way to approach the task of naming a business is to do so from your customer's point of view. Your business name should clearly define your offering and communicate your message to customers. Put yourself in your customer's shoes for a moment. If you were looking for a business that provides your product or service, what would you expect that business to be called? If you were in the market for computer parts, for example, wouldn't you look for a business that has "computer parts" reflected in the business name? Jim's Computer Parts may not sound as snazzy as Jim's Electronics Emporium, but snazzy doesn't pay the bills. Happy customers who quickly identify you as the source of their purchase do.

The name of your business can also spark subconscious reactions in a customer that may drive them to you or drive them away. Words like quality, complete, executive, best, low-cost, and on time often spark positive reactions in the mind of the consumer. Words like cheap, discount, and used tend to create negative emotions. You'll notice that no one claims to sell used cars anymore, but the dealer lots are loaded with vehicles that are "previously owned."

Finally, let's talk about things to avoid. Experts agree that you should avoid using generic terms like enterprise, corporation, partners, and unlimited as part of your everyday business name. These terms are fine for the legal business entity name, but are often too unclear for everyday use. Can you tell me what any of these companies do: ABC Corporation, Big Dog Enterprises, M&B Partners, and Discounts Unlimited sell? I didn't think so.

Also avoid abstract names like Yahoo, Google, Monster and Flip Dog (I am not going to list the names of the numerous local high tech firms that have bucked this rule :o). Abstract names will require a subtitle to explain what the business does or an expensive marketing campaign that brands the name into the minds of consumers. Unless you have deep pockets, I suggest you go with a name that describes your business at first glance and leave abstraction to the likes of Cher.

Finally, you should avoid hokey names, unless of course, you are starting a hokey business. Crazy Dave's Stereo Shop is a great name if the business is really run by Crazy Dave and his personality is exploited in the marketing of the business.

However, if you want to be taken serious, then give your business a serious name.

Would you go to Crazy Dave's House of Dentistry?

Neither would I.

Here's to your success.

Tim Knox

With a Lease, The Devil Is In The Details

2005-02-01T22:46:00.000-06:00

In the last article we looked at a few of the things you should consider before leasing that first office or storefront for your business. To recap, you should not only consider the old standard "location, location, location," but also consider things like sufficient parking, the number of employees who will be working onsite, and future growth projections. I stressed that it was important not to get caught up in the moment. You should take your time to find the space best suited for your business for the long haul, not just for today.

This week we'll discuss the most important aspect of the process: signing a commercial lease (insert dramatic music here). One of the biggest mistakes many entrepreneurs make when leasing commercial space is not reading the lease. Forget reading the fine print. When it comes to a lease its ALL fine print.

Don't believe me? Let me tell you the true story of my friend, Homer, whose name I have changed to protect the ignorant. Homer signed a two year lease on a suite of offices for his business. As the owner of the business Homer signed on the dotted line and agreed to personally guarantee payment of the lease and to abide by its terms. Homer moved in and it was business as usual until the end of the two year lease term drew near. It was then that Homer discovered that failing to read the lease was going to be a very costly mistake.

Toward the end of the two year lease period Homer decided to relocate, but when he gave the landlord what he thought was the customary 30 day notice, he discovered that the lease had automatically renewed for another two year term at the 60 day notice point. In other words, Homer didn't realize that the lease required a minimum of 60 days notice to let the landlord know that the lease would not be renewed. Because Homer did not know that he was required to give at least 60 days notice of his intent to vacate, the lease automatically renewed for another two years. And there was not a darn thing Homer could do about it but reach around and slap himself in the back of the head for not taking the time to read the lease.

What was the landlord's position when Homer pointed out that he had not read the lease and therefore was not aware of the 60 day notice? The landlord, while sympathetic to Homer's plight, stuck to his guns and told Homer that he would have to honor the lease, which meant that even if Homer moved out as planned, he was still on the hook for paying the rent for another two years.

Does the fact that the landlord chose to enforce the lease agreement rather than let Homer off the hook make him an evil man? Not at all. From the landlord's point of view, he had no choice but to enforce the terms on the lease. He had a signed contract that told him his space was going to be rented for the next two years. He had not planned on the space suddenly being vacant. Being a landlord with unrented space is like being a business with no paying customers. Empty space means no revenue from rental fees which means no money to pay the mortgage payment. As the old saying goes, "It's just business..."

Sure, any landlord with a heart might feel bad that Homer was ignorant of the auto-renewal clause, but not so bad that they are willing to risk their own financial well-being by having Homer's space sit vacant. The bottom line is this: whether Homer read the lease or not is irrelevant. Homer signed the lease, thereby agreeing to its terms, and therefore he must hold up his end of the bargain, period.

As of this moment, Homer is relocating his business in spite of not being able to get out of his old lease and he will continue paying the payment on the vacated space for the remaining two year term of the lease or until he can sublease the space. Even then Homer is not fully off the hook because he will still be considered the legal tenant unless his sublessor agrees to sign a new lease with the landlord. Hopefully he will just have someone else making the lease payments.

Again, the moral to this story is READ THE LEASE. Or even better, have an attorney read it for you. I have learned over the years to never sign a legal document of any kind without letting my attorney review it, especially if the document involves money and my first born child.

Here are a few other points to ponder before signing a commercial lease.

How is the lease payment calculated? The most basic equation for calculating a lease payment takes the number of square feet times the cost per square foot, then amortizes that over a 12 month span. For example, if you have 1,000 square feet and the cost per square foot is $12, the annual lease payment would be $12,000. Divided by 12 months the monthly lease payment would be $1,000. Again, this is a simplified scenario. These days most commercial leases include additional factors that affect the final price, such as rent increases, operating expense escalations, common area charges, etc.

Who pays for what? It's important that you understand exactly what you are paying for. Are you responsible for any costs other than the rent? Will you be responsible for paying your own utilities, for example? Will you have to pay for parking privileges or janitorial service? Who handles maintenance and repairs?

Is there an escalation clause? It is typical that the lease contain what's known as an escalation clause that allows the landlord to pass on increased building operating expenses to the tenants. If your lease contains such a clause you should ask for a cap on the amount the lease payment may rise over a given period of time. And if the escalation clause is ever activated by the landlord you are well within your rights to ask for an itemized accounting of the expenses that are being considered as cause for your raise in rent.

What rent increases might there be? One very important factor to know is this: if you do renew the lease how much can the landlord go up on the rent? It is expected that rents will increase as property values increase. If your landlord can rent the space for more than you agreed to pay a year ago, he is within his rights to ask for the increase. However, it would be a nightmare if your rent suddenly doubled overnight. Negotiate the increase before you sign the lease. Most rent increases are calculated by percentage, not by flat rates.

Renewals and terminations. Most leases require that you give a minimum of 60 days notice if you intend to terminate the lease and vacate the property. As Homer learned, many leases also renew automatically for another term unless you give notice within 60 days of expiration. Know when your lease expires and the time required to give notice.

Is a personal guarantee required? What happens if your business goes south and can no longer afford to make the lease payment? Are you then responsible for paying the rent out of your own pocket? Probably so. Most landlords insist on a personal guarantee from the owner or an officer of the business. This means that even if you go out of business you are still personally on the hook for the remainder of the lease.

Finally, clarify all points. You should be clear on every point in the lease. And if you are not, ask for clarification. Exactly what space are you leasing? Who is responsible for repairs? What common areas will you have access to? Who is responsible for maintaining the little things, like keeping the shared restrooms stocked with soap, towels, and most importantly, toilet paper.

A small detail to consider now, but not when you suddenly find yourself without such amenities at the wrong time.

The Internet Tax Man Cometh

2005-01-26T22:50:00.000-06:00

Q: I was contacted by the city tax collector to say that my business is scheduled to be audited to see if I owe sales tax on items purchased on the Internet. Can they really make me pay sales tax on internet purchase? I thought you could buy things online tax free? -- Charlie B.

A: Sorry, but your local municipality is well within its rights to audit your business to identify items purchased online. The city can also demand payment of sales tax on those items if sales tax was not previously paid. Don’t be surprised if the auditor asks for access to your books and to see purchase receipts and invoices for at least the past year.

One of my companies recently underwent such an audit and it really was not as painful as you might think. Being a software company, the majority of our online purchases were for computer equipment, technical manuals, and software development tools. Since we purchase computers from a large supplier who collects sales tax at the point of sale (ditto for the development tools), the only sales tax we ended up owing was for an inordinate number of technical manuals and books purchased at Amazon.com.

If your small business is like most, the majority of your large purchases are made locally from companies that already collect sales tax. Furniture and computer equipment are typically the largest ticket items a small business buys, so unless you bought your desks and computers off of Ebay (which is highly possible these days) you should be OK.

Internet sales taxation has been a topic of contention even before Amazon sold its first book and Priceline booked its first flight. One of the more controversial points is that no one, including our own government, seems to have a clue how to implement a fair and logical Internet taxation process. With over 7,500 different local, county and state taxation systems in the United States, you can understand the controversy.

In 1998, Congress did what it usually does when faced with a potentially explosive issue like Internet tax collection -- it decided to put off making a decision. Congress enacted a three-year moratorium on the collection of taxes to give an appointed advisory board time to come up with an acceptable solution. That moratorium ended in 2002 and opened the door for municipalities to begin collecting sales tax on their own.

Here in Alabama the state sales tax collection department has aired radio spots asking Alabamians to step up to - and toss dollars into - the proverbial collection plate. The commercial kindly suggests that if I have purchased anything from an online retailer, I am honor-bound to proclaim such purchases and submit the appropriate sales tax to the collection department right away. They thank me in advance for my cooperation.

So, Charlie, when the auditor shows up at your door the best thing you can do is smile politely and be totally forthcoming. The sales tax that you pay is a small price for the convenience of shopping online.

Or at least that’s what you should tell yourself as you write the auditor a check.

Here's to your success!

Tim Knox

The Business of Identity Theft

2005-01-19T22:52:00.000-06:00

Q: I use PayPal to accept credit cards for my online collectibles business. I recently received an email that my PayPal account was going to expire in five days if I didn't click a link in the email and give them my PayPal account information. Being naturally paranoid I decided not to give this information and I'm happy to say that my PayPal account did not expire. Was this a scam? -- Brenda A.

A: Be thankful that your paranoia kicked in, Brenda, because you were about to fall victim to the scam of the week, this one aimed at the 35 million merchants and individuals who use Paypal.com as their online payment processor.

The email you received was not from PayPal, but from an Internet bad guy behind a forged email address using the PayPal.com domain. You should understand that no reputable online company will ever ask you to provide your account information. Think about it. They already have this information. Why would they ask you to provide it.

Since I use PayPal for several of my online ventures, I, too, received the email in question. The email first seeks to instill fear in you by saying that your PayPal account will be closed if you do not provide personal information. You are then directed to open an attached executable file and enter your PayPal account information and other personal information that PayPal doesn't even require, including your social security number, checking and savings account information, driver's license number, and other personal information that can be used to clean out your PayPal account and perhaps even steal your identity.

If you're not familiar with PayPal, it is a hugely successful, web-based company (purchased by eBay in 2002) that many online retailers and eBay sellers use to accept electronic payments for everything from newsletter subscriptions to consulting services to just about any product for sale on eBay.

When someone places an order on a website that uses PayPal for online payments, that customer is directed to PayPal.com to complete the payment process using a credit card or electronic check. The merchant can transfer the money collected in his PayPal account to his checking account any time he likes. Since many larger merchants make this transfer just once a week or so, their PayPal accounts are ripe for the picking from those who have the cunning and lack of ethics required to gain access.

The shear number of PayPal customers is one reason it has become a popular target of scam artists trying to steal personal information from individuals and businesses alike.

Identify theft is on the rise. Thanks to the Internet stealing someone's identity has never been easier. At any given moment, there are any number of Internet thieves using all manner of high tech wizardry to steal personal and business information from unsuspecting souls, and many times they can gain access to this information simply by asking the person to provide it through fraudulent means.

The PayPal scam is just the latest in a long line of sophisticated attempts to steal personal information through online means, Amazon, eBay, Dell Computer, and many others have been the brunt of many such scams in recent years.

Identity theft is what's known as a knowledge crime, which means that the criminal doesn't have to break into your house to rob you blind. If you have a bank account and a social security number, you are susceptible to identity theft.

While most people are familiar with identity theft, most business men and women never think about it happening to them, at least on a professional level. Consider this: if a criminal can learn your business checking account number or the number of your company credit card, they can steal far more from your business than if they had simply knocked down the door and carted off your desk.

The Internet aside, most business and personal identity theft is still the result of stolen wallets and dumpster diving. You should guard your business records closely and be very careful what you throw away. Stop and think for a moment what a criminal might find in the dumpster behind your office.

There's a good chance that dumpster has, at various times, contained scraps of paper with your social security number, driver's license number, credit card number, old ATM cards, telephone calling cards, and other pieces of vital business information like bank statements, invoices, and purchase orders. A dumpster-diving thief could literally rob your business blind in a matter of hours.

Here are a few ways to protect yourself from business and personal identity theft.

* Never give out your first name, last name, business name, email address, account passwords, credit card numbers, bank account information, PIN number, social security number, or driver's license number.

* Change your online account passwords every 30 days. Believe it or not, a hacker who steals your personal information can guess your online account passwords in about two minutes. If your Charles Schwab online account password is your birthday or the name of your first born or family pet, count on a hacker cracking that code faster than you can say 'Bill Gates.'

* Never provide personal information in response to an email or telephone call. Just because someone calls and says they are from Dunn & Bradstreet and need to confirm your business information does not mean they are really from Dunn & Bradstreet.

* Never give your business credit card number over the phone to place an order with someone who has called you unsolicited. If you are interested in what they are selling get their number, check out their company, then call them back to place the order.

If you think that you have become the victim of identity theft or think someone is trying to steal your identity or personal information you should report them immediately to the Federal Trade Commission. You will find more information on their website at http://www.consumer.gov/idtheft/. For more information on what to do if identity theft happens to you visit http://www.privacyrights.org/fs/fs17a.htm.

So, if you ever receive an email from PayPal, Amazon, eBay, or any other ecommerce website asking you to update your account information by email you can pretty much bet the farm that it is a scam.

In business, as in life, a little paranoia is a good thing.

Here's to your success!

Tim Knox

Online Payments Make It Easy For Your Customers To Buy

2005-01-13T22:56:00.000-06:00

In the last column we discussed the process of credit card enabling your brick-and-mortar business. I pointed out that research has shown that accepting credit cards can help increase revenue and speed up cash flow. This week we will look at setting up an online payment system for your business website. If you think hooking up a brick-and-mortar location with a credit card system stymies most bankers, try asking them how to do it on your website.

The fact is most banks can provide you with the merchant account needed to accept credit card payments online, but beyond that, they have little to do with the process. Even larger banks may only have a single person on staff that is tasked as the "credit card processing expert" and if that person ever goes on vacation, you're pretty much out of luck (voice of experience talking here, folks).

