Target Texas Business newsletter

Target Texas Business Newsletter

Volume 1, Fall 1998

In this issue:

What is Target Texas Business (TTB)?

Target Texas Business is an umbrella program which developed out of efforts within the Texas AgriLife Extension Service to provide support and education to potential and struggling small businesses in Texas. These businesses are known by many different terms, including home based, micro, small, start-up, transitional, and others. Businesses differ in terms of size, location, scope of market, products, and other characteristics. Businesses may be agricultural or non-agricultural, retail or wholesale, service or product oriented. Most are sole proprietor, employing 0–4 employees. The main subject matter included in education programs includes business planning, marketing, financial management, human resources, and other topics. Faculty currently involved in this effort are specialists from Family Development and Resource Management, Agricultural Economics, Community Development, and County Extension Agents from several counties across Texas.

Extension’s Role – Your Role

You are probably wondering what your role in Target Texas Business should be. Perhaps you’re thinking, “I have no business background AND I don’t have time to add one more project.” This newsletter is intended to provide you with resources, ideas, and ready-to-use information so that you CAN do home based and microbusiness programming. There are many residents in your county who have little knowledge of how they can make their business, no matter how small, successful. They may have a hobby that they want to convert to an income generating business, or a business idea that needs defining, or just want to learn more about how to sell a product or service.

Our role in Extension is to provide sound, research-based education—not to make decisions for potential or existing business owners. Facts and figures on small business are constantly changing, but the best fact is that small businesses generate 80% of jobs in Texas. These are businesses with 20 or fewer employees (microbusinesses that include home based business).

The Facts

Your District Director has probably shared with you 1997 data for new business registrations for your specific county. Please note the percentage that are home based and those that are commercially located. Statewide, 51% of new businesses started in 1997 were home based businesses. In many areas, figures were higher than this. We do not know how long these home based businesses remain home based before they move to commercial locations or if they move at all. About 50% of businesses will fail or close within the first year of operation.

The need for viable businesses is present in every county, and particularly in the 213 that cited economic development as an issue in the previous long range planning process (renamed – Texas Communities Futures Forum). In 1997, nearly 4,000 individuals in 27 counties have learned of home based business options through workshops, seminars, or newsletters targeting entrepreneurial potential in adults and youth. Through these efforts, participants have gained business start-up and management education that will aid them in making critical decisions affecting potential and existing home based business ownership. Help make reliable business information available in your county so that individuals can make sound decisions concerning whether to start or not start a business.

If you need assistance in program development in this subject matter area, please call Dr. Pam Brown, Extension Consumer Sciences Specialist at (806) 746-4055.

Each home based business has the potential to increase an individual’s or family’s income (usually by supplementing current income), create jobs, provide niche services or products, and contribute to the local and state economy. Generally, these individual owners need assistance in business planning, marketing, selling, pricing, and frequently in product development.

Some Ideas

There are many possibilities to provide educational programming to these audiences. You might want to hold networking seminars, invite panels of experienced business owners to address those wanting to start a business, offer brown bag lunches for owners or potential owners, host a workshop for TANF clients or those out of work who might have a skill that could be turned into a business, or target rural residents who are looking for alternatives to relocation. Run news releases or develop a newsletter featuring information about sound business practices. You may want to adapt parts of this newsletter simply to fill an educational “niche” (see the article below on page 7 from Epsilon Sigma Phi newsletter. What kind of programming niche can you identify?).

Home Based Business Topics

Frequently Asked Client Questions

Question: What is a business plan and why do I need one?

Answer: A business plan precisely defines your business, identifies your goals, and serves as your firm’s resume. Its basic components include a current and performance balance sheet, an income statement, and a cash flow analysis. It helps you allocate resources properly, handle unforeseen complications, and make the right decisions.

Because it provides specific and organized information about your company and how you will repay borrowed money, a good business plan is a crucial part of any loan package.

Additionally, it can tell your sales personnel, suppliers, and others about your operations and goals.

Question: Why do I need to define my business in detail?

Answer: It may seem silly to ask yourself, “What business am I really in?” but some owner-managers have gone broke because they never answered that question.

They try to be all things to all customers.

