Business Idea: Starting a Bakery Business

The bakery industry was hit by the growing obesity problem and the popularity of low-carb diet. But according to a report by the Business Trend Analysts, the market for bakery products remains quite healthy with the U.S. manufacturers sales in 2005 estimated at around $35.2 billion.

So if your dream is to bake the most wonderful cookies, pies and pastries, here are some resources on how to start a bakery business:

• Starting a Bakery
• How to Start a Home Bakery of Your Own
• Starting a Bakery (Canada regulations)
• Bakery Net Forums
• BakingBusiness.com

I suggest the first step is to write your business plan. This is an essential tool if you are requesting for funding or applying for a loan. But even without planning on getting investors or loans, a business plan can help you think through the business and understand what you are getting into (e.g. market factors, competition, resources you need, marketing strategies, etc.). Here are some examples of business plans:

• Specialty Baker Business Plan (free)
• Coffee Shop and Bakery
• Restaurant - Dessert Bar and Bakery
• Restaurant - Delicatessen and Bakery

You can also get a lot of information from the following bakery associations

• American Institute of Baking (AIB)
• American Society of Baking
• The Bread Bakers Guild of AmericaInternational Cake Exploration Society
• The International Dairy, Deli, Bakery Association

For in-depth information, I suggest you read the following books

• How to Open a Financially Successful Bakery by Sharon Fullen and Douglas Brown
• Baking for Profit: Starting a Small Bakery by George Bathie
• How to Open a Financially Successful Specialty Retail & Gourmet Foods Shop by Sharon Fullen
• Gourmet to Go: A Guide to Opening and Operating a Specialty Food Store by Robert Wemischner
  

Taking Advantage of the Mail Moment

According to the USPS, the Mail Moment "defines the highly interative daily ritual that consumers devote to bringing in their mail and discovering what it offers" from sorting and organizing to allocating and reading. Hence, marketers should always consider including mail as one of the channels to be used for reaching customers.

Aside from the obvious benefits USPS derives if every businesses embark on direct mail, I can totally relate to this so-called "mail moment." When I'm out of the house around lunchtime (the mail delivery time in our neighborhood) and calls home to check on the kids, one of the questions I always ask is "What came to the mail today?" In fact, when I reach home, checking the mail is one of the very first things I do. And when I am at home, I love checking the mail box to see our mails.

The USPS study says that mail evokes emotion:

• 56% say receiving mail is a "real pleasure"
• 55% "look forward" to discovering the mail they receive
• 67% feel mail is more important than the Internet

Below are other insights from the Mail Moment study:

1. Mail gets your message into waiting hands = people look forward to receiving their mail (unless of course they are anticipating bad news like collection or more bills they can't afford to pay :o)

• 98% of consumers bring in their mail the day it's delivered
• of these, 72% bring it in as soon as possible
• 77% sort through their mail immediately

2. Mail takes you to the person in charge = mail is usually sorted by the person in charge of managing household operations, of which:

• 90% determine which mail is kept for review
• 81% review financial documents
• 84% are the principal grocery shoppers

3. Mail boasts a loyal readership = while time has become a very precious commodity, consumers spend a bit of time with their mail

• Consumers spend an average of 30 minutes reading their mail on any given occasion
• They spend 45 minutes with magazines, 30 minutes with catalogs and 25 minutes with Direct Mail

4. Useful mail performs direct tasks = consumers look to commercial mail to:

• Browse for new consumption
• Manage the home
• Oversee finances

You can find other interesting direct marketing studies from the USPS website

How to Create New Ideas and Products that Work

Nine out of ten new products introduced into the marketplace fails. And this is because business organizations rely on a random and disorganized system of brainstorming, focus groups and quantitative consumer research.