I have helped many clients set up online credit card processing systems and more than once I've had to sit down with the bank issuing the merchant account and educate them on how online payment systems work. Don't believe me? This is a direct quote (here's the Bible, here's my hand) from the manager who was in charge of processing Internet merchant account applications at a local bank, "When someone pays online how do they swipe the credit card in their computer..."

You will need the following to accept credit cards on your website: (1) an electronic shopping cart system; (2) a payment gateway service; (3) a credit card processor; and (4) an internet merchant account issued by a bank or other financial institution or service bureau.

Here's how online credit card processing works. (1) Your customer submits his credit card information at checkout on your website. (2) The shopping cart software sends the transaction to the gateway. (3) The gateway routes the information to the processor. (4) The processor contacts the bank that issued the customer's credit card. (5) The issuing bank approves or declines the transaction. (6) The processor routes the result back to the gateway who then passes the result back to the website shopping cart system. The entire process is done electronically and takes seconds to complete.

We covered most of these elements last week. Here's a quick refresher for those who missed the basics, then we'll talk about the shopping cart system you'll need to implement on your website.

Payment Gateway Service: The payment gateway service comes into play when a customer submits their credit card information to the webpage form. Think of the gateway service as the middleman in the process. The website's shopping cart checkout system electronically submits the credit card to the gateway service that then routes the information to the processor for approval.

Credit Card Processor: The credit card processor is an electronic data center that processes the credit card transactions coming from the gateway company, ensures that the charge is valid, then settles the funds in your merchant account.

Internet Merchant Account: An Internet merchant account is a bank or account in which funds from online sales are deposited by the processor. Merchant accounts are usually issued by banks that are associated with the major credit card services like Visa and MasterCard. Be aware that many banks will not grant merchant accounts to Internet merchants as they are often categorized as "high risk ventures." This policy varies widely and in the end, the granting of the merchant account will come down to economics from the bank's point of view. If the bank sees even the smallest iota of risk, you will not be granted the account.

Fortunately, the growth of online sales has given rise to an entire industry of merchant service bureaus that will grant you a merchant account and everything else you need to accept online payments. The fees are usually higher, but it's better than not having an online payment system at all.

Shopping Cart System: To accept online payments you must have what's called a "shopping cart system" that allows the customer to select and purchase products from your website. A shopping cart system typically consists of three components: the product catalog, the shopping cart, and the checkout/payment system. The product catalog is the component that displays the items you have for sale on the website. The shopping cart system is the component that allows your customers to select products by clicking to "add items to cart," and the checkout/payment system is the component that allows the customer to complete the checkout process and pay for their purchase with a credit card (or in some cases an electronic check). It is the checkout/payment component that communicates with the gateway system to complete the transaction.

Adding a shopping cart system to your website can be a simple or highly complex task, depending on the system you select. The cost of shopping cart software ranges from free (for simplistic form-based systems) to very expensive. Which shopping cart system is best for your business depends on a number of factors, including the product you're selling, the depth of your product line, the purchase options you wish to offer customers, the inventory control functionality, and the extent of automation you desire.

There are numerous companies who can assist in the setup of your shopping cart and online credit card payment system. These companies typically charge several hundred to several thousand dollars for their services, but like anything you get what you pay for, so always use a company with good references in this area. When you're dealing with something as important as credit card processing and cash flow, bite the bullet and get it done right the first time. The money you spend now will be returned many times in increased sales volume from credit card customers.

The most important thing to remember when setting up an online payment system is this: online it's all about security and privacy. Though online credit card processing has been around for years there are still many people who are uncomfortable giving their credit card number online. These are the same folks who do not hesitate to give their credit card number over the phone or hand their credit card to a waiter who disappears with it for ten minutes. Online credit card processing is much less susceptible to fraud and abuse than of those scenarios.

Maintaining Your Business Website

2005-01-09T09:18:00.000-06:00

Q:Should I build and maintain my business Web site myself or pay someone else to do the work for me? -- Wesley L.

A:When you say, pay someone else to do the work for you, Wesley, I am going to assume that you are talking about hiring a professional Web site designer to do the work and not your next-door neighbor’s teenage son. If my assumption is correct, then read on. If not, go ahead and flip over to the comics section. You will get no good out of the advice I’m about to give, so you might as well consult Dilbert for your hot business tips.

Should you build and maintain your business Web site yourself or pay someone to do it for you? Let me answer your question with a couple of my own. Number one: is building and maintaining Web sites the key focus of your business? Number two: could your time be better spent doing more important things like, oh I don’t know, say running your business? If your answers were no and yes, respectively, then you have no business building and maintain a Web site.

Remember this: every minute you spend on tasks that are not related to the key focus of your business is time spent to the detriment of your business. In other words, every minute you spend focusing on tasks that do not contribute to the growth of your business and thereby increase your bottom line is time wasted.

If you want to be a web designer, be a web designer. However, if the key focus of your business is building widgets, it doesn’t take a rocket scientist to figure out that your time would be better spent building widgets, not Web sites.

Case in point: I once had a very wealthy dentist ask if I could teach him how to maintain his Web site so he wouldn’t have to pay me to do it. Now my teeth had helped put this guy’s kids through college, but that didn’t seem to matter. At that moment he was more concerned about having to pay for changes to his Web site than my personal oral hygiene. Sure, I said, I’ll be glad to teach you how to update your Web site, just as soon as you teach me how to clean my own teeth so I don’t have to pay you to do it. He got the point. And he charged me enough for the cleaning to keep his site updated for months. Smart man.

Many business owners think they can’t afford a professionally designed Web site and that simply is not true. While the old adage, “you get what you pay for” is never more true than when applied to Web site design, having a professional web designer do the work for you is money well spent. A well-designed Web site can bring you a many-fold return on your investment. You can’t say that about too many other collaterals.

While it is best to leave Web site design and maintenance to the experts, it is up to you (or someone considered a subject matter expert within your company) to provide the designer with the content (text and photographs) that best conveys your company’s message to your customers. A Web site, no matter how well designed, is meaningless if it lacks the content required to interest customers in the products you sell or services you provide.

Here’s are a few questions that, once answered, will help ensure that your Web site’s message is as appealing as its design. Go over these points with the designer before the design process begins as the answers will help determine the direction your Web site’s design should take.

What Is The Purpose Of Your Web Site?

Most business Web sites have two purposes: (1) to educate the consumer and, (2) to sell them products or services. If you sell shoes, for example, the purpose of your Web site is to educate potential customers on the quality and durability of your shoes and as a result, to sell them shoes. If you paint houses the purpose of your Web site is to educate home owners on why your services are superior to other painters and sell them on hiring you to paint their house. By defining the purpose of your Web site you will give the designer the information required to create a Web site that best conveys that purpose to your target audience.

Who Is My Target Audience?

Your target audience consists of those folks you want to attract to your Web site: potential and current customers, future and current employees, possible investors, etc. Anyone who might be interested in your company and its products or services is a member of your target audience. Correctly identifying your target audience is vital since your Web site should be designed specifically to appeal to your target audience.

Put yourself in their shoes (or in front of their computers). Imagine your Web site through their eyes. If you were visiting a Web site such as yours what would you expect to find and what would you be disappointed not to find? Identify your target audience, then have your Web site designed to fulfill their needs and surpass their expectations.

What Content Should My Web Site Feature?

Your Web site content should be driven by the nature of your business. If you're a real estate agent, your site should feature photographs of homes you have for sale and information on buying and selling a home. If you own an auto body shop, your site might feature before and after photographs of cars that you have repaired. Remember to determine the purpose of your site, then develop the content to serve that purpose.

What’s My Competition Doing?

The last question you should ask is one of the most important: What is your competition doing on the Web? Do a Google search for similar businesses and click around their Web sites. How are their Web sites designed? What message are they trying to convey? Are they doing a good job of conveying that message and as a result, selling products? What do you like about their Web sites? What don't you like? Make note of the things you like and the things you hate, then share your findings with your site designer.

Remember, you're not stealing trade secrets here.

You're just borrowing ideas.

Here's to your success!

Tim Knox

If You Build It, Will They Come?

2005-01-02T09:22:00.000-06:00

Q:I recently launched a website for my sporting goods business. Do I need to do anything special to attract customers to my website? I know nothing about search engines and marketing as such. Please tell me where to begin. -- Sean M.

A:Sean, that is a question that has been asked by every business person who has ever launched a website. If I build it, will they come? Of course they will -- if you’ve built a website that appeals to dead baseball players.

For those of you who didn’t get the “Field of Dreams” reference, let me put it this way: No, Sean, if you build it they will not come, at least not without some effort on your part.

Assuming that a website will automatically attract customers is the single biggest mistake that many business owners make. It is this mistake that eventually leads them to dismiss their website as a failure and abandon their online sales efforts.
I can’t tell you how many times I’ve heard a client say, “Well, I threw up a website, but nobody ever came to it and I didn’t sell a single thing from it! Dang thing was a waste of time, if you ask me …”

Forgive me, but “threw up” is the operative term there. These short-sighted entrepreneurs (God love them) mistakenly think that all they have to do is throw up a website and that their business will automatically double overnight. And when nothing happens they blame it on the infallibility of the Internet, on El Nino, on the Bosa Nova, on their customers… everything but their own lack of marketing efforts.

If you build it, will they come? That, Sean, depends totally on you.

When it comes to attracting customers, opening an online business (or an online branch of an existing business) is no different from opening a traditional brick and mortar shop. Without a little fanfare and a well-devised marketing plan, chances are your website will become just another spot of roadkill on the Information Superhighway.

The first step in devising your marketing plan is to ask yourself this question: Who is my customer? Who is it that I want to attract to my website? Believe it or not, this is a question many entrepreneurs fail to ask. The identity of your customer is incredibly important because if you don’t know who your customer is, how can you expect to market to them?

The next question concerns the locality of your customer. Do you want to attract a local or global clientele to your website? If the answer is local, then you will gear your marketing efforts toward customers in your own backyard, which means incorporating your website launch with your offline marketing efforts.

If the website is the online branch of a brick and mortar business, include the website URL in all your print materials and advertising campaigns. Consider running ads in the local paper, on radio or TV announcing the launch of your site. Use direct mail or in-store posters to announce the site launch to your existing customer base. In short, keep doing what you’re doing to attract customers to your physical store, just add your website address to the mix.

Just remember, it’s important to consider your website a branch of your brick and mortar business because that’s exactly what it is. A good business website will help you sell more products, widen your range of clientele, and increase your revenue without adding overhead. Don’t sell your website short. Make it work for you.

If you are seeking a global audience, your marketing efforts will be quite different. Attracting customers from around the world is a more difficult task than attracting customers from around the block. Fortunately, the task is not impossible. The Internet has leveled the playing field in many ways. Now every business, no matter how large or small, has the ability to do business internationally.

In the most basic sense, an online marketing campaign to attract global customers should include the following efforts.

Register With Search Engines

There’s not enough room in this newspaper for a thorough discussion of search engines and their effectiveness (or lack thereof) in driving traffic to a website. Suffice it to say that 95% of search engine traffic comes from Google and Yahoo, so start there. It’s also important to realize that just registering with search engines does not guarantee you traffic, but it certainly can’t hurt.

Unfortunately, the free search engine lunch ran out a couple of years ago when search engines figured out that people would actually pay for listings and higher placement. Since that time the only way to guarantee a high (or at least higher than others) ranking is to pay for it. The two most popular pay-for-placement programs are Yahoo’s “Yahoo Express” and Google’s “Adwords.” Visit their respective websites for details on these programs. Be prepared to spend several hundred dollars at a minimum to get your site listed.

Exchange Links With Similar Sites

One free – and potentially effective - way to drive customers to your website is through link exchanges with sites of similar interest. Locate sites that make a good match to your own and contact the owner to ask if they will link to your site in exchange for you linking to theirs. If you sell golf balls on your website, set up a link exchange with another website that sells golf clubs. You post a link to them and they post a link to you. It’s called digital back scratching, and if done properly, can work well to drive traffic your way.

Go To Where The Customers Are

If the mountain won’t come to Mohammed, then Mohammed must go to the mountain. One little known way to attract customers to your website is to market your products on a mega-site like eBay. There are thousands and thousands of people on eBay at any given time and each one is potentially your customer, so it's a great place to drum up business. Your goal is not to make a living selling on eBay, but to use eBay as a marketing tool to drive traffic back to your website. Go to where the customers are, then bring them back home with you.

Let’s use our golf ball example. Post a few auctions on eBay selling your golf balls at a ridiculously low price so your auction attracts plenty of attention. When customers make a purchase, add them to your client list and send them an email inviting them to visit your website for more great products. eBay also lets you create your own “About Me” page that you can use to advertise your business.

We have just scratched the surface, but hopefully this is enough to get you started. I wish I could tell you that attracting customers to your website is easy, but the truth is, it's anything but. It takes hard work, creativity and above all, perseverance

Here's to your success!

Tim Knox

Franchising Pros and Cons

2004-12-26T09:24:00.000-06:00

Last week's question from Anthony R. on how to choose the franchise that would best fulfill his life-long dream of owning his own business sparked a number of emails from other readers wanting to offer their two cents on the subject.

Some folks offered helpful insights and suggestions on how to pick a franchise and a few things to watch out for, while other emails came from current franchise owners asking me to help them sell their operations to Anthony R.

Hmm, sounds like it's time to update the old business card once again. Tim Knox: Franchise Broker At Large… Who knows, maybe I can franchise the concept.

Last week I promised we'd take a closer look at a few of the things you should look for when considering a franchise opportunity. Keep in mind that there are thousands of franchise opportunities that range from the low end opportunities available for a few thousand dollars to the high end franchises that cost hundreds of thousands of dollars.

The difference in price is reflected in many ways: the viability of the opportunity, the level of training and support offered to the franchisee, the track record and financial stability of the franchisor, the success rate of the franchisees, and a dozen other factors.

All a lower end franchisor might offer is a training manual and the right to use their company name. Many also have very little interest in weeding out potential franchisees. The truth is many are in business just to collect franchise fees. They have little interest in whether or not a franchisee actually succeeds. If you have a pulse and a checkbook, you can become their franchisee. And your pulse does not have to be that strong.

The higher end franchisors have very strict franchisee requirements and will not allow just anyone to become a part of their franchise system. They also go to much greater lengths to ensure the success of their franchisees. They offer complete hand holding from start to finish and remain heavily involved in the business even after the doors open. Yes, you do pay dearly for their assistance, but as the old saying goes, you get what you pay for.

Here are a few things to look for in a franchise opportunity:

Turnkey operation
This is the most appealing feature of many franchise systems. Many of the top franchisors will scout the best location for the business, build and equip the facility, hire and train employees, put you through an extensive management training system, then toss you the keys. Furthermore, they will work closely with you for the first few months to help make certain that you know what to do with the keys once they've been tossed to you.

The majority of franchises don't offer such complete turnkey packages, so be prepared to do much of the upfront work yourself. Often it is up to you to find a location, negotiate the lease, build out the space or erect a building, install the equipment, hire and train a staff etc.

