Do I Need a Contract?
Angel asks:
“I have the opportunity to create gift baskets for a local brownie company. They supply the brownies and I will create the basket for them to give to the customer.
Should there be a contract between the brownie company and my basket business?”
Congratulations on obtaining this account. Many designers do not pursue a contract when working as an outsource supplier because they believe the informal connection is beneficial.
However, many more understand the complexities of this collaboration and work out the details in writing before starting.
I learned long ago that you, the company hired to complete a project, are the one responsible for creating the contract. It’s in your best interest.
The contract will include:
- the two parties’ names
- the contract terms (what will be provided)
- the contract length (how long you will work with them)
- the payment and when it’s due (charging for the entire project versus an hourly rate works in your favor)
- where the work will be completed (their facility or yours),
- who’s responsible or held harmless in case of fire or theft, and any intricacies associated with the terms
I’m not an attorney, so consider what I’ve shared as advice only.
I encourage you to seek guidance from a small business attorney to create this contract. If you think he’ll be expensive (it’s more affordable than you imagine), think about how much this project will cost you if something goes wrong and there’s a dispute that lands you into court.
I interviewed small business attorney, Robin Gronsky, on Legal Tips to Keep your Company Out of Court, which covers this and other topics. It’s a worthwhile investment to understand legal basics.
[tags]gift baskets business, finding a small business attorney, gift basket laws[/tags]
When Am I Making Money?
Shelby Huband asks:
“Will will you be able to tell if you are making money once you start your business?”
I’m most often asked where to find money to start a business, which is outlined in this finding money section. However, this question is just as critical.
You are making money when your profit is greater than your expenses during a specific time frame, whether monthly, quarterly, or yearly.
This same answer is true to determine when you’re making enough money to cover not only your gift basket business expenses but also your personal living expenses.
Take time to list all of your monthly costs, which are what you pay for mortgage/rent, transportation, food, school, communication (telephone land lines and cell phones), heat and electricity, etc.
These are the expenses that, when consistently covered by your gift basket revenue (after paying for business expenses), with leftover monies (profit) to place into retirement and vacation accounts, you’re indeed making money and living a comfortable lifestyle.
I encourage you to invest in time with a certified public accountant to understand the “making money” concept to meet your goals quicker rather than later in business.
[tags]gift basket business, when am I making money, sales and expenses, profit and loss[/tags]
Should I Invest in a Franchise?
B.J. asks:
“Can you comment on Gift Basket Franchises vs “Start from scratch businesses”. “
I’ve never investigated gift basket franchises. It’s best for you, if interested in this type of investment, to consult legal counsel before signing an agreement.
The differences between a general franchise and starting an independent business centers around several factors.
- Investment money. A franchise will expect you to hand them thousands of dollars for being part of the organization. When you start from scratch, you control how much money is invested.
- Mentoring. A franchise usually includes guidance, either at a specific facility and/or by phone, for a period of time. When you start from scratch, you must search for a mentoring program, which you’ll pay for according to the mentor’s fee structure.
- Inventory. A franchise may or may not provide you with baskets, supplies, and other items to start your business. Some franchises tell you that you must buy your inventory exclusively from them. Starting from scratch means you find and purchase your own materials.
- Business name. Buying into a franchise may mean that you must use the franchise’s name for your business, which is good for recognition as long as customers are familiar with the name. Edible Arrangements and Quiznos are two examples. Starting from scratch means you name your business on your own.
- Marketing power. Some franchises will provide matching dollarsto market your business, its location, and available products. Some will not. When starting from scratch, all marketing costs come out of your pocket.
- Franchise fees. Some franchises charge monthly or yearly fees. Starting from scratch means that you invest as much as you want in your business whenever you want.
- Monitoring. A franchise reviews your business and financial records on a regular basis. Working for yourself means that no one sees your documents except you, a trusted accountant and attorney, and the Internal Revenue Service (if located in the U.S.) if contacted for an audit.
These are the major differences I’ve learned about franchises, and there are more. However, what I outline here does not necessarily apply to any gift basket franchise selling their service in the U.S. or abroad. If a gift basket franchise abides by any of what I’ve outlined above, it’s coincidence.
Each franchise makes up their own rules. That’s the beauty of operating a chain of franchises. When you start from scratch, you can also make up your own rules, as long as you stay within general guidelines set by your state or country. That’s the beauty of owning an independent business.
[tags]gift baskets, starting a gift basket business, owning a franchise, how to choose a franchise[/tags]