The new book " Lightning in a Bottle: The Proven System to Create New Ideas that Work" by David Minter and Micheal Reid introduces the concept of Idea Engineering as a much better way to create new ideas. Idea Engineering is a 7-step system that enjoys a success rate of 1 in 2. It includes the following steps:

1. Learn = how to effectively research, compile and sift, relevant information
2. Develop "Working Theories" = how to synopsize what you've learned and develop working theories
3. Develop ideas (concepts) from the "working theories" = how to bring together research and working theories to develop actionable ideas with maximum potential.
4. Do financial due diligence = how to determine if ideas will actually make money before you talk to consumers
5. Talk to consumers -- not in focus groups, but one at a time = how to test and modify ideas with one-on-one interactions with consumers, and avoid the biggest mistake that product developers make: depending on focus groups
6. Iterate the concepts by listening to consumers = how to modify your questions and your concept during one-on-one consumer interaction, thus employing a real-time concept development with real consumers
7. Take the best concepts coming out of the interviews and "monetize" them - predict their real world value = how to predict real world value by conducting a large scale quantitative survey with consumers

One of the book's points is that "creative business geniuses know what the public wants." This reminded me of a conversion I had with the President of a market research company I worked with early in my career. While she talked of the importance of market research (which is after all the business of the company), she said that not all successful products in the market was launched with the guidance of market research. She mentioned the classic story of the launching of Sony Walkman whereby the Sony Chairman at that time refused to do a market study on the product. He instinctively knew that this would be a success, and true enough, Sony Walkman became extremely successful and popular.

Reaching Target Customers and Determining Response Rates

If you're thinking of ways to reach your target market, the first step is to determine the right strategy you will use. And the right strategy is one that will allow you reach your audience at a very cost-effective manner, especially if you have tight resources.

Knowing the response rates for each strategy can help you understand how consumers react to the various medium, thus helping you determine the best marketing tactic for you.

According to the Direct Mail Association (DMA) in their The DMA 2005 Response Rate Report, the overall response rates of the various marketing strategies used are as follows:

• Mail = 3.40%
• Newspaper = 0.50%
• Catalogs = 3.67%
• Radio = 1.35%
• Magazine = 0.17%
• Direct Response Television (DRTV) = 8.14%
• Telephone = 8.55% (includes telephone follow-up to direct mail campaigns)
  

10 Tips for Starting an eBay Business

I have been selling on eBay for years on an off-again, on-again basis, selling vintage postcards, pearls and various other items. So I was glad to receive a copy of the new edition of the book "eBay Business The Smart Way: Maximize Your Profits on the Web's #1 Auction Site" by Joseph Sinclair.

The book offers 10 tips for beginning sellers to establish and operate a business on eBay:

1. Financial Needs. Determine your personal financial needs.
2. Profit Model. Create a product profit model.
3. Niche. Find a niche with products that satisfy your product profit model, and if applicable, your personal passion. Find wholesalers.
4. Name. Choose your business name and use it everywhere.
5. Business Form. Choose a business entity and get a sales tax license.
6. Accounting. Set up your accounting software and chart of accounts.
7. Trials. Run some trial auction.
8. Auction Management. Subscribe to an auction management service. Integrate your accounting with your auction management.
9. Help. Find people to help you (as your independent contractors) with your business tasks.
10. Customer Service. Plan general and specific customer service policies and programs.

The Joys of Self Employment

Happy Thanksgiving to everyone!

In this day of giving thanks, spending time with family and yes, eating, it has made me think of all the benefits and joys having my own business has given me and my family. Entrepreneurship has given me so much, and I am a better person because of it.

Here's my list of the joys and benefits of self employment:

1. The freedom to pursue your own vision
2. The control and flexibility you have over your own time.
3. The opportunity to learn and gain knowledge.
4. The highs and lows of self-employment.
5. The sense of pride and fulfillment in accomplishing things.
6. The confidence you gain in knowing that you can do it.
7. Potential earnings exceed a salaried employee.
8. Business owner reaps the full rewards
9. Each new day is a challenge.
10. The chance to share your learning.

Read the full article "The Joys of Self-Employment"

What States are Tax Friendly to Small Businesses?