Proven track record and management system
As mentioned earlier, many of the lesser-known franchise systems offer you a training manual, maybe a training video, and a few hours of telephone support. Not the best way to learn how to run a business. A good franchisor will provide you with thorough management training, either at their facility or onsite at yours. Since one of the reasons for buying into a franchise system is to tap into their expertise and know-how, thorough training should be a foremost consideration.

Customers waiting for the door to open
I don't have the statistics in my pocket to back this up, of course, but I'd bet the farm that every time a new McDonald's opens its door, it's a mere matter of minutes before the first Happy Meal is sold. Many franchisors spend hundreds of millions of dollars on national ad campaigns to promote brand awareness. This works great for the franchisee who can literally have customers waiting for the doors to open on the first day of business.

Always consider the downsides
There are downsides to franchising. Foremost is the high cost of entry. The top franchise opportunities require considerable investment on the front end, usually more of an investment than if the entrepreneur started a similar venture on his own. You could open an independent hamburger fast food restaurant for a fraction of the McDonald's franchise fee, but you probably won't sell as many hamburgers. What you're buying from McDonald's is not just a fast food restaurant that sells hamburgers. What you're buying is a brand, a reputation, and a proven business system with ready to eat customers. Be prepared to pay a premium for it.

Another downside is that when you buy into a franchise system you often have to pay a percentage of your revenues back to the franchisor. You might also be required to buy supplies from the franchisor, including inventory, paperwork, software, computer systems, and anything else the franchisor decides that they should supply to you.

And there in lies the biggest downside of all. When you buy into a franchise system you don't control your business, the franchisor does. You have very little say-so in running the business. You must follow their processes and procedures without variation. And should you decide to get out of the business you may not even be allowed to sell the franchise to just anyone. The new owner would have to be approved by the franchisor before a deal could be made final.

The bottomline, Anthony, is to do your homework and make sure the franchise you choose fits your personality, your lifestyle, and your pocket book.

Taxing eBay Part Deux

2004-12-17T09:27:00.000-06:00

When my column on paying income tax on eBay profits ran it brought a wave of emails on whether you were required to report income earned from eBay sales to the IRS sparked a number of additional questions and comments from eBay sellers who were hoping that I could somehow validate that their eBay activities were mere hobbies instead of actual businesses and therefore not susceptible to IRS taxation.

Several folks argued that just because their little eBay hobby generated a little cash, that didn’t make it a full blown business. It seems they consider the income from their little hobby to be financial manna from Heaven and thereby not taxable by earthly tax collectors. I’ve always been amused by folks who try to impress me with talk about their “little side business” but when the subject turns to taxes they suddenly refer to it as “my little hobby.”

All arguments aside, the conclusion that I came to after reading each of the emails was always the same: while you may think selling on eBay is just a fun pastime and the money you're making is not reportable as income, depending on the circumstances, the IRS would probably disagree with you.

It seems that everyone likes making money, but hates carving off a piece for good old Uncle Sam. Welcome to free enterprise, folks. If you’re going to come to the dance you have to pay the fiddler.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on Ebay.

As mentioned last week, the IRS uses a number of factors to determine if an eBay hobby that generates sales revenue is actually a business. These factors include:

· Do you carry on the hobby in a business-like manner?

· Do you spend considerable time working on the hobby?

· Do you depend on income from your hobby for your livelihood?

If the answer to any or all of these question is yes, you’re running a business, not carrying on a hobby, and you are responsible for paying taxes on your income.

What's eBay's take on all this? Naturally eBay is vehemently opposed to anything that might rock the eBay boat. eBay does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS.

Ebay considers itself merely to be a facilitator, meaning that they provide a marketplace in which buyers and sellers come together to do business.

Furthermore, under its current system it would be impossible for eBay to issue accurate 1099s to sellers. eBay does not track if a seller actually gets paid by the buyer, so eBay has no idea how much money - if any - actually changes hands at the end of each transaction.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc.

You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.

Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Taxing Your eBay Profits

2004-12-13T09:29:00.000-06:00

As a small business person-slash-advice columnist I dread the first quarter of the new year. Not because in my mind my own business fortunes start at zero again every January or because I have already dismissed every New Year’s resolution I made when the clock rang out the New Year.

No, the reason I dread the first quarter of the new year is that my email box floods with questions about business taxes and the IRS, my two least favorite subjects on earth. It’s not that I am opposed to paying my fair share of business taxes. It’s that I consider the IRS to be a little like Beetlejuice, the movie demon who appeared only after his name was called three times in a row. My fear is if I write too many IRS columns their dark agents may appear on my doorstep, ready to drag me away to an uncertain fate.

Oh well, one must do his duty no matter the consequences, so here we go….

Q: I am starting a small retail business. While talking to a potential supplier last week he asked for my EIN number. I had no idea what he was talking about, so I told him I would have to get back with him because I didn’t have the number handy. What is an EIN number and why do I need one? -- Robert P.

A: Robert, do you remember the old Johnny Rivers song “Secret Agent Man?” There was a line that said, “They’re giving you a number and taking away your name.” An EIN isn’t as cool as a secret agent number, but it works much the same way when it comes to your business’ relationship with the IRS. Instead of identifying your business by name, the IRS identifies your business by EIN.

EIN stands for Employer Identification Number and is also known as a federal tax ID number. The EIN is a nine-digit number that the IRS assigns to businesses and is used to identify taxpayers that are required to file various business tax returns.

Does your business need an EIN? According to the IRS the answer is yes if:

· Your business has employees

· Your business is a corporation or partnership

· You file returns for Employment, Excise, or Alcohol, Tobacco and Firearms tax

· You withhold taxes on income (other than wages) paid to a non-resident alien.

· Your business has a Keogh plan

· Your business involves trust, estate, real estate mortgage investment conduits, non-profit,
farmers’ cooperatives, or plan administrators.

Applying for an EIN is a relatively painless task. You can apply online at the IRS website (irs.gov), apply by mail or telephone, or if you do business in a state that participates in the Federal Employer Identification Number project you can apply through you local IRS office (sorry, Alabama is not one of them).

You will need an EIN number prior to filing business returns with the IRS, so make sure you
give yourself plenty of time to obtain one. For more information on EINs and your business, consult your accountant.

And while we’re on the subject …

Q: I made extra money selling things on eBay last year. These were items I picked up at
yardsales mostly. My husband says I am responsible for paying income tax on the money I made, but I disagree. This is just my hobby, not a business. What do you think? -- Gladys A.

A: With so many people selling on eBay these days this is a question I get quite a bit. In fact, I have plans for a future “eBay and taxes” column, but I believe your question is more, “is it a hobby or is it a business?”

Again, I went to the horse’s mouth (at least I think it was the mouth) for the answer. According to the IRS there are a number of factors that help determine if your hobby can be considered a business and thereby make you susceptible to the IRS tax rules governing business.

Do you carry on the activity in a business-like manner? If you conduct your eBay activities like a business, i.e. you keep business records, track your profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is considered a business.

If you put considerable time and effort into your venture, the IRS may contend that you do so for profit and not fun. It seems the folks at the IRS don’t believe in doing things strictly for pleasure. My guess is, neither do you. If you weren’t making money selling on eBay I doubt you’d be bothering getting up at 4am to hit all those yardsales. Then again, maybe you would…

If you depend on income from your eBay activities for your livelihood, it’s a business, not a hobby.

There are a number of other factors the IRS considers to determine if a hobby is really a business, but in your case I think that covers the basics.

For detailed answers to any tax question you should consult a qualified accountant or tax attorney. God forbid you rely on a guy who is afraid to mumble the letters “IRS” three times in a row.

Here's to your success!

Tim Knox

Do You Have What It Takes To Be An Entrepreneur?

2004-12-04T09:32:00.000-06:00

Q: I am interested in starting my own business. I have a business degree and lots of experience in my chosen field, but I don't know if I have the necessary skills to really make it on my own. Any advice?Marie C.

A: You've hit the nail on the head, Marie, because when you're an entrepreneur it's truly up to you to make it on your own. Sure, you may have investors and advisors and employees and friends and family helping you climb the ladder, but in the end you're the one who walks the high wire alone.

There are a variety of skills you'll need to succeed as an entrepreneur and chances are do not possess them all. One of the great things about being an entrepreneur is that if you lack certain skills you can always hire people with those skills to help round out your company skill set.

Here are a few of the skills you'll need starting out and others you can build upon later. Different stages of business require different skills.

People Skills
Every budding entrepreneur should have good people skills. The ability to walk into a room and befriend everyone there is often more important to your business than an investor with deep pockets. The more you can make people like you, the more they will want to do business with you.

Networking Skills
Networking is one of the best ways to build partnerships and find new clients. Networking simply means that you go to functions that attract the people you need to know. A successful entrepreneur is also a successful schmoozer. It's the entrepreneurial equivalent of "kissing babies and shaking hands." Whether it's the weekly Rotary luncheon or a Chamber function, show up with a pocketful of business cards and meet as many people as you can.

Leadership Skills
To be an entrepreneur is to be a leader. Even if you are a company of one, you must have the skills to take charge and to lead. It's much easier to learn leadership skills when you only have yourself to manage. These skills will come in very handy as you add employees and your business grows.

Management Skills
Management skills encompass a wide variety of tasks, including managing the daily operation, growth, employees, customer relations, investor relations, and so on. Poor managers make for poor entrepreneurs.

Employee Relation Skills
Your employees are one of the most important assets your business has and it is important that as the boss, you develop a professional relationship with your employees. It is important that your employees feel appreciated and you show it financially and professionally.

Team Building Skills
As your organization grows you must have the ability to build a team that can take your business to the next level. Your team not only includes employees, but also partners, your accountant, your attorney, and investors. Anyone who has the ability to impact your bottom line and growth should be part of your team.

Marketing and Sales Skills
Until you grow your business to the point that you can justify adding a marketing person, it will be up to you to think up ways to market your business. As I've said before, marketing is one of the most critical areas of business as getting the word out to customers is the first step in generating revenue.

Like marketing, selling is vital to the success of your business. Starting out you will probably be the one making sales calls and closing deals for your business. You must have the ability to sit in front of a prospective client and sell them on your service or product. Many entrepreneurs find this difficult to do as sales is more art than skill. This is also why one of your first hires when able should be a good sales person.

Time Management Skills
Unfortunately, there are only so many hours in the day and for entrepreneurs that means we must manage our time well or inevitably some things won't get done. I find that it helps to plan your day the night before. I know before I ever get to the office what I have to do that day. I know the order I will do things in. Of course, something always comes up to throw a monkey wrench in my plan. When the unexpected happens I try to add it to the next day's schedule. If that's not possible, I deal with it and then try to get back on track. That's not always possible, but having a plan certainly helps.

Do you currently have all these skills? Probably not. Very few people possess them all even after years in business. Does a lack of these skills mean that you shouldn't start your own business? Of course not. Entrepreneurial skills can be learned and improved over time.

Here's to your success!

Tim Knox

How To Create Multiple Streams of Online Income

2004-11-26T09:35:00.000-06:00

One of my favorite things about being an Internet Entrepreneur is that I can literally wake up in the morning with an idea for a new product and have it become a reality by the afternoon. Or I can find new ways to promote an existing product. Or I can join a new affiliate program or pursue a joint venture. Every time I repeat this process I create a new stream of income to add to my existing revenue base.

I firmly believe that the key to business success is this: Don't put all your eggs in one basket. What do eggs and multiple streams of income have to do with each other? If you spread your eggs across many baskets you can still make omelets even if one of those baskets goes away.

Similarly, if you have multiple streams of income, the loss of one income stream will not devastate you the way losing your only stream would. If you rely on only one source of income and that single income source goes away (ever been downsized, laid off or fired?), you are left broke and desperate. This is why every success Internet Entrepreneur that I know has multiple streams of income.

This is also why I encourage my readers, newsletter subscribers, and ebusiness clients to establish multiple streams of income, which is extremely easy to do online. Here are a few pointers to get you started.

Create Your Own Info Product
Regular readers of this column have heard me preach this sermon before. Creating your own info product is the best way to generate a new income stream because it is so easy to do, so easy to distribute, and offers maximum profit potential. I can wake up with a topic in mind, sit down at my computer and within hours have a short book or report that I can turn into a downloadable ebook and immediately offer for sale on my website.

Anyone can create an info product themselves or farm out the actual writing to someone more adept. If you've got an idea it's easy to find someone to do the writing for you. I've covered this topic before, but it's worth visiting again because it is one of the best ways that I know to create a new stream of income.

Become An Affiliate Marketer
This is one of my favorite ways to create multiple streams of income because there are hundreds (if not thousands) of affiliate programs that you can sign on with and begin making money immediately. As an affiliate marketer you market a company's product or service and when you send them a customer or make a sale you are paid a commission.

You can sign on with as many affiliate programs as you like and each one has the potential of creating another stream of income for you. Many Internet Entrepreneurs have become millionaires without ever having a product of their own. They did it by promoting affiliate programs

I talked about affiliate programs in a previous column and you should refer to that column for an in-depth discussion of affiliate programs.

Start An eBay Business
Selling on eBay continues to be one of the more popular ways to make money online, though very few people are getting rich with an eBay business alone. Many Powersellers don't make enough profit to cover their costs.

I gave you pointers on starting a successful eBay business in a previous column also found in this book.

Market Your Services Online
Are you a computer programmer? A writer or editor? A graphics artist or website designer? If so, you can market your services to customers around the world and it doesn't cost you a dime.

You can offer your services to customers on websites like elance.com or rentacoder.com. Basically you register with these sites and when someone posts a job that falls within your area of expertise you can bid on the work. For example, I needed a logo for one of my online businesses so I went to elance.com and posted the project for bidding and within hours I had a dozen graphic artists bidding for the job. I sifted through the profiles of everyone who bid on my job and picked a graphic artist who did the logo for less than $50.

Granted, I did not pay top dollar for the logo (to get it done locally would have cost ten times the amount I paid), but the designer probably spent an hour or two knocking out the 5 designs I got back and the work came to him, he did not have to spend a dime on marketing his services.

These are just a few ways to create multiple streams of income. There are hundreds of other ways to make money online. No matter which ones you pursue, just remember, the more streams of income you have, the bigger your money lake becomes.

The Secrets Of Starting A Successful Ebay Business

2004-11-19T09:38:00.000-06:00

Q: I hear so much about people who started selling on eBay and eventually turned it into their full time business. Is it really possible to build a profitable business just selling junk on eBay? -- Alex K.

A: If Fred Sanford were alive today, Alex, I'm sure he'd be earning his ripple money by selling quality junk on eBay. While it's also true that one man's junk is another man's treasure (I have a garage full of treasure to prove this point), your chances of building a profitable business selling "junk" on eBay (or anywhere else, for that matter) are slim to none.

While there is a lot of junk/treasure for sale on eBay, it is typically sold by individuals who have "I break for yardsales!" bumper stickers on their cars and not serious business people.

For serious entrepreneurs, however, selling on eBay can be a good way to start a new business if you are willing to put in the time and energy required to make the business a success. eBay is also a good option for existing businesses to expand their reach by selling online.

