Small business

The Realization

Sorry for not posting more frequently, I’ve been very busy at my part time job teaching ESL this week. But I did want to share a big decision I’ve made this week.

Since I came up with the BeddyBye idea I’ve read a lot about entrepreneurship. All the advice suggests that you ask yourself how involved do you want to be. Do you see yourself running the day to day operations of the business, or would you rather develop the concept and then sell it?

For a long time I was certain that I would want to run the day to day operations – work with manufacturers, run the website, organize the shipping and inventory, and improve marketing. However, when I think about how much is involved with manufacturing it is overwhelming. There is a reason why so few people enter the manufacturing business, or sell their ideas to an established business- the start up costs are so high for an individual entrepreneur. I realized that I don’t want that to be my full time job.

I have decided to take a month long break from BeddyBye and then I will focus on selling the idea. I think the best option is to get a provisional patent and then sell the idea with the website domain and the LLC. I want to see my dream realized, but when I’m honest with myself, I recognize that I don’t have the energy, drive, or money to handle the manufacturing hurdle. In other words, I would like someone with the experience and resources to take over.

But don’t feel bad for me. I don’t look at this as a failure or as settling. When I set out on the HeSo project my goal was to take my dreams and ambitions more seriously. My goal was not to focus all my attention on one idea. So if I am able to downsize the BeddyBye project, teach ESL (which I love), and work on my exciting next project (which I will write about in the next month or so) I will be true to my HeSo.

My honorary doctorate

I figure any classes I take after grad school are going towards my doctorate, right??? Right! So pretty soon I’m going to go by Dr. Tracy, or Dr. T for short.

I’ve been taking free business classes at the NYC Business Solutions Center in Jamaica Queens (there’s a center in every borough, and if you’re not in NYC I’m sure your city has great resources too. If not, move here!). Although the information is daunting, and hard to wrap my brain around some times, I’m learning a boat load. For instance, an LLC is more expensive to set up than a sub chapter S Corp, but you don’t have to pay city taxes on the first $100,000 of profit each year. That’s about a huge savings every year. Also, if you have any full-time employees you need to have workman’s comp – even if you’re running an internet business and the only inherent danger is a broken nail.

The hardest thing to accept is that my original budget was completely unrealistic. I can’t believe a random number I guessed without doing any research could be unrealistic, but such is life. I was figuring my prototype would cost $500-$1000. Ha! I’m meeting with the engineers this Thursday and just the initial consultation is $500. They said that prototype development usually starts at $5,000. Eek! I know I can find a cheaper place, but I can’t find a single bad word written about this place, it’s relatively close, and they focus on making prototypes that are ready to be manufactured – that means I won’t have to start over again when I find a manufacturer.

I figured I would be able to do all the accounting with Quickens, but now that I learned payroll tax, unemployment tax, sales tax, and metro tax are all on top of city/state/federal taxes, and they all have different deadlines I’m realizing it’s not worth the time to become an expert, and the potential for making mistakes are too high. But fortunately I met a great CPA at business school and she’s helping me out.

I figured I wouldn’t need a lawyer since I’m working alone, and I’m not going to sue myself. However, there are so many gray areas of the law that I don’t understand, and I can end up paying a lot more in the long run if I don’t have someone to help me dot my legal i’s.

Originally I laughed at the guy who wanted to sell me my domain name for $1,800, but now that I’m seeing the costs of everything else it seems silly to lose out on the perfect marketing name just to save a couple hundred dollars.

At first I was budgeting $10,000 to have the prototype, LLC status, website, and first order of inventory. Now it seems like $20,000 at minimum (I’ll explain where this money will come from in a later post). At first this number made me gag, but then I looked at it in another light. I wouldn’t balk at paying $20,000 for business school if I really thought I needed it. But now I’m going through the Tracy Business School (TBS -characters welcome), and better yet, once I graduate I will have a fully running business. OR I will have a big expensive failure. But even if it’s a failure I will still be exactly where an MBA grad is – looking for work.

Follow up on my new career!

So I’m sure you’ve been sitting on the edge of your seat waiting to hear about my next business step. A few weeks ago I mentioned that I had a great idea for a new product. I thought I should let you in on what I’ve been doing since then.

Alex Eben Meyer

by Alex Eben Meyer

  • I bought the domain name. Unfortunately, someone already owned the original name I wanted. I was able to email the owner and he was willing to sell it for $1,750!!! Can you believe it? I decided to tweak the name a little and register with Active-Domain.com   for $4 a year. However, most other resellers are a lot more reasonable so if you’re interested in buying a domain name that’s already taken you can find the contact info for every domain owner at Whois.com .
  • I’m filling out the paperwork to form an LLC. After talking to a few small business owners I learned that it’s necessary to separate your personal finances from the business. If there is any potential that you’ll be sued, and let’s face it in this day in age you can get sued for anything, your personal finances will be safe. If your company goes bankrupt, your personal savings won’t be in jeopardy. I certainly don’t want my couch to be repossessed. Where would I write my blog posts!
  • I signed up for a free small business owner course at Queen’s community college. NYC.gov is a great resource for free advice.
  • I ordered foam and I’m busy making the prototype. Working with it has caused me to completely revamp the original idea. If you have an idea for a product I would really suggest trying to make it first – no matter how much you think about it, or draw the designs you can’t foresee the actual design flaws until you’re holding it in your hands.
  • I’m sharing my idea with with my target audience. I’ve gotten lots of great suggestions for marketing and design improvements. Everyone has said they would buy it, so that has been really encouraging!
  • I’m blogging about it. Making it public has held me accountable and pushes me forward. Almost everyday someone who’s read my post about finding my future career has asked, “so, ahh, what’s goin’ on with that?” It’s super motivating!
  • I've been so busy my kitchen's a disaster.