One watch store owner realized that most of his time was spent repairing watches while most of his money was spent selling them. He finally decided he was in the repair business and discontinued the sales operation. His profits improved dramatically.

Question: What do I need to succeed in a business?

Answer: There are for basics of success in small business:

  1. Sound management practices
  2. Industry experience
  3. Technical support
  4. Planning ability

Few people start a business with all of these bases covered. Honestly assess your own experience and skills; then look for partners or key employees to compensate for your deficiencies.

Question: What should I know about accounting and bookkeeping?

Answer: Good record keeping is a must! Without records, you cannot see how well your business is doing and where it is going. At a minimum, records are needed to substantiate:

  1. Your tax returns under Federal and State laws, including income tax and Social Security laws.
  2. Your request for credit from vendors or a loan from a bank.
  3. Your claims about the business, should you wish to sell it.

But most important, you need them to run your business successfully and to increase your profits.

Question: What do I need to do first when I’m ready to start my business?

Answer: Register your business name with the local County Clerk’s office. There is a small fee for this action.

Cyber Sales: What It Means for Computer Home Based and Micro Business

Home based businesses selling via the Internet confound both taxpayers and tax collectors. The traditional tax base for the purchase of goods and services leaves many questions when Internet commerce is at issue. Why? According to the State Comptroller’s Office, the basic transaction is weakened when it occurs electronically.

In Texas, sales tax means a transaction tax on goods and some services. However, in transactions on the Web, a “sale” may involve “transfer of intangible information,” which may represent tangible property or taxable services.

If items are transferred electronically, they may change from taxable status to nontaxable status. Some of the challenges to current tax laws involve:

Source: Fiscal Notes, April 1997 (page 7)

The following table outlines Texas’ stand on Internet sales transactions:

What’s Taxable? Just where to draw the tax line in cyberspace often confounds tax payers and tax collectors alike. Here is where Texas stands on the issues.

SUBJECT TO STATE SALES AND USE TAX
Internet access services The local tax on information services is based on the location of their service’s place of business.
Information services companies’ advertisements and sales over the Internet This service is assessed a sales tax on the sale of the products. If a customer pays for a product with a credit card and the product is shipped anywhere in the world, Texas tax law considers the product “picked up” at the “server” location.
Data processing services (Except for transcription of medical dictation)
Computer software Software is considered tangible personal property, so software manufacturers may claim a sales tax exemption for the manufacture of the product. If a taxpayer buys, modifies, and sells software, he may receive a tax exemption because modification qualifies as “manufacturing.” The taxpayer may claim a tax exemption on computer hardware, software, and printers used to code the software.
Charges for maintaining a site name and link on the Internet  
Creation or posting of Web pages  
Information or data scanned into the Internet or the creation of HTML documents  
Graphic art or logos created for a home page  
Information transferred between automated clearinghouses and merchants. This is taxed as telecommunications services. For example, an Internet dating service has been held to be a taxable information service.

 

Research Brief

Women and Technology

Women business owners use computer technology at a higher rate than men business owners. The National Foundation for Women Business Owners (NFWBO) reports that women business owners are increasing their investments in computers. Eight hundred women- and men-owned businesses in the United States were surveyed to learn how women and men owners are dealing with the information technology. Women have increased purchasing of computer technology by 60% and plan to increase even more this year. Women use technology to explore new business opportunities, expand and grow, evaluate competition, or become involved in global marketing. Development of home pages has tripled in the last two years. The report revealed that women are using technology in each of these areas at a higher percentage rate than men business owners. Computer technology is used by both men and women owners in customer responses, to introduce products and improve marketing efforts. Forty-seven percent of women owners subscribe to an online service compared to 41% of men owners. Half of women business owners use the Internet frequently, while only 40% of men use it to communicate. Usage is predicted to increase as the number of women-owned businesses increases.

Source: Rosenthal, B. (1997). Women entrepreneurs embrace the Internet and information technology. Sept. 30.

Home Businesses Do Better Than Most Wage Earners

Research by Giga Information Group found that home based business owners gross (before taxes and expenses are deducted) an average of $45,000 a year. That’s 50% higher than the average household income in the U.S. compared with the U.S. population as a whole. Only 2% of home based businesses earn in excess of $100,000. Giga Information Group projects a 27% growth in the number of U.S. households operating some form of revenue-generating home based business by year 2000.

