Things I Love About Running An Online Business

I'm sitting here at 1am on a Wed (well, OK, I guess it's Thurs now) loafing time away listening to music on Pandora Radio (Pandora.com -- very cool! Check it out!) and reading my latest issues of Motor Trend, Car and Driver, and Diesel Power Magazine and relishing some of the cool perks of owning an online business.

Here's a few I thought I'd share:
1) No Commute.
Well, ok, does a flight of stairs to my in-home office count? I absolutely LOVE not having to drive to work. For 5 years I commuted back & forth to Salt Lake or to some remote clinic I had to work at and I'm telling you, I hated it! There I sat in an iron box on 4 wheels wasting time away, burning up money in gas, and devaluing my car by rolling over the odometer mile after mile.

It got old really fast and I've not missed a single moment of the drive since quitting "the day job" to do my business full time. These days a tank of gas in my Toyota Tundra can last nearly a month and then some. Heck, we put more mileage on mini-van than my truck ever see's.

It was funny, we recently got a letter from Allstate wanting to know how in the world we could drive SO LITTLE in a years time (when I quit the day job & sold the Accord I had my agent adjust the mileage estimates on my insurance because it lowered our premiums). Anyway, I calculated the mileage we now travel using their form and found that we put about 8000 miles a year on the minivan and only 4500 on the truck. How's that for savings?!

Not having to commute to work just totally rocks!

2) My Business, My Hours
About six months into running my business full time I made a decision to close my business on Wednesday's. At that time we were doing lots of Biodiesel demo's and it was easier for some reason for people to come & see them during the middle of the week. I also did some research & found that that was my lowest call volume day and emails were the slowest on those days.

I was also looking for a way to get my weekends back since I was just about burning myself out trying to keep up with the business (we had a REALLY busy year last year). One day when I was just about at my wits end I made the decision to not answer the phone on Wednesdays and just get "the other stuff" done so I could have a weekend all to myself for family time instead of being a slave to the business.

I'd also remembered reading a Benjamin Franklin quote at a vendors place that read, "Run thy business or thy business will run thee". So, I bit the bullet (I was really nervous about losing sales) and said to heck with it. It's my business and I'll run it any dang way I want.

And so from that day on, Wednesdays were MINE! Granted, I technically am still working on Wed's, but it's usually doing stuff like updating my site, photographing new products, paying the bills, working with vendors to develop new products to offer, and other "non-sales driven" stuff. Oh yeah, and not answering the phone right in the middle of a really brain-consuming project.

My customers have all gotten used to it and are just fine with it. They still ask occasionally what in the world I do on Wednesday's and some even wonder if it's some "religious thing with Mormons". I just laugh & explain.

I still get people that'll call on wed's...today someone from Puerto Rico rang the line at 7am! But I just ignore it & let the voice mail catch it. Ah....life is good!

3) Employees Rock!
I spent the first couple years doing all of the business as a one man show. I did the packing, the shipping, the bills, everything....and it got old. For about 6 months I fretted over hiring an employee because I'd heard so many horror stories that small business owners had shared, but, I finally bit the bullet, plunked down my hard earned cash for workers compensation insurance, signed up for Paychex (it's a payroll service), got registered with the state to hire employees (it'd blow your mind all the crapola the government makes you go through to hire someone "legally"), and hired an employee.

That was in March of last year and oh my gosh do I love having an employee around! I must be spoiled because I think I have the best darned employee out there. He's from next door, just graduated high school last year, and is an incredible worker. He's incredibly good too! He handles all the shipping, stocking, and printing of new orders. He also does our inventory, and basically makes it so I can concentrate on running the business and bringing in more sales. I love having him around!

It also means I can now go on extended vacations and the business continues to operate. We went to Lava Hot Springs last summer & he ran the place while I was gone. In July I also went on a business trip & yep! He kept it running! It rocks!

I don't know what I'd do without him (well, yes I do, I'd cry....he went to a NASCAR race last week & I had to pack again...let's just say he can pack out the orders 10 times better than I can!) The guy's amazing!

Also, a little tip...if any of you out there do start a business and need an employee, spend some time finding the right one, then train them really well, and treat them well. He's paid really well (he makes more than the managers at McDonalds do working for me--I noticed it one day when I took him out to lunch & saw their "help wanted" sign, "Hey, look! You make more than the managers here make! Cool, huh!") Find great staff, train them well, pay them what they're worth, and they'll make life for your business rock!

