Dream Merchant 2309 Torrance Blvd. #104, Torrance, CA 90501 (310) 328-1925 email: Jkm316@aol.com

THE HARD LESSONS I LEARNED ABOUT WASTING MONEY IN A NEW BUSINESS

As This Author Learns, Sometimes What Looks Like a Good Deal Can Cost More Than You Think.

c2002 By Dennis Hessler

When I started my home-based business ten years ago, a very famous small business guru strongly suggested that I set up a toll-free order service as one of my first steps. This 1-800 number took orders, processed credit card information, and operators were there 24 hours a day. A pretty good deal, I thought.

The problem was that at the very time I needed to be conserving my money for advertising and product development, I had to pay $300 to set up the account and an additional charge every month whether I used the service or not. They also charged me a percentage of every order, plus a hefty credit card processing charge.

Still, I figured they were there ALL the time, they were toll-free to the customers, and they accepted credit cards, all of which made me look like a big-time operator.

But even with premium-priced packages, I was sometimes paying out $75-$100 a month for $1,000 worth of 1-800 orders. And sometimes more. In addition, I paid for the time callers spent on the toll-free line.

Back then, 1-800 numbers and 24-hour order lines were all the rage, so I figured it must be a good idea. But it cost me a bundle compared with the sales I was making at that point in my information-publishing career. And it was painful to write a check for most of my profits each month to my order-taking service.

The nice thing was that if you called any time, day or night, a cheery voice would say "Spyglass Point Productions" and take the order. Of course I was paying a premium for the service, but at least I looked professional.

Uh huh. This is a mistake lots of new business people make. They think it's important to look professional. Sometimes it's not a toll-free order taking service they pay for. Sometimes it's fancy stationery, furniture, or expensive equipment they only use once in a while.

Yeah, that's nice. But here's what's really important--the ONLY thing that's really important.

Making a Profit!

You see, many newcomers equate furnishing the office with running a business. You know the type: "Okay, I have a big desk, lots of filing cabinets and pretty 4-color business cards. I MUST be in business!" Except that it's cash flow, not fancy furniture that makes a business successful.

Eventually I talked to my bank about setting up my own credit card merchant account. It was so easy, I wish I'd done it a lot sooner. Then I said farewell to my 1-800 order-taking service and posted information in all my sales material saying you could place your order at my regular non-toll free line during certain hours. Then I held my breath.

Surprisingly, I received just as many orders as before and, of course, I saved buckets of money because I no longer paid the 1-800 service all those charges. This one act increased my net income by more than $1,000 in one year.

The point is, you've got to BRING IN more money than you PAY OUT, and every time you're writing a check, you should be taking a long look at the addressee and asking yourself "How is this making me money?" That's a question I finally asked myself and when I did, I didn't like the answer.

Today thanks to the Internet, you really don't need a 1-800 number. You don't need a 24-hour answering service (an answering machine, however, is still a good idea). You just need to be there either in person or on the Internet to take the orders and process them.

The lesson here: Cut expenses and watch the result. If the return is the same and the expenses are down, ...well, you know what to do.

Yes, a 1-800 number gives you increased credibility (I guess) but at what cost? If you want credibility, simply tell prospective buyers you will be available by phone during certain times. Then be there. Answer your email promptly. Have a killer website. All these things increase your credibility more than a 1-800 number and they cost a lot less.

Dennis Hessler is an international trade consultant and publisher. He recently published an ebook about lessons he's learned over the years about how to sell through the mail and over the Internet. It's called "39 Myths About How to Make Money Selling Information Products and How I Break All the Rules and Make Thousands Every Month." You may contact Dennis by contacting:

Spyglass Point Productions
P.O. Box 13141
Pensacola, FL 32591 U.S.A.
Phone: 850-438-5527
http://www.spyglasspoint.com/myths
Dennis@spyglasspoint.com