Source: Home Business Magazine Online

Coming Soon

New Home Based Business Exhibit:

“So You Want to Start a Home Based Business” – To be showcased at Children, Youth and Families Institute, August 25-27, 1998. After September 7, check out from the Educational Resource Library. (979) 845-2704.

Professional Development Training

New Home Based Business Curriculum:

Ca$hing In On Business Opportunities Training – Winter 1999

Ca$hing In on Business Opportunitiesis a new curriculum designed to be used by educators who work with home based businesses. The curriculum is comprehensive, covering a wide array of topics of interest to current or potential business owners. Each of the 22 chapters follows a basic format consisting of a teaching guide, narrative, handouts, and transparency masters. Also included with the curriculum is a disk containing a computer-generated graphic slide presentation for each chapter. The curriculum is divided into the following sections and chapters:

The curriculum is written at a basic or beginning business level. Information can be added or deleted as appropriate for the intended audience. Local resource people or consultants should be brought in to supplement needed expertise when necessary.

Ca$hing In On Business Opportunities was written by nationally recognized Cooperative Extension Service experts in the area of small business development, representing 15 different land-grant universities. The curriculum was developed by the Cooperative State Research Education and Extension Service as part of the Communities in Economics Transition National Initiative.

Agents in other states are training Chamber of Commerce members, Department of Rehabilitation, conducting courses for farmers interested in value-added businesses.

Resources

Helpful Web Sites on Entrepreneurship

These sites are great for keeping up-to-date on resources for home based and microbusiness owners. Check them out!

Video Series

To Our Credit, a two part series for PBS will air Thursday, September 10 and Thursday, September 17 at 10:00 p.m.

To Our Credit explores the issues, recounts the successes, and examines the challenges of microentrepreneurs around the world. It is produced by the Access to Credit Media Project. Preview tapes and materials to assist in promoting local programs are available from:

The Access To Credit Media Project
Newburgh Associates
2007 Carmel Road North
Newburgh, Maine 04444 USA
(207) 234-4112
(207) 237-4068

Part One: Bootstrap Banking and the World, profiles the global microcredit movement with stories from the Grameen Bank in Bangladesh, the Small Enterprise Foundation in South Africa, BandoSol in Bolivia, and India’s Self-Employed Women’s Association.

Part Two: Bootstrap Banking in America, profiles microenterprise development in New England, Arkansas, South Dakota and Chicago.

To Our Credit provides a unique opportunity to educate communities and policymakers about the promise of microenterprise and microcredit.

What’s the Difference Between Associations and Networking Groups?

As you work with the growing numbers of home based and microbusinesses in Texas, you may be approached to assist with the organization of supporting these small businesses. Group membership for many individuals is satisfying, while for others it may not hold interest. Regardless of the type of group needed, the ultimate goal is for the organization to become self-supporting, provide a network that assists the self-employed person with contacts and resources, and a means of providing educational programming (business lingo call it technical support).

Associations – Groups of people bound together because of particular interest. The belief guiding an association is that there is strength in numbers and benefits can be garnered for the larger group at a lesser cost than individually. Associations may be within a locale or distant. There is usually a membership fee, newsletter, annual meeting, or other means for the group to be self-sufficient.

Networking Groups – The newest trend in business, called “power networking groups.” These groups are organized around the principles of familiarity, friendship and trust. They may also be known as “lead referral organizations.” Commitment to the group is expected as is regular attendance at meetings. Members provide on another word-of-mouth referrals, while some groups expect at least two referrals at meetings from each member. Trust is the foundation. Membership fees tend to be more costly in these types of organizations.

Consumer Watch

Outlook at Business Outlets

Factory stores originated in the mid-to late 1800s as back rooms where a single manufacturer sold irregular, damaged, or outdated merchandise—first to employees, then to customers.

Today’s factory outlet malls house hundreds of stores and rival conventional shopping malls in the amenities they offer to shoppers. Generally, outlet stores carry merchandise delivered directly from the manufacturer; less than 15% is marked irregular and further discounted. Prices at outlet stores average 30–70% below prices at conventional department or specialty stores.

