Farmers, whose home IS their business, have no choice, do we? But if you buy a home at the top of a boom cycle, mortgage for close to what it is then valued at (notice I don’t say ‘what it’s worth’) and then borrow further against it, you are camping on the train tracks. Farms are no exception. Decide whether you want a productive livelihood, or a consumption lifestyle. — Nancy
Responding to Adriana Gardella’s recent post on the pricing issues faced by a dressmaker, Bari Jay:
I think that this is a classic example of the concept of “Positioning.” Right now, Bari Jay has a creneau, a nice little niche. People who want to feel fancy and want something that is custom, personal, and truly one-of-a-kind, can go get measured for a dress and have it delivered to them at a later date.
By lowering your price, you are directly competing with companies like David’s Bridal, which is exactly what you do not want to do (as they, and other similar retailers already have this market segment pretty well covered). The very process of getting a Bari Jay dress is inconvenient. You can’t leave with the dress that day, so you will lose to competitors who fall into the same price range, but have the ability to stock large amounts of dresses on hand. To your advantage, classiness and fanciness are oftentimes ‘inconvenient’ in nature (as, for example, buying a fancy car like a BMW is as much about the experience as it is the product), and that is where you excel.
Don’t break out an extra product line or lower your prices (as this devalues your brand and makes your parent brand seem even cheaper)! Focus on the quality of the dress and enhancing the classy and elegant experience of buying a Bari Jay dress, and customers will drive farther to get their fittings. — JLaurain
Responding to Robb Mandelbaum’s post on Amazon’s competition with small businesses:
If the national sales tax replaces the state tax for online vendors, then I have no issue with it. However, as has been noted, there are a huge number of small local businesses who also sell online, and requiring them to collect sales tax for the more than 7,000 different state and local jurisdictions, not to mention the expense of applying for sales tax permits, would be a financial nightmare.
The problem is that everyone sees the major players like Amazon, and the American Booksellers Association has been ranting that they can’t compete for a decade. However, a careful study of the reason most independent bookstores close reveals not competition from Amazon but rising rents or other real estate issues as the main cause of their demise.
I’m disappointed that this article didn’t address the fact that small online businesses will suffer greatly should the nexus rule be replaced by something that demands they collect sales tax on all sales. It seems to me that is a VERY important point in this discussion. — Elizabeth Burton
Responding to Adriana Gardella’s post on a company’s efforts to train its employees:
Since 1995, over 95% of the prospective tutors who I have interviewed to work for my company (Math 1-2-3 NYT 4/21/11) have been lacking in knowledge and/or teaching skills. Many are stumped within 3 minutes when I grill them on SAT or Calculus or even basic Algebra. In frustration they ask: “do you have a manual that I could study and can I call back soon.” I always inform that what they are asking is impossible. If I were to write a manual it would have to be literally 5,000 pages of material to ensure mastery of all levels of math test prep. It would take years to train someone to be expert enough to work for me. My “training program” is to let prospective tutors get their mistakes out of the way while working for other companies for years. Then, I hire them away by paying them double. As founder of the company, my role isn’t to train. Rather, my role is to ASSESS expert ability. The biggest “do not hire” red flag I’ve encountered is when a prospective tutor says: “Can’t I just study 3 key topics that will be covered in the next tutoring session.” If a tutor needs to STUDY before tutoring a student, then the tutor isn’t a tutor at all — he’s a homework helper and not someone who I can bill out for $150-$200/hr. I hire only top 1% talent because our clients are very demanding. — Mark Kronenberg
Responding to Gene Marks’s post on the best small-business reads of 2011:
Everybody thinks they are an expert on small business, and they are eager to tell you how to start the next Apple or Google. But a huge proportion of small businesses ultimately fail. Where can you find good advice about when and how to cut your losses with a failing business?
