Saturday, February 28, 2009

Shipping Terms

So when you get to the point where you have a product built and shipped, you will need to pay attention to the shipping terms. Unlike when you buy your dell computer and the computer comes damaged, and you reject it, on the B2B side that doesn't happen. Most items will be shipped FOB or Free on Board.

FOB is what is called an Incoterm or International Commerce Term. Wikipedia has a great synopsis of the various Incoterms and what they mean.

It is important to realize that shipping terms and conditions are litterally centuries old. Lloyds of London was originally set up to insure spice shipments. Risk Management departments litterally spend weeks negotiating, shipping terms, conditions, and even the definition of Free on Board. If the crain drops the container and it hits the railing, was it considered "on board"?

Since in all possibility you will not have a cargo insurance program, evaluate the risk of product being lost or stolen in transit. While it is a big money maker for sellers (think Best Buy makes money from selling a TV? Nope just the insurance on it.), it may make sense for you to have them cover the cost of the product.

This becomes a bigger deal on high value items where the truck driver, stops to use the bathroom, and "forgets" to take his keys out of the truck. Oops, the truck is gone. And yes, it does happen! It is sometimes less of a deal when you use a common carrier like Fed Ex or UPS but try and understand the terms you are accepting from your manufacturer.

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Friday, February 27, 2009

Contract Manufacturing

The misnomer many people have, is they have to figure out how to make their product. No such thing, there are firms that specialize in taking your prototypes and making them workable designs. There are multiple places to search for companies to make your product. It all depends on whether you want it built on-shore or off-shore. This site was brought to my attention by the 4hww. Great site and it allows you to search for specialty manufacturers.

If you do not mind having product built and manufacturers in china, taiwan and other over seas inexpensive labor areas you want to check out . Alibaba is a public company that is a B2B aggregator.

Right now these are the two best sites I have found to search for your contract manufacturer unless you include google. You would be suprised.

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Sunday, February 22, 2009

Prototype Update

So I was supposed to have a friend review my prototype. Go figure he gets sick and our dinner gets cancelled. Well even though I was not able to get his review, I will work on getting in touch with manufacturing companies this week to make my product.

I have been working on a letter to send to various product companies that asks the various questions such as, can they make custom products, minimum lot sizes, any set up fees and how much per piece. I will work out the details further and post this week.


Friday, February 20, 2009

Another Prototype

Just a quick post. I made a second prototype last night. I am supposed to be meeting my friend for Dinner tonight (if his flight gets in on time). I am hoping to get his input and see what suggestions he would make. This week-end I will provide some of the search resources available to make your product.


Wednesday, February 18, 2009


Ok, my first prototype is done and let me tell you, its ugly. Your prototype will be ugly too. Prettyness is not the point of this exercise. The point is to create a mockup, so companies that are paid to make products for you can make it pretty. Mine was made up of a combination poster board, tape, tape, tape and tape. Packaging tape became my friend this go around.

My next step is a critique of my product from an actual user I would be targeting. Hopefully I will see him at the end of the week and get his take on my first mock-up. Again the importance of a mock-up was shown when I created it. I changed some design schemes on it to make it easier to use and make things more consistent.

Next I will start doing a search for companies that can create my product. That will be the next post.


Tuesday, February 17, 2009


So a quick post. This seems simplistic, but something we do not think about until its too late. Get a large manilla envelope and put any and all receipts in it for tax time. I do not do my own taxes due to company stock and options that make doing my taxes difficult. But any receipts you can maintain as legitimate business expenses can be used to create deductions. A log of miles you drove in your car included.

So the reciept for my protoype supplies are going in this envelope as a legitimate business expense. The books I bought for website building, again a legitimate business expense. i need to create a driving log as well. My car is paid off so the 54 cents a mile the govt lets you write off is quite useful to me.


Monday, February 16, 2009

Prototype Update

Ok I have not finished my prototype yet. I am quite disappointed in myself as I wanted it done by now. Other issues came up that allowed me to push it off. Horrible excuse. This is the procrastination bug that gets me in trouble. I need to work on it tonight as I have several appointments (including an interview) this week which will make it difficult for me to finish it if I don't start now.

In addition, one of my friends, who would be the target market for the product agreed that it would be a good idea. I need to pass the protoype by him too so he can tell me what he likes and doesn't like about it. Right now the product he is using is quite a bit more expensive and bulky, hence the value add of my product.

I will keep you updated on my progress.


Friday, February 13, 2009

Should I incorporate?

Every small business has to decide the best "corporate" structure to provide for their business. You essentially have three choices. Sole proprieter, S Corporation or LLC. Their are advantages to all three and the final decision is yours. Which one works for you.

The main difference between the sole proprietership and the others is liability. Both the LLC (Limited Liability Company) and the S Corp (Sub-chapter S Corporation) limit the liability to the assets of the entity. Many prefer this since they do not need to worry about their house or car being at risk.

I have decided for this first project, the risk is minimal at best, so will not go through the process of seeking liability protection. The cost can be quite high. My next project I will create an LLC, so earning can just flow through to me the individual. Each state is different, and you just want to make sure your state recognizes single member LLC's.