4) Online Sales At All Hours Of The Day, 24/7
Because my business is online, I'm technically "open for business" 24/7. I literally make money in my sleep. I'll go to bed with all the orders cleared and wake up to several more. It's amazing how many orders come in overnight.

You just can't beat sales like that! It's just so cool to wake up & see orders that have come in through the night. Weekends are even cooler! By far, the best "sales day" of the week is Sunday. AND I DON'T EVEN WORK ON SUNDAY! Is that cool or what?

Tonight while I was lounging around reading my Motor Trends & Car and Driver two sales came trickling in. Now how many Brick & Mortar businesses do you know that can pull that one off? The internet is so dang cool!

5) Low Overhead
Because nearly all of my sales are generated online, I don't have to pay for a fancy showroom or a retail space to house the business. I bought a 10 x 20 storage shed to store the inventory we stock here and I use a converted bedroom in the basement for my office space. And I even get to write off the space used for the office on my taxes! How cool is that?

The internet has truly made it possible to operate a full fledged business from your house. Trust me, it's possible. Very, very possible! I'm now headed into my 5th year and it's been growing every one of those years too!

6) Layoffs? What Layoffs?
About 7 years ago I worked for Iomega (you know, the guy's that make Zip drives). I worked there for 5 years and in that time I lived through nearly 7 rounds of layoffs. We went through 5 CEO's in that time too.

After getting married, buying a house, and basically taking on a ton of responsibility (both financially and mentally), the prospect of losing my job as each of those rounds of layoffs happened just about made me go crazy. For weeks I wouldn't sleep at night and I'd have visions of "the grim reaper from HR" knocking on my cubicle to "come and visit with him about something" (which meant you were losing your job) It drove me crazy!

I finally quit that place (never did get laid off, I quit on my own terms), and went to work for Intermountain Health Care (a MUCH more stable company) and did that gig for 5 years. In that time, even IHC had layoffs. I even had to help determine who did & didn't get to keep their jobs at one point; trust me it's not fun. Nobody likes telling an otherwise useful worker that they're losing their job knowing that they have kids at home they have to feed. I remember my boss hated it too. It wasn't pretty.

One day I read a book called "The Millionaire Next Door" that changed my life. In it they basically interviewed lots of lots of millionaires and asked them questions about what they'd done and how they got so rich. In one section of the book it talked about that most of these millionaires owned their own businesses. Also in that section one of the millionaires said something that really resonated with me that sunk deep to the bone.

He said, "When you work for someone, you have one boss that controls your ability to make money. If you screw up, one person can determine whether or not you can pay your bills. If you own your own business, you can spread that risk over literally hundreds of people; your customers. In other words, when you work for yourself, your "boss" is your customer base. If you lose one customer, so what? You'll have 99 others to keep you going. And chances are if you're at all good at what you do you'll get another 100 after that. However, if you fail, you have no one to blame but yourself."

It was that and a couple other points in the book that really stuck with me and got me started on this whole "own your own business" gig. And I gotta tell you I ABSOLUTELY LOVE IT!

Yep. The economy is going to pot. Yep. Lot's of my friends & relatives are losing their jobs. Yep. It sucks. I've been there, done that. But, the good Lord up above willing, we're still here & kicking and still doing pretty good. Definitely not as good as last year, but still not anywhere near to the point of having to shut the business down either.

You see, I have literally thousands of customers (I did a count earlier this year for a newsletter I publish just how many customers I had last year. It tallied in at well over 5,000!). Those wonderful customers of mine (and believe me, I LOVE my customers! I think I've got the greatest customers in the world!) take good care of me & I take good care of them.

Because of them, I've been able to spread my "job-loss risk" out quite a bit and at least for now, we're doing fine.

7) S-Corps
If you've read some of my previous posts, it's pretty obvious I'm not a fan of taxes. I think if most people had ANY CLUE how much businesses pay in taxes; and particularly small businesses, it'd make their heads spin. You see, the majority of the US population works for other people for a living. All they see is the money they get in the form of a paycheck.

What they don't see is that the business enterprise they work for is paying taxes through the nose just to keep afloat and to provide them with a job. Taxes suck. I realize what they're for, I realize that we all need to pay our fair share, but that doesn't mean I have to like them. I haven't seen a tax refund in over 5 years. This year I paid more in taxes than I ever MADE in a single year working for someone else (yes, that's a lot!).