When I opened some small bookstores in the mid-1970s, I had high hopes of becoming wealthy. Instead, I went broke and I lost the business and our home, which had been used to get a second mortgage to raise money for the business. Nobody should start driving without knowing where the brake pedal is, or start skiing down a mountain without knowing how to stop (I made that mistake in the Alps in the 1960s, but that’s another story). And nobody should start a business without knowing how to get out before losing their shirt. — Jim Purdy
Article source: http://feeds.nytimes.com/click.phdo?i=cd04f68a580691cbe7a89bbab700d232
Case Study: Why a Victim of Sandy Doesn’t Want an S.B.A. Loan
Case Study
What would you do with this business?
Last week, we published a case study about Ralph Lucci, owner of Automobile Film Club of America, a company that has supplied vehicles for film and television productions since 1993. Based in Stapleton, on Staten Island near the waterfront, the company’s lot and 57 cars were flooded last October during Hurricane Sandy’s surge.
Initially, Mr. Lucci estimated that it could cost $400,000 to replace the cars and refurbish his office, the shop and the equipment. He now thinks it could cost as much as $575,000. But with the cars covered just for liability, Mr. Lucci said that insurance would not provide enough money.
As a result, he has wrestled with closing the business for good or borrowing a lot of money and trying to rebuild. He was approved for a $25,000 New York City emergency loan for small businesses, an amount that is less than the cost of repairs on his office. He has debated whether he should apply for a Small Business Administration loan, but it would come with two stipulations that he found difficult. One would be that he obtain flood insurance, which Mr. Lucci estimated could cost up to $25,000 a year. The second stipulation would require that he post his house as collateral, something that seemed especially risky to a 60-year-old man.
In a recent interview, condensed and edited below, Mr. Lucci explained his decision on the S.B.A. loan and responded to some reader comments.
Did you decide whether to take the S.B.A. loan?
It was too expensive. The S.B.A. wanted me to get a $1 million flood insurance policy. That’s $2,100 a month. I could get an equity loan on the building for a lot cheaper and I wouldn’t have to get flood insurance. I could also put an equity line on my house, which is not in the flood zone.
What will you do instead?
I took the $25,000 city loan. And I applied for a $10,000 grant from the city and some others. I’m not going to get all the money that I lost, but I’m making it up. Whatever I don’t make up, I’ll get through grants or some small loans.
So are you scaling back the business?
Actually it grew. I used the $25,000 city loan to buy seven cars. I’m doing a show now and I got called for a TV pilot. The lifts we fixed, the compressor we fixed. I didn’t fix the office. Like somebody said, `don’t do the office.’ Use money to make money. I’m working out of the house. At one TV show they’re crashing a lot of cars. We make money that way.
Some of the readers said you should have learned a lesson from the flooding during Hurricane Irene. What will you do differently?
Next year I’ll make sure I move all my cars out. I’ll do my office differently. I’m raising the heaters, raising the equipment. Everything is going to be off the ground. I’ll evacuate a couple days ahead of time. If I hear there’s a storm, I’ll pick up computers. All the cars are parked five blocks away.
If you stay in the same spot, shouldn’t you get flood insurance anyway?
I’m not sure.
How much can you afford to pay?
Probably $5,000 a year, not $25,000.
A few readers suggested that you become a broker who finds cars for the movie business rather than owning your own. Have you considered that option?
I have a database of 10,000 cars from here to California. I’ve been doing that for years.
Have you thought about selling your property to make some cash? One reader suggested you move to a safer location, perhaps outside the city to lower your costs. Would you do that?
I won’t get the money that the property is worth. There are big plans for this area, including a mall and housing. When the value doubles, then I’ll sell it. I live here, so it’s 10 minutes away from my house. I work to 3 in the morning sometimes.
What will happen to your business in the next year?
I’m planning on rebuilding the fleet. I’m not going to quit. I might do a car museum. I’ll be leasing. I know I’m 60, but I can’t quit. I’ll die. I started this business with zero. I can do it again. Money’s coming in. I’m working hard.
Article source: http://boss.blogs.nytimes.com/2013/02/12/why-a-victim-of-sandy-doesnt-want-an-s-b-a-loan/?partner=rss&emc=rss