Everyone from small used car dealers to giant companies like Dell Computers have discovered that eBay is an excellent place to hawk their wares simply due to the huge number of folks who visit the eBay site on a daily basis. Nowhere else on earth will you find such a large pool of potential customers.

Consider these numbers: · There are nearly 69 million eBay users who spend $59 million every day. · Most eBay sellers are home-based businesses that sell every- thing from porcelain dolls to locks of Elvis' hair to $100,000 Mercedes convertibles to $5 million dollar vacation homes.

· Every minute of every day more than 150 new items are listed for sale, more than 500 bids are placed, and seven new people register to shop on eBay.

· At any given moment, eBay is conducting some 12 million auctions, divided into about 18,000 different categories.

· About two million new items are offered for sale every day, and 62 million registered users scour the site to find them. · One company is grossing more than $5 million dollars a year selling brand new pool tables on eBay. Their eBay store is so profitable that they have closed their retail location and now sell solely online.

That's right, $5 million dollars from the sale of pool tables: proof that you can sell just about anything on eBay if you know how to do it.

Be aware, however, that eBay is no magic bullet. As any eBay Power Seller (a seller who sells a minimum of $1,000 in goods per month) will tell you, building a profitable eBay business takes hard work and requires long hours, and often the financial rewards do not make it worth the effort spent.

When it comes down to the mechanics of it all, running an eBay business is no different than running a brick and mortar business. You still have the same considerations regarding product selection, inventory purchasing, product pricing, inventory management, order processing, fulfillment, customer service, etc.

You must also consider the legal and accounting aspects of the business. Just because you're selling online does not mean that Uncle Sam won't expect his piece of the pie. Revenue generated by an eBay business is just as reportable and taxable as revenue generated from a brick and mortar store. And if you sell to customers within your state you may also be responsible for collecting city, county or state sales tax.

One of the biggest obstacles to building a successful eBay business may be the stiffness of the competition. Many sellers sell identical items and the price wars often get ugly, but that's to be expected in a free market place, which is exactly what eBay is.

You may be the only store in town that's selling that one of a kind, custom made just for you, broke the mold after they made it, Dale Earnhart Memorial Bobble Head Action Figure (Earnhart fans would string me up if I called it a Doll), but do a quick search on eBay and you'll probably find a hundred others just like it.

So, can you build a profitable business selling on eBay?

Certainly, thousands of people have done it and so can you.

Here are a few tips to help get you started.

Sell Quality Products
Don't sell junk! Leave the knick-knacks and fake leather jackets to the less informed. You should offer only quality products at a fair price.

Research The Competition
Once you have your product in mind, don't invest a dime on inventory until you have spent some time on eBay to see what the competition is doing. If you want to sell motorcycle helmets, for example, you should look at current auctions to see how many others are selling similar helmets and what prices they are charging. This step is vital since you may discover that you can't compete with current sellers on price or there is simply no market for what you have to offer.

Start Slowly
Many people believe that the more items they have for sale on eBay the better. They will invest thousands in inventory and spent hundreds on listing fees (yes, eBay charges you to list items for sale and collects a final fee if the item sells). Those are the folks that usually end up with ten thousand Ginsu knives forever in their garage.

Test, Test, Test
A fair portion of eBay auctions result in no sales, so it's best to test the waters before jumping in with both feet.

List a few items and see how they sell. If an item doesn't sell, list it at least twice more. Some items might not sell the first time, but may the second or third, then sell steadily from then on.

If an item gets no bids the first time, consider adjusting your price or your terms. If an item sells well, keep it in stock and then experiment with another item.

Do Your Homework eBay is too broad a subject to be covered fully here, but there are a multitude of books available that can help you start an eBay business. In fact, I bet you'll find most of them for sale at this very moment at eBay.

What's my bid…

Here's to your success.

Tim Knox

How To Handle Customer Billing Snafus

2004-11-12T09:42:00.000-06:00

Q: I just discovered that for the past six months I have been billing a client half of what I should have been. Should I just include the total of the past due balance on his next bill or contact him first to let him know that it's coming? This client has been difficult in the past, so I'd rather not deal with him until I absolutely have to. My partner, on the other hand, thinks we should call the client and let him know what's going on before sending the bill. What do you think?-- Louis K.

A: I think your partner is right. If you think this client has been difficult to deal with in the past just wait until he opens your bill with six months worth of arrears attached to it without prior notice or a full explanation of the amount owed.

Sending such a bill is like dropping a bomb on the client's desk, and I guarantee you the fallout from the resulting explosion would end up landing squarely on your head.

So the question then becomes, how do you collect money that is rightfully owed to you from a client who has a history of being difficult? That's easy, Louis. You make your partner call him.

Seriously, whether the client owes you the money or not is a moot point. Yes, you made an accounting mistake, but if the client agreed to pay you a certain amount each month in exchange for certain services rendered, and you have been under-billing that client for delivering those certain services, the client owes you the money, period.

I have found that in situations like this it is always best to be proactive and face the problem (or what you perceive as a potential problem) as quickly as possible. This will save you hours of needless worry since most of the time the problem is not as big a deal as you imagined it to be.

There can only be three outcomes in this situation.

(1) The client will understand and pay you without argument.

(2) He will argue the point, forcing you to offer a compromise plan.

Or (3) He will flatly refuse to pay, forcing you to decide how far you're willing to go to collect what is owed. You should be prepared for either occurrence before getting face-to-face with the client. Remember this: In a business negotiation, he who is prepared the least gives up the most.
With that in mind, here's how I would handle the situation.

Arrange to meet the client in person. This is much better than trying to explain the situation over the phone because most people (including myself) tend to only give half of their attention when on the phone. The other half is usually focused on things going on around them while they're on the phone.

Once you're in front of the client, downplay the fact that an error was made (since the error did not negatively affect the service the client received). You might even poke fun at yourself over the situation (if the client has a sense of humor, that is). You should then politely ask if he would prefer to have the unbilled balance included on his next invoice or submitted as a separate invoice.

Then close your mouth, smile, and wait for him to respond.

You'll notice that you did not give him the option of not paying the bill, nor did you give him a point of contention to argue over. He should get the message that it goes without saying that he owes the money and needs to pay the bill, but being the wonderful person that you are, you are willing to let him decide how you should be paid.

I'm willing to bet that the client will choose option A or B and that will be the end of that. If this client has been difficult to deal with in the past, he may argue that since the mistake was yours, he shouldn't have to pay the bill. This is, of course, a BS argument (and I don't mean Bachelor of Science), but one that some clients might make just to get out of writing you a check.

As mentioned earlier, you should have prepared for this possibility before going in. If your business can survive without collecting the unpaid balance and you really want to maintain a relationship with this client, you should be prepared to offer a compromise that lets the relationship continue.

Without appearing to be caving under the pressure (this is the hard part) look the client dead in the eye and say, "Mr. Client, since I value your business and the billing mistakes were indeed mine, I'm willing to forego collection on the unpaid balance and start billing the correct amount with your next invoice, which, by the way, I happen to have right here…"

Granted, in this situation you are not going to collect on the past balance, but you are establishing the rules of the game for the future and you might even improve your relationship with this client. The money you forfeit today could lead to an increase in referrals, testimonials, and repeat business tomorrow.

Here's to your success.

Tim Knox

Entrepreneurs Just Get Better With Age

2004-11-04T09:44:00.000-06:00

Q: I'm thinking about starting a business after I retire next month. I'll be 65. Am I too old to start a business? -- Milton A.

A: Milton, congratulations on your pending retirement. I find it admirable that after many years of hard work you are thinking about starting a business. While most men your age would be content to sit on the porch and watch the world go by, you are considering a ride on the entrepreneurial roller coaster. You're certainly tall enough to ride this ride, but are you too old?

Here's my standard answer: It depends. It depends on your health, your energy, your drive, your goals, and of course, your finances. If all those are in good shape and you have your spouse's approval (that's a biggie), then there is absolutely no reason why you should not start a business at your age.

In fact, the numbers are actually in your favor. According to recent studies 22 percent of men and 14 percent of women over 65 are self-employed. That's compared to just 7 percent for other age groups.

According to a Vanderbilt University study the number of entrepreneurs age 45 to 64 will grow by 15 million by 2006.

That's compared to a 4 million decline for entrepreneurs age 25 to 44.

A 1998 survey of baby boomers conducted by the American Association of Retired Persons (AARP) revealed that 80 percent of respondants planned to work beyond retirement age, and 17 percent of those planned to launch new businesses.

The study noted, "Self-employment among American workers increases with age, with the most dramatic jump occurring at age 65."

Older entrepreneurs may also find starting a business easier than their younger counterparts because older entrepreneurs tend to have more experience to draw from and more assets with which to finance a business.

Further evidence comes from a report released by Barclays Bank entitled Third Age Entrepreneurs - Profiting From Experience. The report shows that older entrepreneurs are responsible for 50 percent more business start-ups than 10 years ago. This amounts to around 60,000 business start-ups last year alone.

The survey also showed that today's third age entrepreneurs (as the report calls entrepreneurs over the age of 50) don't mind putting in the hours required to build their business. Nearly 49 percent work an average of 36 hours or more a week.

Third agers also rated holidays, lack of stress and a balance between work and home life more important than their younger counterparts.

The report further showed that only 27 percent run the business as the only source of household income, with 51 percent supplementing their pension.

Other key findings showed that third age start-ups account for 15 percent of all new businesses, and third age entrepreneurs are three times more likely to be male than female. There is a downside (isn't there always?). Many businesses fail within the first few years and older entrepreneurs may be less able to handle the financial loss than younger entrepreneurs.

It's one thing to lose everything at 25, but it's a much bigger deal to be financially ruined at 65.

So my advice, Milton, is that if your health and finances allow (and the Mrs. gives the green light) by all means start your business.

Climb on the entrepreneurial roller coaster and hang on tight.

You get the senior discount, by the way.

Just try not to lose your lunch when things get bumpy and you'll probably do just fine.

Here's to your success.

Tim Knox

When It Comes To An Office Lease, It's ALL Fine Print

2004-10-28T09:47:00.000-05:00

Last week we looked at a few of the things you should consider before leasing that first office or storefront for your business. To recap, you should not only consider the old standard "location, location, location," but also consider things like sufficient parking, the number of employees who will be working onsite, and future growth projections. I stressed that it was important not to get caught up in the moment. You should take your time to find the space best suited for your business for the long haul, not just for today.

This week we'll discuss the most important aspect of the process: signing a commercial lease (insert dramatic music here). One of the biggest mistakes many entrepreneurs make when leasing commercial space is not reading the lease. Forget reading the fine print. When it comes to a lease its ALL fine print.

Don't believe me? Let me tell you the true story of my friend, Homer, whose name I have changed to protect the ignorant. Homer signed a two year lease on a suite of offices for his business. As the owner of the business Homer signed on the dotted line and agreed to personally guarantee payment of the lease and to abide by its terms. Homer moved in and it was business as usual until the end of the two year lease term drew near. It was then that Homer discovered that failing to read the lease was going to be a very costly mistake.

Toward the end of the two year lease period Homer decided to relocate, but when he gave the landlord what he thought was the customary 30 day notice, he discovered that the lease had automatically renewed for another two year term at the 60 day notice point. In other words, Homer didn't realize that the lease required a minimum of 60 days notice to let the landlord know that the lease would not be renewed. Because Homer did not know that he was required to give at least 60 days notice of his intent to vacate, the lease automatically renewed for another two years. And there was not a darn thing Homer could do about it but reach around and slap himself in the back of the head for not taking the time to read the lease.

What was the landlord's position when Homer pointed out that he had not read the lease and therefore was not aware of the 60 day notice? The landlord, while sympathetic to Homer's plight, stuck to his guns and told Homer that he would have to honor the lease, which meant that even if Homer moved out as planned, he was still on the hook for paying the rent for another two years.

Does the fact that the landlord chose to enforce the lease agreement rather than let Homer off the hook make him an evil man? Not at all. From the landlord's point of view, he had no choice but to enforce the terms on the lease. He had a signed contract that told him his space was going to be rented for the next two years. He had not planned on the space suddenly being vacant. Being a landlord with unrented space is like being a business with no paying customers. Empty space means no revenue from rental fees which means no money to pay the mortgage payment.

As the old saying goes, "It's just business…"

Sure, any landlord with a heart might feel bad that Homer was ignorant of the auto-renewal clause, but not so bad that they are willing to risk their own financial well-being by having Homer's space sit vacant. The bottom line is this: whether Homer read the lease or not is irrelevant. Homer signed the lease, thereby agreeing to its terms, and therefore he must hold up his end of the bargain, period.

As of this moment, Homer is relocating his business in spite of not being able to get out of his old lease and he will continue paying the payment on the vacated space for the remaining two year term of the lease or until he can sublease the space. Even then Homer is not fully off the hook because he will still be considered the legal tenant unless his sublessor agrees to sign a new lease with the landlord. Hopefully he will just have someone else making the lease payments.

Again, the moral to this story is READ THE LEASE. Or even better, have an attorney read it for you. I have learned over the years to never sign a legal document of any kind without letting my attorney review it, especially if the document involves money and my first born child.

Here are a few other points to ponder before signing a commercial lease.

How is the lease payment calculated? The most basic equation for calculating a lease payment takes the number of square feet times the cost per square foot, then amortizes that over a 12 month span.

For example, if you have 1,000 square feet and the cost per square foot is $12, the annual lease payment would be $12,000. Divided by 12 months the monthly lease payment would be $1,000. Again, this is a simplified scenario. These days most commercial leases include additional factors that affect the final price, such as rent increases, operating expense escalations, common area charges, etc.

Who pays for what? It's important that you understand exactly what you are paying for. Are you responsible for any costs other than the rent? Will you be responsible for paying your own utilities, for example? Will you have to pay for parking privileges or janitorial service? Who handles maintenance and repairs?

Is there an escalation clause? It is typical that the lease contain what's known as an escalation clause that allows the landlord to pass on increased building operating expenses to the tenants. If your lease contains such a clause you should ask for a cap on the amount the lease payment may rise over a given period of time. And if the escalation clause is ever activated by the landlord you are well within your rights to ask for an itemized accounting of the expenses that are being considered as cause for your raise in rent.

What rent increases might there be? One very important factor to know is this: if you do renew the lease how much can the landlord go up on the rent? It is expected that rents will increase as property values increase. If your landlord can rent the space for more than you agreed to pay a year ago, he is within his rights to ask for the increase. However, it would be a nightmare if your rent suddenly doubled overnight. Negotiate the increase before you sign the lease. Most rent increases are calculated by percentage, not by flat rates.

Renewals and terminations. Most leases require that you give a minimum of 60 days notice if you intend to terminate the lease and vacate the property. As Homer learned, many leases also renew automatically for another term unless you give notice within 60 days of expiration. Know when your lease expires and the time required to give notice.

Is a personal guarantee required? What happens if your business goes south and can no longer afford to make the lease payment? Are you then responsible for paying the rent out of your own pocket? Probably so. Most landlords insist on a personal guarantee from the owner or an officer of the business. This means that even if you go out of business you are still personally on the hook for the remainder of the lease.