My tax guy advises S-corps, and as I learn more I will let you know what he has told me. Of course everyone situation is different and you have to determine what works best for you. There are several companies out there that will help you set up and establish an entity. I have l inked to one below but I know there are several others.

Hopefully those who have incorporated can provide resources in the comments as well.


Tuesday, February 10, 2009


So while you are trying to figure out the final design for your product, that should't stop you from doing other administrative things that need to be done. Whether you run your business out of a home, or out of a 100,000 square foot warehouse, you still need a mailing address. I would recommend not using your home address as the last thing you want is someone showing up at your home.

The simplest solution is to get yourself a Post Office Box. I was looking at the local post office, and its $99 for the year for a 3x5 post office box. You will need this anyway to set up merchant accounts, take delivery of documents, and show an address for other legal matters. I need to go to the post office this week and figure out the logistics. Can they mail forward? Can they take more mail then will actually fit in the box? Can I have an actual street address for Fedex and UPS to deliver to?

Here are the resources I checked out:

The UPS Store provides boxes as well with a real street address. Might be easier to handle as well.

You can also check out mail forwarding services. Let me know if you have more ideas.


Prototype Update

One reason I recommend a prototype, is once you start creating the mock-up, there is more work then it may seem at first. We all have a lot of ideas in our head about how we want to make, and design our product and what features we want in it. When building a prototype, it forces you to finalize how you want it to look, and what features you want to settle on.

If you look at Myers Briggs, I am a typical ISTP, and the P is what gets me in trouble sometimes. The desire for more and more information before we can finalize a decision can paralyse us from ever finishing something in good time. Anything that forces me to make a decision, even with incomplete information sometimes, is never a bad thing. Those who are strong J's will not have this problem.

So I went to Walmart today and picked up poster board, craft knife, velcro strips and a ruler to start building my prototype. I could have gone to any store, I just happened to be there for an oil change, kill two birds with one stone. I already have packaging tape and other supplies that I can build the mock-up. I will keep you informed as I build it out.

Wow, was going through my RSS feeds and found this article that agrees with the need to "sprint" sometimes.


Sunday, February 8, 2009

The Prototype

I will eventually share my business product with you after I have it set up and established. I will even link to the product description. Who knows, you may want to try it as well. While you may ask, why won't you tell me the product, I have several reasons.

First, as this is my first idea, I am probably slower then most, and do not want an enterprising person coming out with the product before me. Second, the process I go through can apply to any business, but will still need to be customized to your particular product.

I will tell you where I messed up, what I would change and how I would do things differently. I want people to learn from this blog, and feel free to ask questions. Most of us would love to have a seasoned business pro tell exactly how to do things. Isn't the journey half the fun though?

So I have my idea. It is one I have been thinking about for quite a long time. My idea came from, there has to be a better way to do this. In my mind I have knocked around ideas, how I would change it, what I want it to look like, feel like, and how heavy. What features I want. That is all great and dandy, but how about creating the prototype?

Yes, mock up what you want the product to look like. No, you do not need to have a degree in mechanical engineering. There are plenty of people out there that can do all of it for you. I will be making my prototype out of things you can get at Walmart, Target, Office Max or any other consumer goods store. Craft stores are great places as well. I already have scissors and duct tape (what isn't it good for) at home.

Using cardboard, plastic, tape, and time, I will create a mock up of what I want my product to look like. This is important for several reasons. First, it allows you to look at it and say, ummm, no I don't think that is going to work, I need to change X, Y and Z. It also gives you ideas for other features to add or those to subtract.

You will also need this prototype to provide to contract manufacturers to create your product. I suggest doing multiple mock-ups as you will most likely need to provide it to several companies as you weed out who is willing to do the work for you. I use the term contract manufacturer loosely as it can include anything from paper manufacturers to steal and aluminum fabricators.

Because I also work and do consulting on the side, this will take me a while to build out. But that doesn't need to slow you down with the other things you need to do. I will keep you informed of my progress as well as continue to post about the other things I need to do as well. Keep brainstorming!


Saturday, February 7, 2009

Starting a new business

Welcome to my blog. I know many of us have dreams and aspirations to start a new business. It is scary, especially for us traditional 9 to 5'ers. I am going to start a small side business, one that will generate passive income to me. I am going to start it with less then $2,500. I will design it so I have to do minimal work and if it fails, I am out a maximum of $2,500.

I have received inspiration from many sources. Watching The Big Idea with Donnie Deutsch, working for Silicon Valley companies that have a very entrepeneurial mindset, and finally reading the book The Four Hour Work Week by Timothy Ferris that gave me some of the tools and inspiration to move forward.

What this business will not be? It will not be a venture capital based business with the next great web 2.0 (2.75 now?), technology or pharmaceutical business. It will be a simple one product business with minimal investment. I will outsource production, fullfillment and customer service as much as possible. Yes, this will cut into my "profit margin" but at the same time, if its an extra $100 a month in profit for doing nothing, so be it.

I am new to blogging, so I will be making mistakes, taking suggestions and will leave the comments open at this time. I reserve the right to shut them down if they become petty, spam or just do not have the time. Welcome and enjoy!