Modish Biz Tips

7 reasons why shop owners need to blog

{photo by Amanky}

You've been told you need a blog to help better your business. "Everybody's doing it, it's good for business!" you hear them say. But, why exactly? You already spend so much time running your shop, do you really need a blog too?

Well yes. You do. And here's 7 really good reasons why:

1. Blogging helps builds relationships with customers

As a small business, it’s an asset for you to be able to connect more personally with customers and a blog can help you do that. You can allow them to see a bit of the behind the scenes of your shop and see that it’s run by a person that shares the same values as them. One thing a micro-business like yours has over big box stores is personality, a face, humanness- use those things to your benefit, allowing your customers to relate to you in that way will also make them trust you with their hard earned dollars more easily.

Estimated Taxes: Everything you need to know

Our resident tax-lady Caroline Devoy is back in action today with everything you need to know about estimated taxes- what they are, whether or not you need to pay them, when to pay them (next deadline is coming up on June 15th!) how to pay them and what happens if you don't. Read on for all the info, and thanks Caroline for the great post!

{photo by ShellyS - Be on top of your money!}

What are estimated taxes?
It's not just what you owe the IRS, but also when you owe it.  Estimated tax is the method used to pay tax on income that is not subject to withholding.  It's the difference between having an employer withhold the taxes for you each payday or you having to make a federal tax deposit each quarter.  For purposes of this discussion, I am referring to individual estimated taxes, not corporate estimated taxes.  Individual estimated taxes are required on income from a business that passes through to the individual level which would include the following entities:  sole proprietorship, S-corporation, partnerships and limited liability companies.

Why does the IRS require the payment of estimated taxes?
The IRS likes to receive their money throughout the year and will penalize you if you wait until the due date of your return to pay the tax you owe.  Thus, if you are receiving wages, your employer is required to withhold a portion of your salary each paycheck as tax withholding (based on the W-4 form you filled out for them).  If you are earning your income from a non-salary source, you are expected to pay estimated taxes each quarter.

Do I have to pay estimated taxes?
If you have a small business, possibly. It depends on how much tax you are going to owe and whether you are willing to pay the penalty.

There are two reasons you would not have to pay estimated tax:

Retail: Brick by Brick- Business Plan Qs answered

{photo of the cutest little desk ever by Quaint Handmade - see full studio tour on Modish!}

We've had a couple of really excellent questions on the last few Business Plan Challenge posts that we wanted to answer today. We're sure that others probably had the same questions and we want to make sure everyone reads the answers. Plus, we get to feel like the Dear Abby of business plans! Next week we'll be back with a post on Operations! 
 
To start, Mallory has a general question about preparing the business plan: 

Mallory on May 31, 2009 - 

I keep wishing I could find more free examples of business plans to refer to. While I have a lot of this information stored in my head or written down in notes, it's a lot to try and organize and write down in a cohesive manner. I found some business plan software that looks fantastic, but it's for PC only! That's no good for a Mac gal like me. :( 

When we created our business plan we used Microsoft Office (Word and Excel) and did not purchase any business plan software. I'm sure there are lots of Office equivalents for Macs, and you probably know more than I do Mallory, but if you need an Excel-like program try Open Office. 
 
As for the structure of your business plan, its important to remember that this is a professional document. And like all professional documents, it is not going to be an example of your most creative writing! The structure that we have been formatting our posts for Modish BIZtips is actually the structure we used in our own business plan. Though it seems very basic and sometimes repetitive, addressing each topic as its own paragraph will allow you to fully explain that aspect of your business as well as making it easy for your reader to understand. Also remember, if a topic doesn't fit with your business, don't include it in your business plan! 
 
An example of how our business plan was formatted using the last post, Marketing and Sales Part 2: 

Selling your work in stores- Wholesale & Consignment Basics, Part 2

{storefront of Of Cabbages & Kings, from a past Modish shop tour}

We covered selling your goods on consignment yesterday if you missed it, and now it's time to talk wholesale! This is just gonna cover the basic basics for people who are just starting out, interested in selling their work in retail shops and want to know more information about what it's all about.