Finally, clarify all points. You should be clear on every point in the lease. And if you are not, ask for clarification.

Exactly what space are you leasing? Who is responsible for repairs? What common areas will you have access to? Who is responsible for maintaining the little things, like keeping the shared estrooms stocked with soap, towels, and most importantly, toilet paper.

A small detail to consider now, but not when you suddenly find yourself without such amenities at the wrong time.

Here's to your success!

Tim Knox

What's The Customer Service Buzz About Your Business?

2004-10-20T09:50:00.000-05:00

If you're a regular reader of this column you know that my number one pet peeve is bad customer service. Nothing chaps my backside more than paying hard-earned money for a product or service only to have the provider of said product or service become apathetic, obnoxious or just downright rude after the transactional smoke has cleared.

The bottomline, my entrepreneurial friend, is this: it doesn't matter if your product is fast food, slow food, retail goods, computers, lawn mowers, books, real estate or automobiles, if a customer is willing to pay you good money in exchange for your product or service that customers deserves to be treated with gratitude and respect, before and after the sale. Period.

I'm constantly amazed at how many business owners and the frontline employees who represent them seem to forget this simple fact.

It's like the old saying about getting a little respect in the morning. If you court me before the sale, you damn well better respect me afterward. Just because you have my money in your pocket and I have your product in my hand, that does not mean that my needs have been fully satisfied or that my expectations have ceased to exist. To the contrary, our relationship is just getting started. It's up to you how well we will get along and how long our relationship will last.

Here's the point: customer service should not stop after the sale. In fact, customer support AFTER the sale can have greater impact on the success of your business than customer support before the sale.

Nothing generates negative buzz about a business like bad customer service, and nothing will drive nails in a business' coffin faster. News of bad customer service travels like lightning and spreads like wildfire. Think back to the last time you were on the receiving end of bad customer service. I'd be willing to bet that you immediately went out into the world and told everyone you met about the experience. You probably also warned them to "never do business with those &^%$ or you'll get treated the same!" As a business person, it should be your mission to make every customer a repeat customer, and one of the best ways to do that is by delivering superior customer service every time that customer comes through your door. Superior customer service leads to increased customer satisfaction, which leads to repeat business, which leads to customer loyalty. It is also much cheaper to keep a customer than to obtain a new one.

The fast food industry is especially prone to customer service problems. This is due in large part to the fact that every transaction is a face-to-face sale and the average fast food worker is a disgruntled teenager who would rather be lying on a bed of nails than standing behind a fast food counter schlepping fries.

However, that doesn't always have to be the case. This is not meant as an ad for Chic Filet or as a slam at Taco Bell, but the difference in customer service between these two fast food titans is astounding.

I used to frequent both establishments (fast food is my crack), so this is the voice of experience speaking. Behind the counter at the local Chic Filet are young people who seem genuinely happy to be of service. They are clean cut and polite. They don't wear their baseball caps sideways or have anything visibly pierced. They look me in the eye, they smile like there is no place on earth they would rather be, and they ask for my order in clear, concise English. They thank me profusely and invite me to come again. Excellent customer service after the sale.

Inversely, a recent trip to a local Taco Bell almost ended on an episode of Cops because the young lady behind the counter grew angry when I politely pointed out that my nachos were stale and asked for a fresh bag (pet peeve #132: stale nachos).

Miss Mary Sunshine snatched the offending nachos from my hand and slam dunked them in a trash can, then tossed a replacement bag (which were also stale) on the counter in front of me. She then gave me a look that clearly said that if I had any further complaints she'd be happy to escort me outside to discuss them in detail. I like nachos, but not so much that I would risk getting my behind kicked by a disgruntled teenage girl wearing a sideways Taco Bell cap. Not-so-excellent customer service after the sale.

Now, which restaurant do you think I will go to the next time I feel the need to feed my fast food monkey? And which restaurant do you think I enthusiastically recommend to my friends? The one that understands the importance of good customer service before and after the sale, of course.

The worst customer service experience I've ever had involved the purchase of a vehicle at a local used car lot. I purchased the used Ford Expedition on a Friday evening and when problems arose with the vehicle over the weekend, I went back to the dealership on Monday morning to speak with the sales manager.

To say the least, the sales manager (who acted like my best friend on Friday) was not thrilled to see me on Monday. To make a very long story short, when I pointed out that he wasn't being very helpful after the sale he came around the desk yelling at the top of his lungs and waving his hands in my face.

By the time the receptionist managed to calm him down, the sales manager had gone so far as to call me "a retarded idiot" (which may be considered redundant) and had instructed me to do something with the vehicle that I believe is anatomically impossible.

It was an Expedition, I'm a little guy. Use your imagination.

Though the dealership owner later apologized and offered to take care of any problem I had, the damage to his business had already been done. The bad buzz machine started the second I left his lot.

Do you think I told everyone I met about my experience with that dealership? You bet your stale nachos I did. Do you think I will ever buy another car from that dealership? Not on your life. Do you think anyone I've told about the experience will buy a car from that dealership? Probably not. Do you think the owner and sales manager learned anything from the experience? We can only hope.

In the end, what is the value of great customer service before and after the sale? Priceless, my friend.

Simply priceless.

Now, can somebody please get me some fresh nachos…

Do you have a customer service horror story? I'd love to hear it. Email me at the address below.

Here's to your success.

Tim Knox

There Are No Dumb Business Questions, Not!

2004-10-12T09:53:00.000-05:00

Q: I'm curious. What is the dumbest business question you've ever been asked?-- Norris W.

A: Shame on you, Norris. There is no such thing as a dumb business question. OK, that's not exactly true. There are dumb business questions and I do get quite a few of them. Not through this column, of course. People intelligent enough to actually use a computer and surf the World Wide Web would never submit dumb questions now, would they. OK, that's a lie, too. I've gotten a few head-scratchers in response to this column. You know who you are, but don't worry, your secret is safe with me.

I have a confession to make. Writing an advice column, whether it be advice for love or money or business, is often hard to do with a straight face. Occasionally a question comes over the digital transom that just makes me go, "Huh?"

It's kind of like trying to stifle a giggle when Grandma breaks wind at Sunday dinner. Some things are just better left ignored.

Of course it's hard to blame a dumb business question on the dog.

I've been writing advice columns for a long time. Most of the requests for advice I receive are sincere and intelligent, and as a (usually) sincere and (somewhat) intelligent columnist, I feel obligated to dispense the best advice I can for the betterment of the person who asked the question.

However, once in a while a real stinker hits the old email box and it takes everything I've got to resist shooting back an answer that is worthy of the question asked.

In other words, when I get a dumb question, my gut reaction is to respond with an answer of equal intelligence, or the lack thereof. Something subtle, like, "Forget business, my friend. The best thing you can do for mankind is to go find a pair of sharp scissors and run… really fast…"

Stupid is as stupid does, Forrest. Greater words of wisdom have rarely been offered before or
since.

Then I remember that as an advice columnist I have a duty to my reader, my editor, my publisher, and above all, to my family, who enjoys eating on a regular basis. There aren't too many openings for smart aleck writers anymore (darn that Dave Berry), so I bite my tongue and respond to the question as intelligently as I can. That usually involves requesting more information from the reader so I can offer an informed answer. It's not as satisfying as firing off a sarcastic retort, but it is much better on the old bank account.

Since you asked the question, Norris, I feel obligated to give you an answer. What is the dumbest business question I've ever been asked? I'll let you decide.

The following are real questions from real people that are running around loose among us. If you recognize your question please don't be offended. This is all in good fun and remember, ridicule is the sincerest form of flattery. Or something like that.

Here's a question I get at least once a week: "I have never been in business before, but I think I'd be really good at it. Can you tell me what would be the best business for me to start?"

Hmm, how about one that involves the Psychic Hotline, since that's who I will have to consult to answer your question. I don't know anything about you, your background, your abilities, your talents, your experience, or anything else. How can I possibly tell you what would be the best business for you? Who do I look like, Miss Cleo?

Here's one of my favorites: "I need to make a lot of money really fast. What business should I start?"

You need to make a lot of money fast, huh. No problem. I have one word for you, my friend: counterfeiting… Somebody hand me an umbrella. It's raining stupid in here.

Here's an oldie but a goodie: "I have a killer business idea, but I don't have any money. Do you ever invest in businesses or just give advice?" Unfortunately, I only invest in non-lethal business ideas, so I'll have to pass on your killer idea. Thanks for thinking of me, though. This window is now closed…

And my all-time favorite: "I have a great product that nobody wants to buy. How can I make customers buy my product."

How can you make a customer buy your product? Piece of cake, buddy boy. Try using the same method I use to make my kids mind. Threaten to put your customer in time out if he doesn't buy something from you right this second! Don't make me get up and sell you something, young man…

I could go on, but I think the point is made. Keep those cards and letters coming, boys and girls. It's readers like you that make this job so darn interesting.

Here's to your success.

Tim Knox

The Thick Line Between Buddy and Boss

2004-10-03T09:55:00.000-05:00

Q: One of my key employees is giving me trouble. He has started showing up late for work and has developed a bad attitude in general. The rest of my employees are complaining since they are having to take up his slack. I've tried talking to him, but he doesn't seem to listen. To make matters worse, he has become one of my best friends since I hired him five years ago, so firing him is out of the question. What can I do? -- Allen B.

A: One reason I am so qualified to dispense sage business advice every week, Allen, is that I have made just about every business blunder you can imagine. I am like the Evel Knievel of the small business world, if Evel Knievel wrote a weekly column on motorcycle safety.

One of the more unpleasant things I've had to do is fire a good friend who was not doing the job I hired him to do. He needed a job, I needed an employee, so I thought I would give him a shot. It turned out to be a match made in business hell. He took advantage of our friendship by showing up late for work, spending time goofing off instead of working, and making a joke out of my complaints about his behavior. Because of our friendship I defended his actions to my other employees, but after a few weeks I knew I had to show him the door. We're still friends, but certainly not like we were before.

The blunder I made was hiring a friend in the first place. I let emotion, i.e. the desire to help my friend gain employment, get in the way of my business sense. That's what you are doing now, Allen, and I hate to be the bearer of bad news, but you are going to have to deal with this situation soon or your entire operation may be affected by the actions of this one person.

The blunder you have made is that you have befriended an employee, which is something you should never do. I'm not saying you can't be friendly with your employees, but you have attached a considerable amount of emotional baggage to the employer/employee relationship and the result is the situation you are faced with today.

Friends expect preferential treatment simply because they are your friends. The workplace, however, must be a level playing field for all your employees, friends or not. While employees deserve your respect (if it is earned), giving one employee preferential treatment over another is never a good idea. This is a problem experienced by many business owners and managers who allow themselves to become too close to their employees.

I understand that he has become your friend over the years and you'd rather eat rocks than fire him, but you have to consider how his behavior is impacting your business over all. What effect is he having on employee morale, on work schedules, on customer relations, on time spent fixing his mistakes, and most importantly, the bottom line?

You have two options: get him back on track or get him off the payroll, period. That may sound cold and politically incorrect, but those are your only choices. Either way, you must be his employer first and friend second. He may have personal reasons for his performance, but as his employer you are legally limited as to how much prying you can do into his home life. As his friend, however, I expect that you already have a good idea what the problem is. If you can help him return to being a productive member of the team, then do so. If not, wish him well, let him go, and move on.

Here are a few suggestions to help you establish and enforce the boundaries of the employer/employee relationship.

Define the relationship. Keep your seat, Dr. Phil, this won't take long. The employer/employee relationship should be well-defined from the outset and the parameters understood by all parties. Some call it "defining the pecking order" or "establishing the food chain." Whatever colorful term you use it all boils down to this: You can be their boss or you can be their buddy. You can not be both.

Don't hire friends or relatives. This rule is certainly bendable if you are the owner of the business and you hire your children to work for you. Chances are your offspring already accept you as the ultimate authority figure and managing them in a business environment is second nature. However, even this situation could have a negative impact on your business as non-related employees often expect the boss' son, daughter, or best buddy to work less, make more money, and be treated better than everyone else. Whether that's true or not, nepotism and cronyism can create an underlying tension among the ranks.

Establish and adhere to company policies. It's a good idea to have published policies concerning every aspect of your business, including employee behavior and performance expectations. By it's very nature the employer/employee relationship is prone to favoritism. Managers can't help but favor those employees who work harder, longer, and faster, but when it comes to adhering to company policies, there should be no preferential treatment of favored employees. Every employee should receive a copy of your published company policies and sign a form stating that they have read, understand, and agree with the same.

The Bottom Line: treat everyone the same. It does not matter if the employee is a vice president or a janitor; everyone in your company should be treated the same when it comes to adhering to published company policies and performance expectations.

While it is true that a vice president may be of more value to the company than a janitor, it is also true that a vice president who is running amok can do far more damage to your company than a janitor who lets a toilet back up every once in awhile (there's an analogy there that I will let you figure out on your own).

It's not personal, it's just business. This is what the movie bad guys say to one another right before the shooting starts. "Hey, Paulie, it's not personal. It's just business." BLAM! BLAM! This is the dating equivalent of saying, "It's not you, it's me." These kinds of statements are not going to make anyone feel better when they are getting dumped or fired. Just ask any former employee or old girlfriend you've used this line on.

If you have to fire an employee - even a friend - do it by the book in a professional manner.

It won't be easy, but you have to remove the emotion and do what's best for your business.

Here's to your success.

Tim Knox

The Business Autopsy: A Fact Of Life

2004-09-30T09:57:00.000-05:00

Last week we discussed the importance of performing an autopsy on a dead business. No, I haven't been watching too many of those wonderfully graphic, TV forensic investigation shows. The reason I recommend you do a business autopsy is to uncover the exact reasons why the business died. This is valuable information that can not only heal feelings of personal failure, but also better prepare you for the pitfalls of business should you ever take the plunge again.

Starting a business is never easy and the odds of your success or failure are about even money. The fact is, approximately half of all small businesses fail within the first four years. And a large percentage of those failures occur within the first year. These are the statistics that keep many entrepreneurs awake at night. Like Sisyphus, always pushing that boulder to the top of the hill only to have it tumble back to the bottom each time, you never know when you're going to lose your grip on your business and have it tumble back over you.

OK, so far in this column I have managed to squeeze in references to modern American television and ancient Greek mythology. Enough highbrow beating around the bush. Perform the autopsy and learn from it. Only by knowing the real reasons your business died can you identify and hopefully stave off those maladies before they take you down next time, if there is a next time. And if you're a true entrepreneur there will be a next time, trust me on this.

There are many reasons why businesses fail, but according to a recent survey by U.S. Bank, the majority of business failures can be attributed to three reasons: bad management, bad financial planning, and bad marketing.

Bad management comes in many forms. The survey showed that seventy-eight percent of the business failures examined were due in part to the lack of a well-developed business plan and a business owner who had no business being in the business he was in. In other words, the business owner did not have an adequate knowledge or a thorough understanding of the business he had chosen to start. This is why software entrepreneurs like me don't start shoe stores. I have feet, I wear shoes. That's not enough to qualify me to go into the shoe business.

Next, seventy-three percent of the business failures in the survey were also manned by owners with rose colored calculators. These business owners over-estimated revenue projections (the number of expected sales) and under-estimated the burn rate (the amount of money required to sustain the business per month).

It gets better. Seventy percent of the failed businesses in the study were led by entrepreneurs who were in denial regarding their own competence, or more to the point, their own incompetence. These business owners either didn't recognize or chose to ignore their own entrepreneurial shortcomings. These entrepreneurs also did not seek assistance from others who might have made up for their inadequacies. It's sometimes hard to ask for help when you are supposed to be the one with all the answers.

Believe me, I know.

The final contributing factor to the death of sixty-three percent of the businesses who died from bad management was that the owners had no relevant or applicable business experience.

Bad financial planning was the second reason sited by the survey as to why most businesses fail. In business, it's always about money. According to the U.S. Bank study, eighty-two percent of the business failures studied reported poor cash flow management as a contributing factor to the death of the business.

Seventy-nine percent of the businesses were inadequately funded, and seventy-seven percent miscalculated the cost of doing business. In other words, they failed to take into account all of the costs involved when setting the price for their products.

Let's move on to my favorite subject: bad marketing. You've heard me preach this sermon before. You can have the greatest product in the world, but if your marketing efforts are inadequate or ineffective you will end up with a warehouse full of the greatest product that no one in the world has ever heard of.

The study showed that bad marketing was a contributing factor in the death of sixty-four percent of the businesses surveyed. Many of these misguided entrepreneurs either minimized the importance of marketing and promotion or ignored it totally.

A vital part of marketing is knowing who your competition is and always knowing what they are up to. The entrepreneur who ignores his competition is a fool (gee, was that too harsh?) and is always destined to fail, as proven by the fifty-five percent of the dead businesses in the survey who either didn't even know who their competition was or simply chose to ignore the competition altogether.

Here's a nice hole in the sand for you, sir.

Please insert your head…

Another mistake made by forty-seven percent of the deceased businesses was that they relied on just one or two customers for the bulk of revenues. This is a common mistake made by many business owners who devote all their energy to one huge client. What they don't seem to understand is that if that one customer goes away, so does most of their revenue.

When performing your business autopsy you might identify other contributing factors that were beyond your control, such as a down economy, the lack of qualified employees, new government regulations that negatively affect the way you must do business, the failure of a strategic partner, etc..

There will always be things you can't control. The key to business success is to keep control of those things you can and do everything you can to prepare for those things you can't.

Next time we'll discuss a few things you should and should not do to help ensure your business success.

Here's to your success.

Tim Knox

Investing In Son's Business Could Cause A Real Family Feud

2004-09-12T10:03:00.000-05:00

Q: My youngest son wants to borrow $5,000 to start his own business. My wife is afraid to tell him no. She thinks we should just give him the money and not expect anything in return. I disagree. He doesn't have a very good track record with money, so I'm a little worried that my investment will be lost. Should I loan him the money and hope for the best or just tell him no and hope he doesn't get too upset?

A: The first thing you need to do, Jeff, is determine if this money would be offered to your son in the form of a gift, loan or investment. The very wording of your question tells me that you have not yet made that all-important distinction.

It sounds like your wife wants to make a gift of the money, expecting nothing in return but the undying love of her last born son.

You, on the other hand, don't know if you should offer the money as a loan (should I loan him the money) or as an investment (worried that my investment will be lost).

Until you can make that distinction, your money should remain in the bank.

I have a very simple rule when it comes to loaning money to relatives: NEVER, EVER loan
money to anyone you might have to sit next to at Thanksgiving dinner.

"Son, pass me that dressing and tell everybody the story of how you blew your old dad's retirement money..."

A loan from a relative is no different than a loan from a bank. You, Mr. Banker, are giving your son, Mr. Borrower, the use of your money for a specific period of time and you fully expect the loan to be paid back under specific terms, even if his business goes south. Sure, you will probably be a little more forgiving than a bank when the loan goes unpaid, but the damage to your personal relationship could be extreme and hard to repair.

In the most basic of terms if you loan your son the money you become the creditor and he becomes the debtor. Have you ever heard of a creditor and debtor having a very good relationship? Has Visa ever called you up just to ask how you're doing? Has your mortgage company ever named a kid after you? Probably not.

The same rule applies with investing in a relative's business. I have raised money for several business ventures and not once did I ever think about asking my relatives to chip in. The last thing I'd ever want to do is lose my mother's yard sale money. I'd never hear the end of it!

An investment is made with the understanding that your money is totally at risk with no guarantee of return. Even under the best of conditions an investment in any business is a gamble. You are betting your money that the business will be successful and that you will get a payback at some point in the future.

Hug your money real tight before making the investment, because if the business doesn't make it, you will never see your money again.

You and your wife also seem very worried about making your son mad, which raises another huge red flag for me. If your son isn't mature enough to take the word "no" without getting upset, he's certainly not mature enough to start and run a business. Unless that business is a bicycle paper route, and even then I wouldn't put my money on his chances of success.

The bottom line is this: if you can afford to give your son the money and can do so without attaching strings to it, then by all means give him the money and wish him well. Encourage his entrepreneurial spirit and support him as a parent should.

Do not, however, expect anything in return and never bring up the money again, especially if he's the one carving the turkey on Thanksgiving Day.

Here's to your success!

Tim Knox

Perceived Value Is In The Eye Of The Beholder

2004-08-14T10:01:00.000-05:00

Q: My partner and I are having a hard time coming up with what we feel is the perfect price for our new product. We know what competing products sell for, but we don't know if it's better to price our product cheaper than theirs or charge more based on what we think is a superior product. What is the best way to determine the perfect price and what is the rule of thumb for raising prices later on? -- Jennifer L.

A: Like the perfect man, the perfect plan, and the perfect murder (not sure what those three have in common, but there is a link there somewhere), there is no such thing as the perfect price. There is that mythical price that gives the customer excellent bang for his buck and the company excellent profits for its efforts, but even that price point can't be considered the perfect price. That's called compromise, not perfection.

Pricing is an important aspect of every business because price is used to create financial projections, establish a break even point, and calculate profit and loss.

It's also important to establish a good price point from the beginning because it is much easier to lower prices than to raise them. If you introduce a product at $100 and make no sales, you can easily lower the price to $75 without attracting much attention. However, if you introduce the product at $75 and it proves popular and you raise the price to $100, you may face irate customers and even be accused of price gouging. So it's better to start high and adjust down, if need be.

There really is no rule of thumb when it comes to raising prices. Price is never set in stone and consumers expect prices to change with the times. You might raise prices to cover an increase in the cost of manufacturing and other production costs, or in response to market demand (the greater the demand, the higher the price).

You can also justify a price increase when you improve a product's quality, features and benefits. The buying public is generally price conscious, but if you can show that the value of your product has increased by the addition of new features and benefits, then the public will usually not balk at an increase in price. Keep in mind that price increases should be done in small increments over time, not by significant amounts over night.

Though price may be determined by any number of factors, basically there are three ways to establish the price for your product.

The first way to determine price is to perform a comparative analysis on similar products sold by competitors. Are the features and benefits similar to your product's? If so, use the price of the competing product as a possible price point for your product. If your product is superior in quality, features and benefits, then you might be able to justify a higher price and still be competitive. If your product is inferior, then your price point will be less.

The second way to establish pricing is to calculate the total cost to produce and deliver your product, then figure in an acceptable margin of profit to calculate the final price.

The third way to establish a price it to use what I call "The David Copperfield Method." Named after the famous magician who made the Statue of Liberty disappear on national TV, this method of pricing simply means that you pull the price out of thin air. Believe it or not, this is the method that many companies use to establish pricing. It's also the reason many companies disappear.

It's easier to understand the allure of the Copperfield Method when you realize that more often than not, product pricing comes down to one thing: perception.

Perception, or as it is more commonly referred to in business, perceived value, is one factor that most entrepreneurs use to determine product pricing. As entrepreneurs, our products are our children. We create them, we nurture them, we grow them and we love them. And often we perceive their value to be much greater than the market perceives it to be.

It's all about the perception of value. What makes a $10,000 Rolex watch more valuable than a $10 Timex? Functionally both are watches and both perform the exact same function: they tell time. Why then does one sell for a thousand times more than the other? Perceived value, nothing more.

An expensive wristwatch can not make you better looking, smarter, healthier, or more popular with the opposite sex. But the perception is that if you have a Rolex on your arm you must have something going for you that the wearer of a $10 Timex does not.

By the way, does anybody have the time? My Timex seems to have stopped...

Here's to your success!

Tim Knox

Don't Fall For The Latest Internet Identity Theft Scam

2004-08-02T10:11:00.000-05:00

The allure of PayPal is that it does not require the seller to have a bank merchant account through which to process credit cards. Anyone with a verifiable email address and bank account can use PayPal and the service can be implemented almost immediately after registering. When someone places an order on a website that uses PayPal for online payments, that customer is directed to PayPal.com to complete the payment process using a credit card or electronic check. The merchant can transfer the money collected in his PayPal account to his checking account any time he likes. Since many larger merchants make this transfer just once a week or so, their PayPal accounts are ripe for the picking from those who have the cunning and lack of ethics required to gain access.

The shear number of PayPal customers is one reason it has become a popular target of scam artists trying to steal personal information from individuals and businesses alike. Identify theft is on the rise. Thanks to the Internet stealing someone's identity has never been easier. At any given moment, there are any number of Internet thieves using all manner of high tech wizardry to steal personal and business information from unsuspecting souls, and many times they can gain access to this information simply by asking the person to provide it through fraudulent means.

Identity theft is what's known as "a knowledge crime," which means that the criminal doesn't have to break into your house to rob you blind. If you have a bank account and a social security number, you are susceptible to identity theft.

Here are a few ways to protect yourself from business and personal identity theft.

· Never give out your first name, last name, business name, email address, account passwords, credit card numbers, bank account information, PIN number, social security number, or driver's license number.

· Change your online account passwords every 30 days. Believe it or not, a hacker who steals your personal information can guess your online account passwords in about two minutes. If your Charles Schwab online account password is your birthday or the name of your first born or family pet, count on a hacker cracking that code faster than you can say "Bill Gates."

· Never provide personal information in response to an email or telephone call. Just because someone calls and says they are from Dunn & Bradstreet and need to confirm your business information does not mean they are really from Dunn & Bradstreet.

· Never give your business credit card number over the phone to place an order with someone who has called you unsolicited. If you are interested in what they are selling get their number, check out their company, then call them back to place the order.

So, if you ever receive an email from PayPal, Amazon, eBay, or any other ecommerce website asking you to update your account information by email you can pretty much bet the farm that it is a scam.

Here's to your success.

Tim Knox

How To Tell If Your Amazing New Product Idea Is Really Worth Gambling On

2004-07-15T10:04:00.000-05:00

Q: I have a great idea for an amazing new product. There is nothing like it on the market and no competition that I can find. I think it will be a huge success and so does everyone I tell the idea to. I'm willing to bet the farm on this one. What do you think my chances of success are?

A: I'm a lousy poker player, mainly because I can't help grinning like the village idiot when blessed with a winning hand or frowning like a sad clown when dealt a dud.

I also never make odds on the success of "amazing new products" because more often than not the only thing that's amazing is the way the product is totally ignored by the buying public. In my software business there have been times when we came up with what we thought was an amazing idea for an amazing piece of software - a piece of software so amazing, in fact, that we knew that all mankind would sit up and take notice, then line up to write us checks.

After hundreds of hours and thousands of dollars spent developing the product we were amazed to find that the only people who thought the software was truly amazing was us.

We made mankind yawn. Quite an amazing accomplishment, if I do say so myself.

It worries me that you say there is nothing like your idea on the market. While you may think that is a good thing, it might actually mean that there is no market for your product. The same holds true for a lack of competition. A total lack of competition might mean that there is no demand for such a product.

Rarely does a product come along that revolutionizes an industry. Rarer still does a product create a new industry on its own. So, how can you tell if your amazing new product really is worth gambling on? The truth is, you can never be 100% certain that your idea will sell. No matter how enamored you are of it or how much your friends rave about it, the success of a new idea depends on a number of factors, many of which are beyond your control.

Such factors include:

· The viability of the idea: is this really a product that you could build a company around? Does the idea have the potential to generate revenue or customer loyalty? · The people implementing the idea: the right team can make even a mediocre product a huge success (ever heard of Windows). Inversely, a bad team couldn't sell ice water in Hades. Pick your team carefully. The right people really do make all the difference. · The demand for such a product in the marketplace: will this product fill a need or satisfy an itch? · The competition: is the market already crowded with competitors? If so, what will it take to move your product ahead of the pack? · The depth of your pockets: even an amazing product requires a ton of cash to go from drawing board to store shelf. · The availability of other resources required to take the product from the drawing board to the consumer: do you have the time, the drive, the perseverance, the knowledge, the contacts, the support, and a hundred other things required to bring your amazing idea to fruition? · The list wouldn't be complete without sheer luck and timing. · And a thousand other things.

Before you invest too much time and money into your idea, do a little research to determine if it's an idea that's really worth gambling on:

· Research the market for similar products. Again, if there are no similar products on the market that might mean there is no market for that product. If there truly is nothing exactly like your product, research similar products that fill a similar void in the consumer's life. Learn all you can about such products: pricing, market share, track record, etc. · Research the competition. As mentioned earlier, if there is no competition there may not be a market for a product like yours. If there is competition, research the competition fully (little guys and big guys) to help determine if you can realistically compete for market share. · Identify your target customer and ask them for an honest evaluation of the idea and its marketability. Avoid friends and family as they usually just tell you what you want to hear. If your target customer is a 35 year old female, pitch your idea to every 35 year old female you meet and gauge their response. Just don't break any stalking laws in the name of market research… :o).

The best advice I can give you when it comes to amazing new product ideas it's best to follow your head and not your heart. It's a lesson that took me years to learn. If I had a nickel for every amazing new product I've invested in I'd go play a few hands of poker.

Here's to your success!

Tim Knox

When It Comes To eBay, Don't Follow The Herd

2004-07-05T10:06:00.000-05:00

: I want to start an online business. Since I don't know anything about ecommerce and building websites and such, I'm thinking about starting out selling products on eBay, then pay someone to build a website for me once the money starts coming in. The big question is: what is the hot product to sell on eBay to make money fast?-- Bob D.

A: While it's true that selling products on eBay can be a quick, low cost way to launch an online business, following the herd by selling the "hot product" of the moment, is not a great idea. To the contrary, chances are you will be stomped in the ground by the herd and left lying in the dust with your unsold inventory in hand.

We talked about starting a profitable eBay business in a previous column and the advice I dispensed then still applies today.

The most successful eBay sellers are those who understand that success on eBay relies on many of the same factors as success in a brick and mortar business.
* Smart sellers research the marketplace and the competition to determine the salability and profitability of the product.
* Smart sellers test the market with one or two before committing to a product line and tying up their cash reserves in inventory that may never sell.
* Smart sellers adjust their product offerings until they find a product or product line that sells consistently.

