Business Question

[Sparko]

Yeah, you need to be able to easily document what you claim. It's best when you have a separate room or, in my case, a separate building. I have an office in my house exclusively for my pastoral study/counseling, etc, but I don't claim that because it'd be too easy to contest that it's also a place where I can watch TV, take a nap, etc.

But what if you have a business that IS watching TV and napping? I think I will start one of those!

I will become a TV critic! Then I will get paid to watch TV and if I take a nap, I can claim it as a reaction to a boring show.

[Irate Canadian]

What idiot decided that tablets should go directly to the site app even when the user doesn't want it to? Man, that thing was annoying...)

The idiots that think a native app is always better then a web interface....

[Teallaura]

The idiots that think a native app is always better then a web interface....

Thank you!!! That danged thing was driving my friend crazy. I tried three things to get around it and when none worked, I looked at her and asked "Where's your desktop?"

It wouldn't have been so bad accept the app didn't work - it just went to an ad and stayed there. You couldn't order from it.

[Cow Poke]

Jesse mentioned "business consulting".

I actually got into that because of my computer consulting. I would often see practices or policies not even having to do with IT, but that were costing the company money, and I would offer to consult on the basis of streamlining their procedures.

Sometimes, it was as easy as helping them understand how much easier it was to do all their UPS and FedEx online, or a way to eliminate handling the same piece of paper over and over.

My favorite business advice was a large industry that had some HUGE plasma cutting machines, where they cut huge plates of 1" steel. One of the machines went down, and the only repair part was a substantially heavy piece of equipment that had to come all the way from Germany. On a ship, the cost of shipping added to the price of the piece was $800. It was over $4,000 to have it flown in 2 days - the ship would take 2 weeks.

The foreman refused to pay $3,200 "extra" for faster shipping. When I asked how much it cost per day to have the machine out of service, he snapped back, "that machine makes us $8,000 a day!" I just waited a few seconds, and he got that "oh, yeah" look on his face.

He smiled and said, "a dollar waiting on a dime". ($8,000 a day times 14 days = $112,000 vs his "saving" $3,200)

Sometimes, an "outsider" can see things more clearly about running a business than the business owners/operators themselves.

[Teallaura]

As for 'home office', not happening at the moment. Way too inconvenient and much too easy to goof off instead. It's one point in favor of renting space - when I'm there I'm gonna be much more focused on making it pay me instead of just me paying it!

And yes, I know it's deductable.

[Teallaura]

Jesse mentioned "business consulting".

I actually got into that because of my computer consulting. I would often see practices or policies not even having to do with IT, but that were costing the company money, and I would offer to consult on the basis of streamlining their procedures.

Sometimes, it was as easy as helping them understand how much easier it was to do all their UPS and FedEx online, or a way to eliminate handling the same piece of paper over and over.

My favorite business advice was a large industry that had some HUGE plasma cutting machines, where they cut huge plates of 1" steel. One of the machines went down, and the only repair part was a substantially heavy piece of equipment that had to come all the way from Germany. On a ship, the cost of shipping added to the price of the piece was $800. It was over $4,000 to have it flown in 2 days - the ship would take 2 weeks.

The foreman refused to pay $3,200 "extra" for faster shipping. When I asked how much it cost per day to have the machine out of service, he snapped back, "that machine makes us $8,000 a day!" I just waited a few seconds, and he got that "oh, yeah" look on his face.

He smiled and said, "a dollar waiting on a dime". ($8,000 a day times 14 days = $112,000 vs his "saving" $3,200)

Sometimes, an "outsider" can see things more clearly about running a business than the business owners/operators themselves.

He should have paid $4800 - the $4000 to ship the thing right then and another $800 to ship a spare to have on hand for the next time.

I don't understand why businesses that know they are machine dependent and know full well how hard it is to get parts don't assess which are most likely to break / hardest to get quickly and just go ahead and get them. Yes, you have to store them but it's a rare part that will cost more to store than it will in downtime waiting for it. If you can run to the store for one, obviously you don't need to store them on site - but if it's gonna shut you down for more than the repair time, um, how is this a good idea?