According to Outlet Bound, an on-line directory (http://www.outletbound.com), Texas has 18 outlet malls with more on the way.

Many outlet malls are located far from their department store counterparts because manufacturers want to avoid competition between their factory stores and the large retail stores that carry their merchandise. Outlet malls are often located between metropolitan markets on major highways or near tourist attractions or vacation spots. Interstate 35 has become prime location, with 6 located in the population-dense corridor. Vacationers are a particular target because they usually have money to spend and may not mind taking a day off from sightseeing to shop—especially if they can find a good deal.

Another hybrid of the factory outlet mall—a regional “value-oriented” megamall—opened in Grapevine in October 1997. More than 300 retailers and 1.5 million square feet make Grapevine Mills one of the largest shopping centers in the Dallas-Fort Worth area. The Virginia-based Mills Corporation, developer of these massive malls, also plans a 1.6 million-square-foot mall in Katy, near Houston.

Source: Fiscal Notes, April 1998

Niche Marketing

by Madeleine Green, ESP National President

The following article, which appeared in the May/June Epsilon Sigma Phi newsletter Connections, “hit the target” for home based business and microbusinesses. The bold titles before each paragraph will help you understand the “fit with business” as well as county programs. This article has been edited for this newsletter.

Do market research

Cooperative Extension is a unique and incredibly special commodity. Are you marketing it that way? Have you narrowed your emphasis, interests, and activities? Have you truly tried to find out what citizens in your community are looking for, asking for, and what information they are willing to buy? If you do this you will be able to “sell” whatever you offer. In these times of information overload, it is more important than ever to carefully craft a niche for your offering. (How unique are the businesses in your county? Are they marketing their uniqueness or trying to appeal to everyone?)

Plan to network

Who do you see as potential clients? Get the names of key individuals, businesses, and agencies interested in that topic. If you are unaware of who these key players are, then ask. Ask all the individuals and agencies you currently have working relationships with for help. It is critical to do a good job of defining this and future contact groups. A key to our success today and in the future is doing business with the right people. These people will serve as a marketing link for us.

Identify your uniqueness

Your specialness will be defined by what you learn about your potential client/customer and the information they seek. Take the time and commit resources to this step and it will return value to your effort. This is very much like the effort one puts into “Building Bridges for Political Support” as defined by Dr. Pat Boyle. Along the way, we need to ask if this is special enough and sufficiently desirable to be selected above other options available in the community.

Know your competition

This is truly a 21st Century challenge as more and more people have access to global resources through the WWW, specialty newsletters and over expanding cable TV offerings.

Take risks

In the supermarket we often encounter individuals offering a tasty morsel, and they inquire “Are you likely to buy this product?” Take your product to the public. Test market it. You will quickly discover if you have crafted a product that has a niche. You will also find out what changes need to be made. Have the courage to make the changes. Once that is done, you no longer want to keep your program/product a secret. That is the time to market and market. It is the time to make things happen. If you have done your homework, the ball is in your court.

Evaluate Sales – Be willing to change

Just because we know our research-based product “is the best thing since sliced bread,” we are not guaranteed success, only a place in history. We need to continually rework our niche, keep it current, and build in change.

Craft a niche...The challenges are here, they are real, and they will not go away. Think long and hard about the niche your unit is crafting. When we commit resources to niche crafting, we position ourselves to own the market place.

Source: Epsilon Sigma Phi Connection – (72) May/June 1998

Editors Note: EVERY business, no matter how big or small, must find a niche in the market place. Extension can assist by identifying service and product needs in communities and helping business match those needs.

 

 

Target Texas Business is published by Family Development and Resource Management, Family and Consumer Sciences, Texas AgriLife Extension Service, Texas A&M System. College Station, Texas.

Editor: Dr. Pamela J. Brown, former Associate Professor and Extension Specialist–Consumer Sciences, Texas AgriLife Extension Service, Texas A&M System, College Station, Texas.

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Last updated: 16 September, 2009

Educational programs of the Texas AgriLife Extension Service are open to all people without regard to race, color, sex, disability, religion, age, or national origin.

Money > Your Business > Target Texas Business Newsletter > Volume 1, Fall 1998


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phone: 979.845.3850
fax: 979.845.6496
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