Friday, February 27, 2015

Small, Micro and Cottage Business Ideas



Almost everything you want to do requires some type of monetary input. If you are working for an hourly wage, you do not have much if any control over how much money you make. I cannot tell you how many times I have heard people try to use a fixed income as a bargaining strategy, but unless someone owns their own business or is paid commission everyone is on a fixed income. At my regular job I am only allowed to get 40 hours a week, that is a fixed income. What I make may not be as tight as others, but it is also not as flexible as some.

What do you need to get out of debt? Build an emergency fund? Do something a little extra around the home? Just become more self reliant? You need to either cut expenses or earn more money. Say you have cut your expenses as far as you can, how can you earn more money if you are paid an hourly wage enter the small or micro business. When your sole source of income is a corporation you are at the mercy of someone else who most of the time has never met you. Having a small business can give you some security and a sense of fulfillment. So how do you start a small business or what business should you start?

What is a Small, Micro, and Cottage business?


Small Business. 

A small business is actually much larger than I thought, but varies by industry. For the purpose of our discussion a small business is one that has less than 500 employees but more than 5. Individually owned (no stockholders). For profit and not dominant in their field.


Micro Business. 


A micro business is less than 5 employees normally manned by family and friends usually on a part-time basis. Micro businesses are typically ran out of a home or outbuilding on an individual's property. The average micro business requires no or little start-up capital, usually less than $35,000. Micro businesses can be either service or product based.

Cottage Business.

A Cottage Business is one that is operated from home with typically no more than 2 employees. Cottage businesses tend to be part-time in nature, but do not have to be. The focus is normally on manufacturing or production. Service type businesses are not included in the cottage business model. Knitting, sewing, honey, soaps or other body care products, and things like that tend to dominate. Most things produced in a cottage business tend to be labor intensive. 

Personal inventory


Now that we have a good understanding of the types of smaller businesses, we will dive into what you will need to look at to decide what business you/we should build for ourselves. We have to take an honest look at ourselves to decide what business we might do well in. 

What are your/our skills and talents?


In order to make anything a profitable business, you must lean on your strengths.  If you are really good at knitting, cooking, or sewing these may be things you could look at offering as a business. Homemade items tend to bring a premium from those who care about such things, but the items have to be quality. If you are good at teaching, you might find that teaching others the skills that you are good at may make you more money than making things and selling them.

What do you enjoy?


It doesn't really matter how good you are at something, if you don't enjoy it, you will not stick with it. As an example I do not like mowing the yard. Mowing the yard is my idea of absolutely nothing left to do. There are some people who truly enjoy mowing the yard. Now, I love being outside and doing a variety of things, but riding back and forth just watching grass fly is not fun for me. If I were going to start a new business, I would not start a lawn care business. I might start a landscaping business and subcontract out the mowing part, but I do not want to have to spend several days a week mowing.

What tools do you have now?


If you are wanting to start a business and not go into any debt in the process, you will have to use what you have on hand now. If you are really good at construction or repair and you have some basic tools, this is something that you could start anytime you wanted. If you are thinking about going into lawn care and you only have a push mower, you could start your business, but the operations of the business would be greatly restricted by your equipment. The equipment you have will help you determine either what business you wish to start or how soon you could start your business.



Local Laws


Okay, this one is a biggie. You will have to talk to someone at your local courthouse to determine what laws will apply to your new business idea. There are some cities that are very anti small/micro business. There have been cities that have shut down bake sales for local nonprofit organizations because they did not purchase the proper permits. Police have shut down children's lemonade stands. Officials have confiscated and/or destroyed garden produce because licenses were not in order all under the guise of trying to make sure people are safe. Um okay. 

Common Law Issues

If you are a good cook and enjoy doing so you might want to start a business where you cook for those who are physically impaired. You may find that it is illegal for you to cook meals in your home and take them to your customers, but perfectly legal for them to hire you to cook those meals in their home. 

In certain cities and communities you may learn that in order to be paid to cut someone's grass you have to attend a class and be certified as a lawn care technician. There is a community not far from where I live in which that is the case, oh and the class is $300.00 a year. If you are just wanting to make a little side money that alone could knock that idea out. Ask questions, learn as much as you can or you could face fines. You may learn that you live in an area where everything is regulated. I hope not, but it does happen.