The Tax Foundation releases an annual study on the State Business Tax Climate Index and Ranking that looks at how tax friendly a state is to small businesses. They have developed a ranking that is a comparative measure that can provide insights on how the state tax system is “hampering the efforts of local entrepreneurs or the possible entry of new businesses.”

The study defines the best states as those who raise sufficient revenue without imposing at least one of the three major state taxes—sales taxes, personal income taxes and corporate income taxes.

According to the Index, the top 10 states with the best state business tax climate for 2007 are as follows:

1. Wyoming
2. South Dakota
3. Alaska
4. Nevada
5. Florida
6. Texas
7. New Hampshire
8. Montana
9. Delaware
10. Oregon

You can read about the 2007 ranking at the Tax Foundation

Small Online Business and the Future of the Web

It's almost end of the year, and now is the time to take stock of what happened to your business this year. It is also the time to look for possible opportunities or positive changes that your business can take advantage of next year. Part of this process is understanding what is happening in your industry.

If you are doing business online, Morgan Stanley's presentation at the recently concluded Web 2.0 conference entitled "State of the Internet" looks at the direction where the Web is going.

Here are some of the trends of the Internet that small and home-based businesses can consider:

• Online advertising is going to continue to grow
• Increased emphasis on targeting and conversion improvements
• Video is going to be big; how content creators can benefit in terms of monetization of videos is still unsure
• The business model of Skype may be worth considering: offer the main product free, but monetize add on or premium features
• Consider local advertising
• Think how your business can benefit from the growing community/social media such as Wikipedia or MySpace (should your business have a MySpace page or can you find a way to create a page on Wikipedia that will not be construed as spamming?)
• Start thinking of reaching the mobile users
• Consider reaching the international markets, such as translating your site into different languages

The subtitle of the presentation "The World's Information is Getting Organized + Monetized" summarizes it all. Read the PDF version of the Morgan Stanley presentation

Lower Your Advertising Costs with Remnant Advertising

If you are promoting your business through advertising, you may want to consider buying remnant or surplus advertising. Remnant advertising is the unsold ad space, which often goes to public service or gone forever. Media companies, from radio, newspaper, magazine even TV, do not always sell their advertising space -- so they sell these spaces often at steep discounts. And tapping these remnant ad spaces can be an effective and inexpensive strategy for your business.

For newspaper and magazine advertising, you can check the remnant spaces available at MediaBids http://www.mediabids.com . Looking through the available ad spaces, Business 2.0's half page ad is available for a discount of $4540. A full page ad at Entrepreneur Magazine can save you more than $12,000 from their usual rate.

Access to information on remnant space is tightly controlled, so there are no similar marketplaces for radio or television that I know of. Though I know that remnant spaces for radio are discounted by 25 to 75% off retail prices.

If you advertise on these medium regularly, check with your media contact how to be able to buy remnant ad space. Just be ready with the creatives fast when a remnant space opens up. But buying these surplus ad spaces is one way you can stretch your marketing dollars.

Marketing to Institutions

Institutions such as schools, universities, hospitals, government offices and libraries represent a $4.1 trillion market, according to a November 2006 Direct magazine article "Predictable But Not Easy" by Larry Riggs. That's a big market that small businesses can target!

However, the article points out that it is not so easy to reach this market. For one, these institutions are governed by a different set of accounting principles. Here are the tips from the author on how to reach this market:

• Understand that these organizations need to spend their entire budget within the fiscal year, but timing is everything
• Target school districts between April and June, when their fiscal year typically ends.
• They have concentrated buying powers, but sending your catalog or offer to the purchasing officer is not always going to work because this officer is not likely to know the needs of all departments.
• If you are targeting colleges and universities, it is best to target deans and department heads.
• If marketing to elementary and high schools, target the principals, and even individual teachers

Read the full article at Direct magazine

Secrets of the Super Successful

Why are the successful people, well, successful? How do they attain the pinnacle of success?