What is wholesale all about?

To sell wholesale means that a retail shop buys items from you in bulk at a discounted rate. Once the shop purchases the items, they own them and it is their responsibility to try to sell them or keep them if they do not sell. This means they're only going to want to purchase items that they feel cater to their target market, that are the right price point for their shop, that fit in well amongst the rest of the items they carry yet are different than anything else they already have, that their competing shops in the neighborhood don't also carry & what they have enough money to purchase at the moment!

There's a lot of variables that go into which items a boutique decides to purchase, so if you approach them and they are not interested in your goods, remember to not take it personally!

But before you start approaching shops at all, or saying "yes, I sell wholesale!" to those that may approach you, you'll need to arm yourself with a few things first:

Selling your work in stores- Wholesale & Consignment Basics, Part 1

{photo of Little Otsu, a shop in San Francisco- from a past Modish shop tour}

Selling your work wholesale or on consignment is often the next step for independent artists and designers- it can help you expand your business and sell more and it's pretty cool walking into your favorite little boutique to see your items sitting on the shelf next to all the other pretty things. So, where to begin? 

First, let's start with consignment: (wholesale info is here!)

To sell your goods on consignment means that you get paid by the shop only upon the sale of your items- essentially, you retain ownership of your items until they sell, the store does not buy them outright. This is often the easiest way to get your products into a store and is a good first step if you're just starting out.

Consignment is beneficial for shop owners and designers alike: it allows shop owners to fill their shops with items at no upfront cost to them and lets them test out the saleability of your goods to their customers. For you, it's beneficial as you retain a higher % of the sales price on your items than you would selling via wholesale (or, you should!) while also testing our your saleability in different markets, and getting exposure in retail shops.

You pay the shop a commission on the sale of your items, as they are working to help market, display and sell your items in the best way possible.

The Consignment Agreement:

When you enter into a consignment relationship with either an online or brick and mortar shop, you need to make sure you receive a consignment agreement from the shop. This should outline:

Retail: Brick by Brick- Business Concept

{photo by nankano}

In today’s section of the Business Plan Challenge we are going to focus on the Business Concept. It is here you will write about both your business and the industry as a whole. You also get to do some fun stuff like the Mission and Vision Statements, as well as your Business Goals; these are areas where you get to really dream and be creative!

Before we get started, a few tips:

• Write as though the person reading it doesn’t understand a thing about your business. Put everything in simple terms and leave out the industry specific jargon.
• Leave out “I” and “we”. Instead, use your company’s name or some variation of “the company”.
• Avoid words like “might,” “maybe” and “however”.
• And last, be positive! This document is selling your business idea!

Now! On to the writing!  

Business Description:

The description of your business venture should give the reader an idea of what your business is all about. This includes the name of your business, expected form it will take (i.e. sole proprietorship or incorporation), names of key personnel (you, any partners or investors), names and description of main products and/or services and purpose they serve, why your business is unique (explain why customers will do business with you), and a brief description of what you have done or are doing to start the business (do you have any existing or potential customers; if so, mention them).

Industry Overview:

The Industry Overview outlines the current state of your business industry and consists of four subsections: Industry Description, Industry Segment, Growth and Trends, and Barriers to Entry. A lot of this information for this section comes from the Market Research you did last week. In this section you will not be talking about the specifics of your business, instead you will be addressing the market from a wide view down to narrow view. Think of it as funnel. We’ll start broad at the top and work our way down to the specifics at the bottom.

We know a few of you were confused about the NAICS codes we discussed last week. The NAICS, or North American Industry Classification System, groups together businesses into categories. By finding your code, you can also find information about businesses similar to yours. Let's carry on and see where this data fits in.

Industry Description: