Expanding business

Discussion in 'Growing and Managing a Business' started by Tom G, Dec 2, 2014.

  1. Tom G

    Tom G
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    Hi Everyone,

    I have been working from home doing a very low profit job (buy bulk + sell to just cover my advertising/website/insurance), and then a few months ago (about 8) I got into producing items myself and selling them to a shop, it's been going really well.
    Now heres the spin. A good friend of mine wanted to join in (she works for an employer currently), she wanted to just help me run it and get half the profit. We first decided to open our own store, but got some good advice and decided against it and to just sell to shops instead. I got some advice about structure and was told to just 'hire' her. I told her that this was a better way to do it, and she said cool. The problem in that I can't afford to hire her, I only profit from one business and it's only enough to pay me. I am also more than capable of doing it all myself. She talks well to customers, however she does like to tell them that it's a 'WE' business if that makes sense? I gave her access to my website and she changed everything to 'us' and wrote a big thing about herself on the about me page. I since have changed the password as I felt it has really overstepped the boundaries.
    She agreed to be a 'volunteer employee' until we do start making enough money to pay ourselves, she also said that she wouldn't feel right if I paid her and didn't pay myself.
    A month ago we decided to go to the markets to see what people liked and maybe make a bit of money to pay off items we've had to purchase to get things up and running. So far we have done 3 and only made enough to cover costs of products, not time. To give you an idea. She helps for 3 hours during the week before the market. And then she is at the market all day with me, which is about 5-7 hours. I do all the paperwork, the labelling, the buying, the taxes, the website building.. well you know.. everything else.
    Our third market was last weekend and she decided that there was something she wanted to buy. So she told me that when I was ready to let her go spend money, she would go off and buy some things for herself. Which she did, again she is my friend so I do not want to cause her to be angry at me. I always pay for everything and this last market, we came home with less money than what we went there with. I was pretty upset as we did sell a bit, but costs were not covered for stock. She tells me that dinner was paying for her labour. (Meanwhile I am going broke)
    I am getting leads not through the market, but the first shop I started selling to, she says she will help me take samples to them.. but then now I'm feeling that she will expect me to pay her for that to? I can do it myself for free. She is eager to work for me as she wants a full time job, but I am years off being able to pay myself, let alone her too!

    Does anybody have some advice for me? Anything at all? The only thought I had was that I could pay her as a rep, I can make the products, and for each customer she gets, she can receive a certain percentage of sales?

    Please help me not ruin this, I'm sure there's a way?
     
  2. golden-process

    golden-process
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    Wow. You've got to set some boundaries. My suggestions:

    1. Company funds are different and completely separate from personal funds. It appears to me your company does not have the luxury to pay her dinner. If you want to pay for it out of your personal funds, that fine, but your company can't pay for that right now.
    2. You control the company checkbook. She does not touch it.
    3. Put her on a strictly commission-based payment (whatever makes the most sense.) But whatever it is, the company must make money after you pay her or it doesn't make sense for anyone.
     
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  3. stuartbriscar

    stuartbriscar
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    Definitely what golden-process said...

    Managing your finances is very important, especially if you are feeling that you are only making enough to cover costs.

    When I was making and selling candles, I had to explain to my wife in the beginning that pretty much all of the money went right back into the business and that we couldn't just use it for whatever.

    If your partner decides to spend money without your permission, tell her that it's on her, not you (or the business)

    I like the idea of commission-based payment.

    Things to consider...

    1) Are there ways to lower your costs? Is there a supplier that offers your inventory at a cheaper price?

    2) Are you actually selling from your website? Do you use an Etsy or something similar? Don't forget about Facebook.

    3) How many times in a month are you at the market selling your items?

    4) Where are some other places you can sell your items? Will some local stores sell your item for you?


    Also, ask your friends and family if they or someone they know might be interested.

    The good news is spring and summer are coming and that's when there are a lot of arts and crafts shows so go ahead and plan for those.
     
  4. FaaastCash

    FaaastCash
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    Well I genuinely feel that you could have also done justice to your business, as I believe that the time has not come, when you can think of hiring anyone to share your responsibilities. Do look at your finances on first hand basis, as this will provide you insight view of business standing.
     
  5. bburkeconsulting

    bburkeconsulting
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    The three above comments are all providing good advice. Look, it's your business, you've put the work into it. If there is no room for her at the moment, tell her so. Tell her you value her capability and assistance, however the business is simply not in a place to pay employees. Perhaps you'd be willing to share profit with her past a certain point. Tell her you will consider her labor as an "in kind contribution" and she will get xxx equity, and outline the terms of the equity draw. i.e. - when the company has a profit margin of xyz, the terms of the draw are abc. If you're running it as a business and paying yourself, then your salary comes out before the business shows any profit, therefore you're not at risk in this situation.

    -Brian
     
    #5 bburkeconsulting, Mar 27, 2015
    Last edited by a moderator: Mar 27, 2015
  6. atlantisrocks

    atlantisrocks
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    I'm wondering if you have a plan to become successful.

    Sure, you have a wish to succeed. But, have you laid out the steps you must take to make your business a success?

    Offering your products at a weekend market is labor intensive. I wonder how many people selling items at weekend markets make a living doing just that. Probably very few.

    I think you need to get your items into stores / shops where you need not be present to make some profit. You indicated that this is where you are generating leads for customers.

    Without a clear plan you are open to distractions, such as your lady friend. You need to have a written plan to guide you. Then show the plan to your friend and tell her when and where she can fit in. As you mentioned, taking on additional help may be years away. Make that plain to her (and to yourself).
     
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  7. bburkeconsulting

    bburkeconsulting
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    Good point.
    Not sure what the product is exactly, but this would really increase your exposure.
    You also have other stores financially invested in the sale of your product.

    Best idea on this thread.
     
  8. aspecialist

    aspecialist
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    As business is concerned, it is not advisable to hire a friend because there are rules in business that sometimes your friendship may compromise. You can remind tell her that as of now you are not getting any profit from your business so as you cannot pay her for the services she gave, maybe you can just give her a commission on every client she get or as per sale basis. You may also ask advice from any business expert like I did.
     

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