[Cow Poke]

He should have paid $4800 - the $4000 to ship the thing right then and another $800 to ship a spare to have on hand for the next time.

I don't understand why businesses that know they are machine dependent and know full well how hard it is to get parts don't assess which are most likely to break / hardest to get quickly and just go ahead and get them. Yes, you have to store them but it's a rare part that will cost more to store than it will in downtime waiting for it. If you can run to the store for one, obviously you don't need to store them on site - but if it's gonna shut you down for more than the repair time, um, how is this a good idea?

The cost of the part was over a hundred grand. That's a lot of money to have something in stock that only fails in extremely unusual conditions. (a tow motor operator was moving a piece of equipment that should ONLY have been moved by overhead crane - it was a freak accident)

[Cow Poke]

As for 'home office', not happening at the moment. Way too inconvenient and much too easy to goof off instead. It's one point in favor of renting space - when I'm there I'm gonna be much more focused on making it pay me instead of just me paying it!

And yes, I know it's deductable.

That's why I really like my "home office" that's in the garage apartment BEHIND my house. It's a one minute commute to work, but it's not "in the house".

[Teallaura]

The cost of the part was over a hundred grand. That's a lot of money to have something in stock that only fails in extremely unusual conditions. (a tow motor operator was moving a piece of equipment that should ONLY have been moved by overhead crane - it was a freak accident)

And then there are those parts... Which is why you have to assess first...

[Cow Poke]

As for the business deductions - something I wish I understood way back when.....

The IRS isn't as interested in mistakes on returns as it is in finding FRAUD. If they find you PURPOSELY cheated them out of a considerable sum of money, they can open up your (I think it's 7) previous years tax returns and analyze them, too.

They're not really looking for $20 bucks here and $50 bucks there - that's not worth the examiner's time.

So, be honest, have your documentation, and fear not!

[Cow Poke]

And then there are those parts... Which is why you have to assess first...

Yeah, otherwise, I almost always recommend keeping a spare in stock -- like our projector bulbs for our Sunday Morning powerpoints -- we have three projectors, all the same, so we keep two bulbs on hand -- and when one goes out, we replace it, and we order another spare. They're about $400 bucks a pop.

[Cow Poke]

Wow, I can't believe I ALMOST left out the most important business advice I could give!!!!

I was reminded of this by something I said in another thread.....

(I don't wear shoes in the house, or anywhere else I can get away with it)

I ALWAYS had in my consulting contract a phrase that said something to the effect....

"Contractor shall not be required or expected to wear shoes at any time except where mandated by federal law."

This did two things.....

A) It let me know if somebody actually read my contract.
2) It gave me the freedom to run around without shoes or boots.

I HATE shoes!

Seriously though, it's good to have a contract with your clients (I prefer to call them clients rather than customers) and you should have an "errors and omissions" clause!

[Truthseeker]

The cost of the part was over a hundred grand. That's a lot of money to have something in stock that only fails in extremely unusual conditions. (a tow motor operator was moving a piece of equipment that should ONLY have been moved by overhead crane - it was a freak accident)

Even though interest rates are low now, maybe it should be pointed out that inventory costs $$$ because cash could otherwise be invested in a money market account or something better.

[Teallaura]

Even though interest rates are low now, maybe it should be pointed out that inventory costs $$$ because cash could otherwise be invested in a money market account or something better.

But would a money market pay more in interest than you'd lose in down time? In some cases, sure - but in most, no. Paying people to spend a week twiddling their thumbs really isn't worth the 5% you might earn.

[Carrikature]

Yeah, otherwise, I almost always recommend keeping a spare in stock -- like our projector bulbs for our Sunday Morning powerpoints -- we have three projectors, all the same, so we keep two bulbs on hand -- and when one goes out, we replace it, and we order another spare. They're about $400 bucks a pop.

One of the projects I'm currently working involves equipment for which there is always a complete set of spare parts onsite. The repairmen can show up and use whatever parts they need, then ship the replacements when time is no longer such an issue. In these cases that's more than worth it, as the sites tend to be extremely remote (the last one I went to was in Presidio).