The book “There’s Always Room at the Top: 8 Secrets of the Super Successful” by Alan S. Becker looks at the super successful -- the CEOs, governors, diplomats, authors, politicians -- and examines what made them stand out from the rest. He found these 8 attitudes that can propel you to success:

1. The two simple but necessary steps to success are: Set a goal and Do it.
2. Know Your Limitations.
3. Go With Your Gut.
4. Never Quit.
5. Keep Your Eye on the Doughnut.
6. There is Always Room at the Top.
7. Power Abhors a Vacuum.
8. The Paths of Life.

You can read a summary of the book and explanation of the above points at Women Home Business

SmartMoney Small Business Challenge

If you are looking to reach finance and investment-minded consumers, you may want to join SmartMoney's Small Business Challege.

All you have to do is to submit your business plan. If adjudged the winner, you can win a prize package consisting of $200,000 worth of SmartMoney and SmartMoney.com advertising and a Sony VAIO computer. The contest will begin accepting entries on November 13 and will run until January 31, 2007.

Learn about the Small Business Challenge contest

5 Basic Rules of Internet Marketing

Nach Maravilla wrote about the lessons learned by PowerHomeBiz.com on how to market a website. He gave 5 basic rules of internet marketing that every online entrepreneur new to this game needs to remember:

1. Understand that everything starts with content.
2. Be persistent.
3. Use different techniques.
4. Track and measure your results.
5. Learn, learn, and learn.

Read the article "5 Basic Rules of Internet Marketing"

How to Borrow from Family and Friends

My colleague George Rodriguez wrote an article giving tips on how to borrow startup capital from friends and relatives. His tips are:

1. Choose the right person
2. Understand that this is high risk capital.
3. Ask for money only when you are prepared and ready.
4. Discuss how their investment will be structured.
5. Put everything in writing.

Read the article "Raising Start-Up Capital: How to Borrow from Family and Friends"

Start Thinking of Taxes

It's holiday time once again! From Veteran's Day, Thanksgiving, Christmas, Kwanzaa, Hanukkah -- it's that time of the year to celebrate.

Before you get carried away with the celebrations (and food!), you need to start thinking about your taxes. Tax time is not one of my favorite things. But like many things in life, it is something that you have to do whether you like it or not.

In my view, as long as I owe the government tax dollars, then it means business is good. But I also do not want to pay Uncle Sam without knowing what the law allows me to deduct as business expenses.

November is the time to catch up on what you are allowed to deduct to minimize your taxes. Do you need new computers? Do you want to buy new software? Do you need to spend advertising money? Have you opened a self employment 401K account? It's time to wade through your receipts, or start talking to your accountant about tax strategies.

It's also the period to start reading all these tax books for whatever changes in the tax laws that may affect you. I have recently received my yearly free copy of J.K. Lasser tax books, and here are some tips from these tax experts:

• Take the Bite Out of April
• Multiple Tax Bills and Mid-Year Law Changes Increase Savings and Complexity
  

Where People Shop for the Holidays

The National Retail Federation has released a survey conducted by BIGResearch “Holiday Consumer Intentions and Actions Survey” that shows consumer behavior and shopping trends for the 2006 holidays. The survey, which polled 7,623 consumers, looked at where people plan to shop and how they intend to use the Internet for this year's holiday shopping.

Holiday shoppers are expected to spend $791.10 each this year, and a growing number is going to use the Internet for their shopping. According to the study, respondents will use the Internet for an average of one-fourth (28.9%) of their shopping.

Here are some interesting data from the study:

• 47.1% plan to purchase holiday items online, though 70.3% will use discount stores; 61.6% will go to the department store; 49.3% will go to the grocery/supermarket; and 48.4% in specialty stores
• Those earning $50K+ more likely to use the Web at 57.8%
• About 38.1% regularly research products online before purchasing them in person or in store
• They mostly research online electronics (39.3%); apparel (20%); appliances (19.6%); home improvement items (18%)
• A fifth (23.6%) use Google first to research products online

You can read about the study from the NRF website

Factors that Contribute to the Survival of Small Businesses

We don't want to start a business by thinking about its failure. As Ayn Rand said in her book The Fountain Head, "you don't start by giving up." But are there factors that can improve your chance for success?