(OK, small rant....I was reading in the Book of Mormon tonight about King Noah's people getting taken over by the Lamanites. When Noah & his cronies beat it out of the land and the Lamanites came in & took over, the Lamanites imposed a 50% tax on everything King Noah's remaining people made. Did you know that if you calculate the taxes levied on a small business in some cases they're paying nearly 45% of what they make in taxes? And we're happy about this? Excited to live in the land of the free, the brave, and the taxed? Now you get a feel for where my attitude about taxes comes from...ok, now on with my post...rant over)

But, wait! There is hope! It's called an S-Corporation and it's what helps keep small businesses from being taxed to the point that they all go belly up.

Here's how it works.
If you work for yourself as a sole proprietor then at the end of the year, everything you make is subject to income tax in the form of self-employment income tax. This not only means Federal & State income tax, but it also means FICA, Social Security, and Medicare taxes too (the ones everyone seems to FORGET ABOUT but the ones that'll absolutely kill you).

(It's been said that the middle-class in America are the ones that REALLY foot the tax bill in the form of Medicare and Social Security.)

Now, here's where an S-Corp comes into play.

When you're a corporation; and particularly an S-Corp, you "hire yourself" as an employee of the company and you "assign yourself a salary" (hence another reason for me needing a payroll company; they get to deal with all the crap that goes with Payroll--ie. Payroll taxes anyone?)

Anyway, the kicker is that once that salaries in place, I don't have to "pay myself" more than that salary regardless of how much the company makes. While the business can make tons more than my salary may be, I only have to pay myself the salary I designate (within reason; there's certain stipulations, but you get the idea).

When you "pay yourself a salary", you still have to pay Medicare & Social Security on the "salary wages", but not on the rest of the profits the corporation makes.

The S-Corp becomes it's own "entity" if you will that can pay it's shareholders dividends. Dividends aren't subject to Medicare & Social Security. They are subject to Federal & State Income Taxes (and trust me, those aren't any walk in the park either), but by using an S-Corp you can reduce the amount of money you pay out to Medicare & Social Security and can greatly reduce your tax burden.

Most CPA's will tell you that it doesn't make sense to move to an S-Corp unless your profits are expected to be higher than about $50K/year. We hit that magic number two years ago & so last year we opted for the S-Corp option and saved quite a bit this year.

Granted, when you're an S-Corp, there's a lot more paperwork & documentation you have to do, but it's well worth it. According to my CPA, by moving to an S-Corp, we saved over $12,000 in taxes that we otherwise would've had to have paid out if I was still running the business as a sole proprietorship. Yep! That's a lot of dough! I don't know of many people that wouldn't want to save $12,000.

There's also a liability benefit to having a corporation too. If the business ever gets sued, the liability is born by the corporation and not by it's officers (if you've done your documentation properly and haven't done something terribly illegal that is). Granted, there's ways around everything when it comes to lawsuits, just ask my brother in law, but an S-Corp does give a bit of liability protection when administered correctly.

So, to me, having an S-Corp this year was well worth it. It also means we can have our own 401K plan; which also is kind of cool (but somewhat EXPENSIVE to administer though!)

And, there you have it!
7 reasons why I love running an online business. Granted, the last two are more about me running my own business & not necessarily tied to it being run online, but they're still things I like.

So, while it's now 2AM and many of you won't be making money until you go into work in the morning and punch that time clock, I'll probably still get a few more sales in before the nights through.

Not a bad thing if you think about it.

Just a note though for all those out there that are now dreaming up ways to quit their jobs and start their own businesses. It's REALLY HARD WORK! This hasn't come overnight. I started it part time and sacrificed an awful lot of personal time and still do to keep it running (just ask my immediate family how much they saw me over the last couple years; it's getting better, but for about 2 years there I didn't do much else).

You'll work many more hours than you ever worked working for someone else (I probably work about 60-70 hours a week on the business) and you never get to really get it out of your mind (I posted something the other day about a business owner and how he was pretty much married to his business 24/7. You eat, sleep, and dream about it all the time. It's hard to get it out of your mind. It's like a needy, hungry child strapped to the side of you that you can never get rid of). But, that's why I chose something I enjoy.

There's a quote out there about doing the things you enjoy for work and you'll never work another day in your life. That's somewhat true. I took a hobby that I absolutely love and somehow figured out a way for me to do it all the time and still pay the bills and it's turned out to be a pretty good gig.

If you'd like more advice on that topic, go pick up a copy of "The Millionaire Next Door". It just might change your life too....

Well, I'm off to go make some money in my sleep. Gotta catch some Zzzz's....