A series of Business Tips from the book:
Homemade Money: Bringing in the Bucks!
By Barbara Brabec
In setting priorities on the things to be done, note that the Pareto Principle, or 80/20 rule, will apply…In matters of time, it means that 20 percent of what you do will probably yield 80 percent of the results.
— Barbara Brabec
Barbara Brabec, known as the expert on home based businesses, has retired from the craft business field. This second book in her series on Handmade Money was written in 2003 — but has lots of value even today.
Barbara was my guru in my early days of working with professional crafters. She allowed me to see the ins and outs of home based businesses from the eyes of someone who had been there. At her prime in the during the 1990s, she was the go-to person for every crafter. Her no-nonsense advice is still applicable to today’s home based business.
I have seen the ’80/20 rule’ in nearly every aspect of my business. It applies to customers, projects, time …. As a start up or experienced home based business, incorporating this rule will guide us to the tasks and products that bring us success. It is also helpful in determining where to cut products, customers and time wasters from our business.
Take a look at all the routine home-related work you do that is stealing time from your business and figure out what it would cost to hire others to do the work.
— Barbara Brabec
Personally, I had never thought about this until my brother, who is a financial planner, told me that he was no longer going to do the yard work (which he hated) and take away time from his business. When I asked him to explain, he said why should he do a job that he can pay someone $10 an hour to do so when he could use the same time to make 10 times that in his business.
WOW! Made perfect sense! I’ll bet everyone reading this has fallen into the same trap!
When we were processing gourmet foods, my husband traded work with another gourmet producer, so as to free up my time to sell the products. Much more productive use of my time! And our friend got Malcolm’s help when she produced her line of gourmet foods. It was a win-win for everyone!
Think for a minute …. what menial task can you pay someone else to do why you make money in your business?
At least annually, do an income-versus-cost analysis for each product and service you offer. The answer you get will help you evaluate the correctness of all your prices …
— Barbara Brabec
Coming from a bookkeeping background, this seems like a no-brainer for me, but I also understand that lots of producers would rather leave the ‘numbers’ for someone else to deal with.
Knowing your ‘numbers’ is part of knowing your business and where it is heading. You don’t want to discover you are losing money with each sale — because you don’t know your correct costs! Especially if you are hiring outside help, have a warehouse or office or some other outside expense that you feel you can afford for your business.
I have always suggested the following quick formula for determining your pricing:
Cost of Good X 2 = Wholesale Cost
Wholesale cost X 2-2.5 = Retail Cost
This formula is rather simplistic, but it is a place to start working on pricing your products.
For more detailed information on pricing, check out my free ecourse: How to Price Your Products!
Also, there are several articles on my blog: Selling Wholesale to Gift Shops
Good customer service is sadly lacking in many retail and corporate businesses today, and that gives you an important “home business edge.” Always emphasize that you can offer something that’s mighty rare these days: personal service, attention to detail, affordable prices, and a guarantee of satisfaction.
— Barbara Brabec
Face it: We cannot compete with the WalMarts of the world! We don’t have the manpower, the selection or the ability to offer products at such a low margin. But we do have other assets to share that WalMart does not have!
With the wide use of the Internet for buying products, we can have just as much clout as anyone else on the web. Joe Consumer does not know if we have just ourselves or hundreds of employees.
One of the many customer service techniques we use on our Tastes of Idaho website is to follow up with folks who have not finished completing their order. Typically, I email these folks and ask them if they have any questions about the products, their order, or ??. Sure, lots of these emails get ignored, but some respond and submit their orders. And it is unbelievable how many of these potential customers respond with much gratitude for my extra effort on their behalf.
We also try to be ‘Johnny on the spot’ for any complaints or inquiries into lost or damaged shipments. One lady contacted me to say she never received her order. The freight company listed the order delivered. Instead of debating the issue, we sent her a duplicate shipment. A couple weeks later, we received an email telling us they found the first order, and liked the products so much, they would also buy and pay for both large orders!
You just never know what will happen when you put customer service first!
When people call to inquire or order, always ask them how they heard of you. Keep track of this information; otherwise you won’t know which of your promotional or advertising methods are working.
— Barbara Brabec
You can spend lots of money on advertising that doesn’t work for you! Checking in with your customers will help determine which venue is best for you and your customers.
When we first started our Tastes of Idaho holiday kiosks, we tried advertising in many venues: radio, local newspaper, college newspaper (UI was located in the town where we had our kiosk), neighboring city newspaper, and weekly classified ad newspapers etc.
We figured the local daily newspaper would give us the most bang for our buck, so we placed a rather large (and expensive) ad in that newspaper. But, much to our surprise, when we asked customers where they had heard of us, most told us the local Money-Saver weekly paper.
As it turned out, advertising in this weekly classified ad paper all during the holiday kiosk season costs us less than the big fancy ad in the local daily newspaper.
NOTE: Since Barbara’s was written over ten years ago, much of the information on the internet is outdated. Despite it’s age, there are lots of good tips there. If you read a copy, make sure to check out the quote she published from my husband Malcolm on page 176!
More information on starting your business — especially if you are looking into wholesaling your products, check out my eguide: The Complete eGuide for Selling to Gift Shops