Location, Location, Location

This is just a fact of life. Where you live determines some of the types of businesses that you can start. The higher the population density and socioeconomic scale your area is the easier it will be to start a micro or cottage business. I am not saying that if you are very rural you cannot start a business. What I am saying is the more rural you are might determine some businesses unfeasible and will mean that you may have to work harder to create a market or that you will have to deal with distribution on a larger scale that someone who is suburban or urban.

Pet sitting or baby sitting businesses tend to do well in suburban environments. If you were to try to start a pet sitting business in a very rural area, it could quickly turn into a temporary farm hand business. Nothing wrong with doing  temporary farm hand work if that is what you like, but the business will change based on where you are.

Low or No Cost Business Ideas

We are going to talk about as many low or no cost business ideas as I can come up with. For the purpose of this discussion a low start up cost business is one that can be started for less than $500. This price will include all initial capitol equipment, advertising, and if necessary licences. Since I am including licences this list will vary greatly based on your local government's greed.

Pet Sitting

Pet sitting can be a great micro business. Pet sitting tend to have the least regulations and can be advertised with word of mouth fairly easily. Initial start up cost very small if any. Of course you have to like animals and you have to be willing to welcome small pets into your home. Things to consider:
  • Get to know the animal. The last thing you want is to agree to keep a dog or cat in your home only to find out that the animal is not friendly or even worse the animal is a biter. Being bitten by a small dog hurts. It hurts bad. If you have children you will need to know if the animal likes children.
  • The animal's veterinary information. If something were to happen you will need to know where to take the animal.
  • If the animal has to go to the vet who will pay? It is really bad to get paid $10.00 a day (or whatever) only to have the animal get sick and you wind up owing hundreds of dollars of veterinary expenses.
  • The animal's health history. If a pet requires medicine or has allergies, you need to know. 
  • Contracts. Sorry but if you are going to do much pet sitting you will need a good contract. This will detail how long the pet will be with you, the payment terms, what to do in case the pet needs medical attention, what you will do with the pet if it is abandoned, and a lot more. You can have an attorney draw up a contract for you or you can create your own Here. If you only pet sit for family and friends you may not need this, but trust me. I have had a pet left with me and had to find it another home.
  • Do a little extra. If you really want to make a name for yourself pet sitting, do something a little extra. It could be something as simple as brushing out the pet or even bathing the pet. Taking the extra step will really get your customers talking. 

Baby Sitting

What was once only thought of as a part-time job for teenage girls has turned into a business in many areas of the country. Like pet sitting word of mouth is your best advertisement and there is very little start-up costs. Things that need to be considered are: Will you be keeping the children in your home or the home of the parents? How late will the parents be out? What do they expect you to do while you are taking care of their children? You must have contact information and know any allergies the children have. Being certified in CPR is a big plus.

Like pet sitting, do a little extra. If keeping the children in their home this could be washing the dishes after you have feed the children or just cleaning up the living room a little. This will leave a lasting impact.

House Cleaning

You will need a fairly affluent market in order for this to be feasible. As people's schedules continue to fill with all kinds of things many are finding less and less times to do things at home. I have known several people who hired individuals to clean their homes. This does not require much to get started, just an attention to detail and a little bit of OCD. Most times you will be using supplies that are provided by the homeowner. The only extra things you will need are the specialty cleaning items that you must have.

Garden or Farm Produce

I have never produced so many chicken eggs that I couldn't sell them all, but I have produced so much squash that I couldn't give it away. With farm produce you have to be smart. If everyone with a garden produces something in your area, you are not going to make a lot of money producing that item. Squash and zucchini are good examples, not everyone likes them and those that do can grow them fairly easily. These produce in such abundance that if you have three plants you will be trying to get rid of squash and zucchini. 

Anything having to do with animals can do well as a small business. Eggs at least around here are a very easy sell. Raising chickens for meat has also done really well locally. Selling hogs, beef cattle, raw milk, quail, you name it, can do really well. There can be a start-up cost but it doesn't have to be high. If you have the room this can be an idea for you. Remember to check local laws. Here in Alabama if you sell raw milk it must be labeled Not For Human Consumption.