The last point is perhaps the most important. Long term eBay success does not come from "one off" sales. The key to real eBay success is to find a product that sells well and sell that product over and over and over again.

I asked Timothy Mina, author of the new book, The Online Auction Expert's Bible To Selling on eBay, his thoughts on launching a successful eBay business.

Why is eBay so attractive to entrepreneurs?
"With an eBay business, you set your own hours and set your own goals," Mina said. "You can work as much or as little as you want and whenever you want. Many sellers supplement their income by selling on eBay and many others have turned it into a full time business."

Mina cites the following reasons for eBay's growing popularity among entrepreneurs who want to start an online business:

* You can start up quickly and don't need special skills.
* There is very little risk and investment required to get started.
* The marketplace is huge. There are millions of potential customers waiting to buy what you're selling, 24 hours a day, with the click of a button.
* No stress, no boss. Yes, there is work involved, but the work can be done at your own pace. You are your own boss and you set your own schedule.
* Most importantly, you can follow your passion and do something you love. If you sell something you enjoy selling, online auctions aren't just profitable, they're fun and exciting, too.

Why It's Critical To Find Your Niche
Mina recommends creating your eBay business with niche items. According to Mina, the benefits of targeting a specific niche market include:

* If you are going to rely on eBay as your primary source of income, it is essential that you find your niche. If the goal of your eBay business is to earn enough money in your spare time to make your car payment every month, it is less important, but still highly recommended.
* If you find a profitable niche, you will become a certified guru of the items you sell you will ideally be the only one on eBay offering the products.
* Your expertise will make it ten times as easy to spot bargains when you're shopping for products to resell. Bargains might be all around you, but if you don't know anything about what you're selling, you won't know how to spot bargains that are right in front of you.
* You will find different ways to add personal value to your products. These low cost add-ons or unique twists to your products will drastically increase your sales and profits by making your items unique and desirable.
* You will have little or no competition from other sellers, so you can corner your niche market.
* By dealing with the same type of customer over a long period of time you will get to intimately understand the mindset of your target customer and what your customer wants. This will help you sell your products better and allow you to market your products in ways others haven't thought of.
* You will be knowledgeable and enthusiastic about what you sell, and you will be attentive to your customer's desires. This results in satisfied customers, name recognition, and a lot of repeat business.
* You're going to find something you're passionate about and specialize in it. If you love what you're doing, you have a much greater chance of sticking to it and loving it. So it won't even fell like work - it'll be like you're getting paid to play.

How do you find your niche?
So how do you find your niche? Mina recommends doing an inventory of your hobbies and interests to help you identify a niche you would enjoy working in.

Ask yourself:
* What are you passionate about?* What do you collect?
* What do you like to read about?
* What do you do in your spare time?
* So you have a favorite pastime?
* What was your major in college?
* What jobs have you had?
* Are there any other fields in which you have a great amount of knowledge?
* What clubs do you belong to?

Mina also recommends that you spend time on eBay studying the category listings. This may give you additional ideas for hobbies you can turn into an eBay business. Once you have defined your hobbies or interests, brainstorm how you can turn them into a business.

* How can you turn your expertise into a product?
* How can you add value to current products related to your interest?
* What product can you sell that may be one of a kind and have little or no competition?
* Can you think of novel ideas that people who share your passion would love?
* Is there anything related to your hobby that you can create yourself? An ebook or a how to, perhaps?

Here's to your success.

Tim Knox

Does Your Website Induce Seizures?

2004-06-19T10:13:00.000-05:00

Q: We promote our web site in all our ad campaigns, but according to my website statistics program, we are getting very few visitors who click past the first page. The site has a cool Flash intro page that the designer said would impress visitors, but it doesn't seem to be working. What can we do to get people to spend more time on the site? -- Christopher O.

A: The first thing you should do, Christopher, is find that designer and beat the living Flash out of him. It won't increase the time visitors spend on your website, but it will make you feel better after you've read this column.

What your designer thought would appeal to visitors is probably the very thing that is driving them away. A Flash introduction page (Macromedia Flash is a software program used to create animations for Web pages) may seem "cool" to you, but from a website visitor's point of view, they can be about as appealing as sitting in the front row of a Pokemon movie with four hundred screaming six year olds (and here comes the segue, folks).

In December, 1997, during an episode of Pokemon, the popular Japanese TV cartoon that has spawned everything from movies to action figures to lunch boxes, a scene featured a rocket explosion that flashed red and blue lights in rapid succession. After the episode, over 600 children were taken to hospitals complaining of seizures, blurred vision, headaches, dizziness, and nausea. Any adult who has ever been exposed to Pokemon for more than two seconds can understand the nausea, but the seizures at first baffled doctors. Scientists ultimately came to attribute the mass reaction to "photosensitive seizures," which are brought on by exposure to certain visual stimuli like rapidly flashing lights on a TV screen. Remember when your mom told you not to sit so close to the TV or you'd ruin your eyes? Turns out she knew what she was talking about. Who knew?

The event caused such concern that Japanese broadcasters and health officials met to discuss ways to prevent future occurrences of bad-cartoon induced illnesses. They established guidelines for the broadcast of flashing images: no image may flicker faster than three times per second; flashing images should be displayed for no more than two seconds; and stripes, whorls, and concentric circles should not take up the largest portion of a TV screen.

It's my humble opinion that these rules should apply to websites as well. I've been in the Internet design business for nearly a decade and I have been witness to numerous websites that could induce photosensitive seizures in blind moles. It sounds like your website might be suffering from a similar ailment.

If visitor's are not clicking past your fancy Flash intro page, you don't have to be a genius to figure out that therein lies your problem. Remove the Flash intro page for a few weeks to see if your website's click-through rate improves and the number of page views increase. "Click-through rate" refers to the number of visitors who click links on your homepage to go deeper into your site. "Page views" refers to the overall number of web pages that were viewed by visitors. If click-through and page view rates improve, you'll know that the Flash intro was your problem.

Here are a few other things you can do to make sure your site offers visitors a pleasant - and seizure free - browsing experience.

Sit In The Visitor's Chair
The best way to make sure your website is as user friendly as it can be, is to sit down at a computer and approach your site from a typical visitor's point of view. Try to imagine that you are seeing the site for the first time. If you are unable to do this, have a friend who has never seen the site click around and offer comments while you take notes.

Have your friend assess the following points:
Is the site appealing to the eye? Are the colors pleasing and complimentary? Is the site easy to navigate? Are the topical categories and subcategories in logical order? Is it easy to find what you're looking for? Does the site have a search engine to make finding things easier? Is every feature of the site less than two or three clicks away? If the answer to any or all of these points is no, you have some work to do.

Don't Dictate Technology
One sure fire way to repel web site visitors is to require that they have special browser plug-ins or 3rd party add-on browser software installed to view your site. Dictating that the user download and install software is not your place and users will resent you (and your business) for it. Visiting your site should be an effortless pleasure, not a technological chore.

Don't Make Them Wait
If your homepage takes longer than 20 seconds to download (appear in the visitor's browser) you are losing visitors, period. Gratuitous animation, large graphics, poorly formatted HTML, bad page layout, and a number of other factors can increase download time. You might have the greatest web site in the world, but if it takes ten minutes to download no one will ever see it.

The lessons to be learned, then, are threefold. One: a website should be designed to satisfy the visitor's needs, not to pacify the site designer's ego.

Two: visitors to a business website are not there to be awed and entertained. They are there looking for information, and unless you give it to them quickly and effortlessly, they will go elsewhere to get it.

And Three: for better mental and physical health avoid Pokemon at all costs.

Here's to your success.

Tim Knox

How To Create Your Own Info Product

2004-06-10T10:15:00.000-05:00

In the last article we talked about why informational products are the best type of products to sell online. An informational product can be a digital book (known as an e-book), a digital report or a white paper, a piece of software, audio or video files, a web site, an ezine (electronic magazine), or a newsletter.

Any product that's informational, instructional, or educational in nature can be considered an info product.

If you missed last week's column you might want to un-line your birdcage long enough to read it first so that you have a thorough understanding of what we'll be discussing this week, which is how to create your own info product.

As covered in detail last chapter, here are a few of the reasons why information is the best product to sell online:
* It's fast to create, fast to market
* There's no inventory to stock
* The startup costs are low
* You can automate the sales and delivery process
* There are no shipping and handling charges

One of the best things about information products is that you don't need a product designer or a manufacturing plant to crank out the goods. You also don't have to spend months and months doing product development.

If you have a computer and a word processing program you have everything you need to create a best-selling info product in a very short amount of time.

Great, you say, but I'm no writer. How the heck can I get into the information business? The good news is you don't have to be a great writer to create a great info product. If you don't have the ability to create the product yourself there are several avenues you can take to info product success.

Co-author with a writer
In my opinion, expert knowledge is much harder to come by than great writing skills. If you are an expert on a subject that people will pay to learn about, you just need a good writer to take your expert knowledge and put it in a saleable form.

I know many subject matter experts who can't write their names in the snow and many excellent writers who don't have the expert knowledge required to create an informational product that will sell. Co-authoring can be a match made in Heaven if an equitable co-authoring arrangement can be made. Co-authoring means that you both get credit for creating the product and share in the revenues.

If you are an expert on a topic, but not a writer, find a writer to co-author the project with you. Conversely, if you're a writer without specific knowledge, find a subject matter expert and partner with them to create the product.

Hire a ghost writer
A ghost writer is someone who will write the ebook for you anonymously, with the writing credits going solely to you. You supply the expertise and guidance and the ghost writer puts it in a readable format. You can hire ghost writers on an hourly basis or for a flat fee, depending on the scope of the project.

There is no shame in using a ghost writer to put your thoughts to digital paper. You don't really think all those pro athletes and Hollywood actresses can write 300 page books now, do you?

Publish a directory
Can't think of a subject that you're qualified to write about? Try compiling a directory. A directory is nothing more than a listing of specialized information that you target market to a particular segment of the buying public. For example, my company publishes a dropship and wholesale industry directory that is a listing of company names, addresses, phone numbers, and website addresses. I simply have someone research the industry and compile their findings in a directory format, package it nicely, and sell it online for $27.

Sign on with an affiliate program and sell their info productsThere are thousands of companies that sell informational products and most have affiliate programs that you can sign on with. Becoming an affiliate basically means you become a reseller of the company's products. You promote the product, you make the sale, the company delivers the product, and you earn a commission.

The key to creating a successful info product is this: the information must be worth far more than the price of the ebook itself. If you're charging $27 for your product, it must give the buyer many times that price in perceived value.

I asked info product expert Jim Edwards, co-Author of "How To Write and Publish Your Own eBook in as little a 7 Days" for his advice on how to create a killer info product.

Here are Jim's Top 5 Tips:

* Niche It - Make sure you are targeting a highly defined niche audience... don't try to sell to everyone. You can get a lot more money showing life insurance agents how to find more customers to buy $250,000 policies than you can trying to sell a product on generic sales skills improvement.

* Hit Their Pain - Make sure your info product hits a painful problem that members of your target audience will do just about ANYTHING to solve. The more intense the pain, the more they're willing to pay to get rid of it.

* Give Them A Taste - Give people a taste of what you offer in your info-product by giving them a sample. Just like the wholesale clubs get you to buy tater-tots in a 50 lb. bag by giving you one to try, you can induce people to buy your information by letting them read the first chapter or listen to the first few minutes of an audio.

* Entertain Them - People hate to be bored. Increase the power of your product by adding humor, drama and other entertainment elements that make them want more and more. This will not only help with future sales to satisfied customers, it will also keep your refunds down and increase word of mouth advertising.

* Keep it Evergreen - Don't make the mistake of creating a product that hits a fad or a fleeting market. Create info-products that can be updated with very little effort. This allows you to create a product once and keep the sales rolling in for years (literally) to come!

Is Selling On eBay Just A Hobby Or A Real Business?

2004-05-30T10:18:00.000-05:00

Q: I made extra money selling things on eBay last year. These were items I picked up at yardsales mostly. My husband says I am responsible for paying income tax on the money I made, but I disagree. This is just my hobby, not a business. What do you think? -- Gladys A.

A: With so many people selling on eBay these days this is a question I get all the time. To many eBay sellers the thought of running an actual business is about as appealing as getting negative feedback, so they go out of their way to convince themselves that selling on eBay is really "just a hobby" and therefore, should not be susceptible to income tax laws.

While you might think selling on eBay is just a hobby and the extra money you're making is not reportable as income, depending on the circumstances, the IRS just might disagree with you.

The IRS rules are clear: you must pay taxes on all personal and business income and that includes money you make selling on eBay.

In its most basic sense, the IRS rules mean that if you buy a vase at a garage sale for $10 and sell it on eBay (or elsewhere) for $20 you made a $10 profit and therefore must report it as income and pay Uncle Sam his fair share.

In reality, if you are a casual seller who only sells a few items on eBay every now and then it's doubtful the IRS is going to lose much sleep over the few bucks you make.

However, if you consistently sell on eBay the IRS may deem your activities to be business oriented and you will be required to file a Schedule C and claim the income.

The IRS uses a number of factors to determine if a hobby is really a business. These factors include:

1. Do you carry on the activity in a business-like manner?

If you conduct your eBay activities in a business-like manner, i.e. you keep business records, track profit and loss, keep a separate checking account, etc. then whether you think so or not, your hobby is really a business.

2. Do you spend considerable time working on your hobby?

If you put considerable time and effort into your eBay sales, the IRS may contend that you do so for profit and not fun. It seems the folks at the IRS don't believe in doing things strictly for pleasure. My guess is, neither do you. If you weren't making money selling on eBay I doubt you'd bother getting up at 4 a.m. to hit all those yardsales.

Then again, maybe you would... :o)

3. If you depend on income from your eBay activities for your livelihood?

If so, it's a business, not a hobby.

There are a number of other factors the IRS uses to determine if a hobby is really a business, but that covers the basics.

You can learn more at the IRS website at www.irs.gov.

What's eBay's take on all this?

eBay is vehemently opposed to anything tax related (especially the forced collection of sales tax, which is a whole 'nother issue). It's understandable that eBay is not a fan of the IRS since trying to enforce tax rules on buyers and sellers would undoubtedly be detrimental to the way eBay does business.

eBay does not does not issue 1099 tax forms to sellers, nor does it report seller's sales figures to the IRS. eBay considers itself a faciliator, i.e. they provide a marketplace in which buyers and sellers come together to do business.

However, since eBay is not directly involved in the transactions that take place between buyers and sellers, it would be impossible for eBay to report sales figures. Furthermore, eBay does not track if a seller actually gets paid by the buyer, so they have no idea how much money actually changes hands, making it impossible for eBay to issue accurate 1099s to sellers.

On the bright side, if you do sell on eBay as a business you can deduct a number of business expenses, including the cost of inventory, listing fees, shipping, envelopes, packing materials, etc. You might also be able to deduct things like the purchase of a computer for business use, office space (even if it's a home office), office supplies, and more.