SBA has a study entitled "Redefining Busines Success: Distinguishing Between Failure and Success" by Brian Headd that looked at the characteristics that result in better chances of survival. The study also looked at the factors that were characteristics of closure.

The study showed that

66 percent of new employers survive two years or more, 50 percent survive 4 years or more, and 40 percent survive six years or more

According to the results of the study, the factors that can improve the likelihood of survival are as follows:

• Being an employer firm
• Having starting capital of more than $50,000
• Having a college degree = higher education give the business owner increased resources to use for the business
• Starting a business for personal reasons = gives owner increased motivation to keep the business going

Other factors also seem to improve chances for a business survival, though to a lesser extent:

• Previously owning another business
• Multiple owners
• Being home-based at startup = because costs can be kept low

On the negative side, the factors that can contribute to the failure of a busines are:

• Being relatively young owners
• Being in services or retail trade
• Not having any startup capital
• Being in an urban/suburban area

The study concludes that "having the resources to be or get larger and the motivation to persist leads to survival."

You can read this interesting SBA study (in PDF version)

Business Survival: Buying into a Franchise or Starting a Business

An interesting question was posed today at Yahoo Answers. Given the failure rate of new businesses, can going through the franchise route improve your chances for success?

I answered the question by exploring the advantages of franchises:

1 - Franchises are already established businesses. Franchises have already proven that the business concepts work and that their business ideas are valid, hence the franchisors are replicating the business through franchising. They already know that there is a demand for their products

Sole proprietors, on the other hand, have to determine their business idea is viable, and whether there is a demand for their products or services.

2. A franchisee cannot be approved without proving that they have the resources and capital needed to run the franchise effectively. They have the resources in place.
Sole traders often operate on the fly and on the shoestring, trying to make do with what they have. Unfortunately, lack of resources mean lack of opportunity to do many things needed to run the business well. Hence they fail.

3. Franchises have the benefit of branding. They come in with a "good name" that is familiar, if not well known to the consumers. Think of a Subway franchise -- consumers already know Subway is, what are their products, and often already have an opinion of the products. Compare that to Nenita's Subs and Fries, which no one knows about

4. Franchises have the support of a knowledgeable management team who already knows what works, what does not work, and how to run the business. Hence, they offer training, even helping franchisees find the best location for the business. They have already studied what works in terms of the store decor and layout.

Franchisees are coming out of the gate with all these information, data and knowledge that a sole proprietor has to learn through trial and error

5. Supply chain for franchises is already set -- the franchisee don't have to spend time looking for the best suppliers for the business in terms of both quality and price because the franchise owner already did that for them.

Compare that with the sole proprietor who may need to spend the better part of their initial startup period looking for suppliers, manufacturers, etc.

The Problem of Starting a Business with No Money and Poor Credit

Many are faced with the problem of wanting to start a business but have no money compounded by poor credit.

I won't say that you can't start a business, because you can. You can start your business with no money -- but it will not be easy. If you're willing to work hard, and be creative and willing to learn, you can surely do it.

With poor credit, getting a low-cost loan from the Small Business Administration will not be an option. In SBA's document "CREDIT FACTORS A POTENTIAL BORROWER SHOULD KNOW" http://www.sba.gov/financing/preparation/qualify.html you can qualify for an SBA loan if you have equity investment and collateral -- which both means money. SBA wants to see that you yourself is invested in your business, so they want to make sure that you have money in your business as well. Without money, then you cannot be approved.