Economies of Scale. With many businesses you will run into something called economies of scale. What economies of scale means is that as you produce more of an item or type of item, the cost of production for each additional item goes down. Why is this the case? Once you have your capital investments done you do not have to do that again. Your fixed costs are set.

Handyman 

If you are a decent carpenter or good at repairs you probably already have your tools. This type of small business can be as big or as small as you like. In many areas basic repairs are not regulated. If you can do basic plumbing and/or basic electrical you could be in good. Plumbing and electrical tend to be more regulated than basic carpentry.

Teaching

If you excel at a skill that others would like to learn, teaching can be an awesome side business. Crafting makes for easily started classes. Knitting, sewing, cooking, and several more do well. I have taught several classes over the years. I have taught basic dog obedience, tracking, competition obedience, foraging, and am now teaching basic preparedness courses. Teach something you are passionate about.

Homemade Items

I am continually astounded by the growing interest in homemade beauty care and homemade cleaning products. I know several people who are making a nice side income making lip balms and beauty care products. This is something that my wife and I are going to do this summer. Not to sell, we just want to move away from all of the chemicals. 

Medium Level Initial Investment

All of these can still be a micro business, but can be scaled up or down dependent on the demand. For us medium level initial investment means over $500. These can still be a small family operation.

Welding

If you have the skill, this is a great business, especially if you have a mobile welding unit. Welding is a skill that if you do well you can be in high demand. I have personally paid someone to weld for me because I did not have the equipment.

Elite Services

In the past I have owned and operated two businesses that could be called elite services. What do I mean by elite services? Services that are only used on special occasions that would be considered a luxury. A limousine service would fall into this category but would have a very high initial investment.

Dove Releases. You may have seen one of these. They normally occur at either weddings or funerals. White "doves" are released either from a cage or a basket. They fly around, look real pretty an then go home. Here is a little secret. The white doves that are released at these ceremonies are actually white homing pigeons. Pigeons breed like rats so it is easy to expand your release business. I started out with 3 pairs and by the time I sold the birds I had 20 and some of the birds that were released didn't make it home. Make sure that you purchase birds that are less than 6 months old. If you purchase birds much older than that as soon as you let them out of their loft they will go to their previous home and the owner can keep them or sell them again. Sorry I don't have any photos of my old business, but I can tell you I have been out of this business for about 12 years and I got a call the other day asking if I still did releases.

You can learn more about purchasing white homing pigeons at The American White Dove Release Association.  I used the old Department of War training guide you can find that HERE.   Oh, by the way. Do not do a release on opening day of dove season. Very few will make it home. Trust me I know.

Carriage Service. This one can be a fairly large initial investment, but if you hustle can make some good money. I purchased my carriages from Robert's Carriages in Canada. At the time they were very affordable and delivered right to my farm. I charged $300 for two hours for a wedding and did things like proms, festivals and parades. Not only did this provide me a good income while I was going to school, I was able to sell the business when I was ready to get out of the business. I was able to find some old photos of the carriage service.



Here are my words of warning on a carriage service. 
  • Have a good contract. I have had to stand in the rain for hours waiting on a wedding to end, that by the way ended late, very late. Oh and I got a $1.00 tip
  • Presentation is everything. If you are not good at decorating learn. Some wedding parties will want to decorate themselves, have something in the contract about additional non riding hours.
  • Have a cancellation policy.
  • Require a deposit
  • Decide where you will offer your services. When I was running the carriage service, I covered all of North Alabama. At one time I had to have business licenses in 6 cities all in the same year. Research is key.

Final Thoughts


If this a complete list? Oh no. This list could go on forever. Figure out what people want or need and be able to give it to them. Your creativity and drive will help ensure your success. Just because you run into roadblocks does not mean your business is a bad idea.

Proverbs 16:3 Commit your work to the Lord, and you plans will be established.

Do your math well. The last thing you want to do is price your goods or services too high or too low. Both will run you out of business. One by wearing you out and the other by rusting you out. Either way you are still out.

Don't be afraid to reach out to others who are doing the same thing in different areas. Thanks to the internet we have networking abilities that have never been seen before. There is always someone who will be willing to answer your question.

Being your own boss at least part of the time is one more way we can all....

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