I'm not accountant (nor do I play one on TV), so please do not take any of this as tax advice or legal opinion. Talk to your accountant if there's any doubt as to whether you should or should not be paying taxes on your eBay earnings.

Here's to your success!

Tim Knox

Is The eBay Fee Increase Actually Good For Business?

2004-05-13T10:21:00.000-05:00

Much of my email from readers this month concerned the recent announcement from eBay that it will increase many seller fees on February 18, 2005. Since many business people use eBay's online store system as their primary ecommerce point of sale, it's no surprise that most of the emails I received were of the angry variety.

One email in particular caught my attention because it urged me to visit a website to sign an online petition protesting the fee hike. The email directed me to http://www.petitiononline.com and upon further investigation I found that 22,548 digital signatures had already been collected (as of this writing).

Thank goodness not all of them had my email address.

This will be the fifth rate hike in as many years for the auction giant and should really come as no surprise. Price hikes are a normal course of business. It was the size of the hike that has many sellers upset.

The rate hike involved the following fees:

* A basic eBay Store will now cost sellers $15.95 a month, a 60% increase from the current $9.95 a month.
* Closing commissions on most items sold through eBay Stores will increase by 50 percent.
* Gallery photo fees will increase from 25 to 35 cents.
* The Buy It Now fee will jump from a flat fee of 5 cents to 10 cents for items priced over $10 and 25 cents for items over $50.
* Final value fees will rise from 5.25% to 8%.

Many of the emails I received pointed out that small sellers are making very little profit as it is so the increase in fees will only serve to drive these sellers completely out of the eBay business. Some sellers accuse eBay of purposefully trying to run them off, but I doubt that's the case. eBay has no reason to drive away the small sellers, but that realization never occurs to those who feel they are being priced out of the market.

Not everyone is too concerned over the fee increase. Jim Cockrum, eBay Powerseller, publisher of "Creative eBay Selling News," the world's largest newsletter on creative eBay selling, and author of one of the best selling eBay books of all time "The Silent Sales Machines Hiding On eBay" has other opinions.

"I don't see the eBay fee increase as a bad thing," Cockrum said in a phone interview. "I actually see it as just the opposite - it's a good thing because eBay is eliminating my competition for me. Who leaves eBay when eBay increases seller fees? It's not the customers (or shoppers). They don't go anywhere since they aren't affected. Only a handful of the weaker sellers leave eBay when fees go up."

Cockrum recommends that sellers use eBay in non-traditional ways to build their online businesses so that future fee hikes will not have an affect on their e-business.

"Selling on eBay continues to be one of the more popular ways to make money online, though very few people are getting rich with an eBay business alone," Cockrum said. "Many Powersellers don't make enough profit to cover their costs. The key to really making money with eBay is not in selling items at auction, but to use eBay to drive customers to your other online ventures. If you do that, the rate hikes do not affect your bottomline nearly as much."

Not everyone shares Cockrum's enthusiasm. Many small sellers think the government or a regulatory board of some kind should get involved to help keep eBay fees in line. This probably won't come to pass anytime soon, but who knows. I can remember when a little company called Microsoft had free rein before they killed off all comers and came to monopolize their market. eBay seems to be headed in the same direction.

The threat of regulation may be the reason eBay is now attempting to smooth the ruffled feathers of the miffed masses. eBay announced this week that they would give a one-time $15.95 credit to eBay store owners and reduce minimum listing fees for inexpensive items from 30 cents to 25 cents, effective immediately.

Too little, too late? Could be. Many sellers believe that eBay may be writing its own obituary with such stringent price increases and such little thought for the smaller merchant. The online petition predicted the long term effects of the fee increase to be:

* Smaller sellers will stop selling on eBay and try to sell somewhere else online. They will never have the chance to expand themselves on eBay.
* Larger sellers may consider starting their own online store or sell elsewhere.
* Prices of auctions will increase. Buyers will turn back to retail stores. The idea of eBay is that you can find things cheaper there, even when adding shipping and handling together.
* Discourage new sellers, decreasing competition (which is what the eBay market thrives on for pricing).

Only time will tell if the predictions come true, but for the short term many smaller sellers are closing down their eBay stores and moving up the street to Yahoo.com.

Here's to your success!

Tim Knox

What's The Best Product To Sell Online?

2004-05-02T10:23:00.000-05:00

I wish I had a dime for every time I've been asked, "Tim, what's the best product to sell online?" I also wish I had a nickel for every blank stare I received when I answered: "That's simple: information." I'd have enough money to finance another startup or two.

As more and more entrepreneurs move to the Internet seeking their fortunes, "What's the best product to sell online," has become the number one business question of the decade.

The next question is always: "Why information?" Again, the answer is simple: because no other type of product is easier to create, faster to bring to market, easier to distribute, and potentially more profitable.

Many info products net as much as 75% to 95% profit on the initial sale after all costs have been deducted. And residual sales to established customers can offer 100% profit.

Informational products come in many forms. An info product can be a digital book (e-book" is the accepted term), a digital report or white paper, a piece of software, a website, a newsletter, etc. Any product that is informational or informative in nature can be considered an info product.

Here's why information is the best product to sell online:

Fast to create, fast to market
Forget a product development cycle that is years in the making. Forget an intense design and costly manufacturing process. I have literally created info products in as little as two hours and had them generating revenue shortly thereafter. If you have an appealing topic and a computer, you have all the tools you need to create an info product.

No inventory to stock
Forget filling your garage with boxes of cheap watches and cases of mega vitamins that you will never sell. When you sell information there is no inventory to stock. Your product is digital (I like to call it electronic air) and requires no space in your garage, just a little space on your computer. One of my most successful info products is a 30kb e-book that requires almost no space at all.

Low startup costs
When you sell information you can literally create a product for next to nothing. If your product is an e-book the only investment required will be in the time it takes to put words to digital paper. If you become an affiliate marketer of someone else's info product your investment can be zero.

You can automate the sales and delivery process.
Thanks to internet technology you can sell info products 24 hours a day, 7 days a week, and never lift a finger. In fact, you don't even have to be awake or at home to make money with an info product. I know many successful info entrepreneurs who are getting rich despite the fact that they work as little as an hour a day.

They check the website and their email, then go play golf or hang with the kids for the rest of the day. You can completely automate the sales and delivery process so your website does everything for you.

An automated website can give a potential customer your sales pitch, take the order and process the payment, deliver the product by email, and even follow up in a few days to make sure the customer is satisfied and offer to sell them additional products.

You can offer immediate access or delivery
Online consumers are an inpatient lot. They want things NOW! These are people who stand in front of the microwave impatiently tapping their foot and frowning at their watch. Selling information is the best way to give your customers immediate satisfaction. As mentioned earlier, an automated website can process the order and payment, then immediately email the download link for the product to your customer.

There's no shipping and handling
One of the things I never liked about selling hard goods was the manual process of taking the order, running the credit card, placing the order with a dropshipper or filling the order of my stock. I hated finding a box and packing peanuts and printing the label and taping it all up and lugging it to the post office. Every minute I spent filling orders was time that I was not being compensated for, therefore, my profit grew less and less with every minute spent on shipping and handling. Informational products require no shipping and handling. Most are delivered by email. In the time it takes you to click your mouse, you can deliver an info product.

What if you don't have your own info product to sell?
This is one of the most appealing aspects of selling information. If you don't have an info product, creating or finding one is much easier than you think.

Starting Your Business By The Book

2004-04-29T10:46:00.000-05:00

I've gotten several questions recently about the legalities of starting a business. So, this week I thought I would address a few of the more common legal issues most new businesses face. But first, let's get the mandatory legal disclaimer out of the way: the advice dispensed by this columnist is probably no better or worse than the advice dispensed by other columnists. Do not take the following advice as gospel or bet the future of your business on any advice given herein by said columnist.

Agreed? Good, let's proceed.

To begin, here's the best legal advice I can give you as a new business person: find yourself a good lawyer and make him or her your very best friend. Granted, your new best friend will charge you an hourly fee for chatting on the phone or talking business over lunch, but you'll find it to be money well spent. A good attorney can save you far more than the cost of his services. I rarely make any decision that has the potential to impact my business without first consulting my attorney.

You can locate an attorney through legal referral services or just by opening the phone book, but the best way to find a really good attorney is to ask other business owners for references.

You want an attorney who specializes in business matters. A few of the things you may need legal help with are: legal business formation, articles of incorporation, trademarks and copyrights, investment documents, employee policies, etc. You may find that a single attorney can't meet all your needs, but if you use a larger firm they will have attorneys on staff that can provide the specialized services you require.

Now, let's take a brief look at a few questions I've received regarding the legalities of starting a new business.

What's a DBA? "DBA" stands for "doing business as." A DBA is another name that you use in the operation of your business other than the legal name. For example, "Jones, Inc." might be the legal corporate name of your business, but you might use "Bob Jones Landscaping" as the everyday business name. In this case, you would see the business described in legal context as "Jones, Inc. Doing Business As Bob Jones Landscaping."

Here's an example of using a DBA to launch a new venture within an existing business. A reader asked: "My wife incorporated a multimedia business three years ago, and I am starting a voice-over business. Is it more beneficial for me to open as a sole proprietorship or to operate within her multimedia business?"

My answer was that he should open his company as a division of his wife's business, operating as a DBA. Even though he is using his own business name (the DBA), technically his wife's corporation is launching the service and therefore will give him some liability protection. Doing so would also help him save on start-up costs (such as having to pay for a separate incorporation). It's relatively simple to keep a separate set of books, and when the new business takes off, he can spin it off into a separate entity.

Will a corporation protect me from liability? It can, if handled correctly. You may have heard about the "corporate veil," which means that you can't be sued personally for anything that happens in the corporation and your personal assets can't be attacked by creditors or a lawsuit on the corporation. But in order to have this protection, you must act like a corporation. This means conducting board meetings, taking notes and publishing minutes in your corporate book.

In addition, be sure to have a separate corporate checking account and, if you need them, corporate credit cards. Don't use corporate money for personal purchases, and vice versa (unless you file an expense report). Many people think they don't need to go to all this trouble if there is just one or two people in the company, but in order to be treated like a corporation, you must act like one. Your attorney can give you more details.

How do I register my company name? To register your company name simply contact the office of the Secretary of State. This is easily done by phone. The registrar will tell you if the name you have in mind is available as a corporate name and will reserve the name for you if it is available. You will be sent a form to complete and submit with a nominal fee. For more information you can also visit the Secretary of State's website.

Do I need a business license? Nearly every business will require a county or city license. Luckily, such licenses are relatively easy to obtain and are not expensive. For local licensing requirements, contact your city or county government offices.

Some businesses might also require a state license. For example, hair stylists, contractors and most businesses serving food fall under the purview of the state licensing board. Each state has an agency that deals with these types of businesses. Contact your local government offices to see if your particular business requires a state license.

Some businesses will even require federal licensing. Examples of such businesses would be those that provide investment advice or that deal with firearms. Federal licensing is typically required for businesses that are highly regulated by the government.

I operate my business out of my home. Do I still need a license? Operating a business out of your home does not get you off the hook when it comes to licensing. You should check local zoning requirements and property covenants. You can find this information at the court house or by calling your local license department. Home businesses are also subject to zoning laws that regulate how property can be used and may restrict various activities.

This is just a sampling of the legal issues that must be addressed by every new business owner. To learn more, take your favorite lawyer to lunch.

Just be prepared to pick up the tab.

Here's to your success.

Tim Knox

Taking Your Business International

2004-04-25T10:26:00.000-05:00

Q: I’m interested in doing business internationally. I have done some reading on the subject, but there is an awful lot to digest. Have you had any experience in this matter and can you suggest the best way to get started?-- P. Granger.

A: Great question, Mr. Granger, though not one I’m personally qualified to answer since I have not had direct experience with international sales. So like any good columnist without a clue I can either make up something and hope it sounds semi-intelligent or I can consult someone who really is an expert on international sales and let him answer your question. Since my agreement with The Times prevents me from fabricating anything other than my true age (I’m 29), let’s go with the latter.

I called on Jose Rodriguez, President of RISMED Oncology Systems, a Huntsville company that provides high medical technology to radiotherapy professionals around the globe, to get his input on the subject. Jose is an old friend and client and if anyone can give pointers on doing business internationally, Jose is the man.

Jose believes that the decision to do business beyond your own backyard should be based on your success as a local, domestic business first. “Unless the business is intended to be one that sells to international customers only, one should not jump into international business until they have devoted the time to develop a good local and domestic business first,” Jose recommends.

Here are a few other points Jose recommends that you keep in mind when considering an entry into the international business arena.

Instill Confidence In Your Customer
Regardless of the type of product or service you sell internationally, you must be ready to provide your international customer with an even higher level of service that you offer your domestic customers. To instill confidence in your international customers you might have to offer such things as around the clock telephone support, extended warranties, and other services that help the customer have confidence in doing business with you.

Know The Rules
You must understand all of the rules and regulations that govern international business practices in this country as well as those in your customer’s country. Understanding the rules will allow you to provide service beyond the expectation of the buyer and operate within the boundaries of the law.

Understand The International Shipping Process
If goods are being shipped internationally you must have a thorough understanding of shipping modes and regulations. Any difficulties with shipping will always be viewed by the buyer as the seller’s responsibility, right or wrong. Understanding the entire shipping process and having policies in place will help avoid shipping problems and keep the customer happy.

Work With Experienced Companies
Always look for experienced companies to work with, especially when if comes to shipping, insurance, freight forwarders, etc. Such companies are great allies and will help keep everything in order and will also help in solving problems related to their end of the process.

Signed and Sealed
Never conduct business under verbal orders. Always put everything in writing with the required signatures. Doing international business is different than domestic business. Outside the United States signatures and seals are required to seal the deal. Don’t worry about offending your customer as this is just part of doing business internationally.

Include A Packing List
If shipping goods, always do a packing list and always number the packages (if 5 packages are being sent, label them 1/5 [1 of 5], 2/5, etc.). If anything is lost, they will know which package is missing and you will have sent a packing list detailing what was in every package, making it easy for the customer, the shipper and the insurance company to solve the problem. Also, always insure your goods for at least 110% of their value.

Have A Damage Policy
Always have a note in your paperwork requiring damage or losses to be reported within 24 hours. Damage reports should be made to the customer’s local delivery company as well as to the shipping company on your end.

Signing Off
If you are selling services abroad, always have the required paperwork so that as the work is finished or as deliveries are made, the customer signs off in agreement with what was delivered.

Ensure Payment
Depending on the amount of the sale, always require payment in advance in U.S. currency or payment through a letter of credit to be paid out in U.S. currency. You might also require that the letter of credit be irrevocable and transferable, that it allow for payments of partial shipments, etc. The more flexible the letter of credit, the better, and usually such clauses are yours just for the asking.

There are many other considerations you should investigate before starting your international business, but that’s a great list to get you started.

Thanks for the great advice, Jose. I couldn’t have said it better myself.

Here’s to your success!

Tim Knox