Here are some articles that can give you ideas of what to do when you want to start a business yet you do not have capital:

Starting a Business with Little Cash? http://www.powerhomebiz.com/vol30/nocash.htm
10 Rules for Starting A Business on a Shoestring Budget http://www.powerhomebiz.com/vol70/shoestringrules.htm
No Money? No Problem! http://www.entrepreneur.com/article/0,4621,288954,00.html
Seth Godin's Bootstrapper Bible http://www.changethis.com/8.BootstrappersBible
How to Start a Business With No Money http://www.smbtrendwire.com/start-business-no-money/

I suggest you read the following books as well. Borrow them from your library or buy them from your favorite bookstore

- No Cash, No Fear: Entrepreneurial Secrets to Starting Any Business with No Money by Terry Allen
- Starting on a Shoestring: Building a Business Without a Bankroll by Arnold S. Goldstein
- The Art of the Start: The Time-Tested, Battle-Hardened Guide for Anyone Starting Anything by Guy Kawasaki

Top 10 Fast-Growing Ways of Reaching Customers

The independent agency network ICOM recently completed a study on the fastest growing ways of reaching customers. While Internet is the king, they found that the "the forms that are growing the fastest aren't the same in different parts of the world."

Blogs, e-mails and group sites were the fastest growing forms of marketing in Europe, North America and Asia. But viral marketing is equally strong in North America, outdoor and product placement in Asia, and SMS and guerrilla marketing topped the list in Latin America. The results are based on data from 58 respondents in 25 countries from 34 member agencies.

Below are the top 10 growing forms of outreach:

1. Blogs/e-mails/group sites
2. Viral marketing
3. Internet (interstitials/message embeds, etc.)
4./5. Commercial messages on hand-held devices
4./5. New formats of outdoor
6.-9. Brand experience (brand-sponsored games, etc.)
6.-9. Guerrilla marketing
6.-9. Search engine marketing
6.-9. SMS
10. Program development (with product integrated into content).

While I wish I could share the actual study, you can read the news release here

The Risks of Starting a Business

One of the major fears of starting a business is the risk involved. What would happen if you invest your money in a business, while potentially profitable, offers no certainty of success? What if the business fails?

Business is risk. There's not one business that can provide a business owner with 100% success guarantee.

If you are hesitant or scared to start a business because of its perceived risk, I suggest you evaluate the level of risk of the business and determine whether you want to take on that risk. In the risk management field, this is called "risk appetite." The most successful entrepreneurs are those who are able to face the risks and overcome them.

Make a list of the potential risks of the business. Understanding how the nature of your business affects risk is important in determining where to apply resources in order to help mitigate those risks. Recognizing areas of business risk will help you to optimize allocation of your resources.

For example, if you want to start a hair salon business, your risks may include (though not exhaustive):

• quality of location that you can get, which can affect your level of foot traffic and even the insurance you can get for the business
• potential for fire given the flammable nature of most hair products
• electrical safety due to the number of electrical appliances used in the business
• top hair stylists may leave, bringing with them your clients

Then indicate the level of probability that the risk will occur:

• Is the likelihood that this risk will happen HIGH?
• Is the likelihood that this risk will happen MEDIUM
• Is the likelihood that this risk will happen LOW

Finalize the list with the steps you can do to manage and minimize the risk.

This type of assessment can help you determine if the risks are well worth it -- and if you have the resources, skills and knowledge to actually overcome the risks.

If you are comfortable with the level of risk, especially when compared to the returns, then invest in the business. If not, then look for a safer business for you to invest or work with someone you think is better equipped to handle the risks of the business. Or maybe consider that entrepreneurship is not for you and you may be better suited for something else.

Best Banks for Entrepreneurs

If you are thinking of getting a bank loan to finance your business, you may want to check with Small Business Administration's "Banking Studies: Small Business Lending in the U.S."

The study lists the best banks in each state in terms of their small business lending activities. The data also includes the microloans offered by these banks. While the latest study is 2004, the study is still very relevant and helpful to anyone looking to get a bank loan

Read about the best small business banks in America