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Oakland, CA

Posted By Bakari

"Turning-Hustlers-into-Entrepreneurs" discusses the possibility of increasing micro-credit in order to support independent "black market" business people.  As someone who has been running a successful off-the-books business for several years, I believe the major obstacle is not a lack of credit, but rather a government which is geared toward big business.

As the examples in the article illustrate, people are already doing what they are doing, without capital.  What they lack is official legitimacy.  Many entrepreneurs, such as myself, would love to "go legit", but it is not a realistic option.
I understand and support the idea that government regulate business to protect consumers.  The problem is that government does not take the size of a business into account in the requirements it imposes on operating legally.

For example, a single guy with a pick-up truck doing local deliveries pays the exact same state license fee as a company with a fleet of semi trucks.  The  least insurance available to him is a million dollars of coverage with a 1-2 thousand dollar annual premium, even if he never comes close to transporting a million dollars worth of goods.   Every city he works in requires its own separate business license.  If he needs to hire a subcontractor on occasion, he needs to buy worker's comp insurance at a minimum, and possibly more.  Being self-employed, he pays an additional tax (which an employer would otherwise cover).  And of course by staying underground, he avoids paying any income tax on his business revenue.

All of this can easily add up to thousands of dollars.  That sum may be inconsequential to a corporation with annual sales in the millions of dollars, but to a small independent, going legit would cost me about 20% of my entire net revenue, more than two months income.

The solution to this is not to finance small business to help them pay for theses fees - these fees are annual, and taking loans only increases risk.  The solution is to have license fees proportional to net revenue, instead of being fixed amounts, requiring insurance companies to offer a full range of coverage options, including (potentially less profitable) low limit policies, and restructuring tax code so there isn't a penalty to being self-employed. Similarly, laws making it difficult or illegal to run certain types of business from home could be relaxed, (for example, allowing small scale retail in otherwise residential districts), eliminating the need for a dedicated store-front, a major on-going expense.

Reducing the government imposed costs of running an independent business legally would , without the additional risk incurred (for both the investor and the entrepreneur) by accepting loans or the costs incurred by providing grants.  It would also increase tax revenue, by encouraging existing underground businesses to come above the radar and join the mainstream economy.

Posted By Bakari

I am considering asking for a raise.
A 33% one at that.
I am fairly confident I will get it, seeing that I am the CEO and majority shareholder as well as the sole employee.

It is not because I need the money.
Just the opposite.

I have too much money, not enough free time (well, maybe not "too much", but more than I need)

I am hoping that a moderate price increase will discourage people from calling me.
The decrease in work would be made up for by making slightly more when I do.

I justify raising my prices to myself in two ways:

1) I now have 3 years of experience.  I have all sort of fancy equipment.  I have moved hide-a-bed sofas, large potted trees, and several 600lb safes.  My repair skills are getting increasingly refined (as I get to practice on my clients houses).  I am gradually moving along the skill level scale from day laborer toward contractor.  That experience makes me more useful.

2) I am still well below the standard moving company rate.  Not long ago I got a call from someone who wanted to hire me to unload a U-Haul from a local move.  I pointed out that the cost of the U-Haul rental alone would be as much as my charge, and wouldn't include a laborer (me).  I priced the job at about $130.  She was immensely relived, and told me she had gotten several quotes, all above $500!
At the new rate, it would have been $160; still far below what she was told elsewhere, and in fact still competitive with renting a truck and trying to do it all alone, (including a dolly, blankets, and insurance makes a one way U-haul rental $155)

Wow.  I was on the fence when I started writing this, but after doing the math just now, and looking up U-haul's rates, now I am quite sure!

So, anyway... I'll leave my minimum where it is, at $50.  Going up to a more divisible number means I will be able to charge to the nearest 15 minutes instead of the nearest half hour.  And I'll be able to afford to make my no car discount $10 off per hour instead of just $5.
Also, I am instituting a sliding scale.  If someone genuinely can't afford even the discounted rate, I will add in an additional $5 per hour poverty discount.
I'll count that at $10,000 (approximately the federal poverty line for an individual) even though things are expensive in the Bay Area, because I don't really buy that things Americans have gotten used to calling "necessities" really are.  Granted, I don't have kids, but I did live nearly half my adult life on less than $10,000 a year - and pretty comfortably at that.  Of course, I will trust my clients on their word regarding income.
I'll also add something explicit on my pricing page about tipping for people above the median income for our area (about $50,000 for a family, $35,000 individual).
I had been excited for a while about having a sliding scale, but couldn't figure any reasonably simple way to institute it.  I think having a base rate, but with exceptions, will be the best way to accomplish it.

I'm thinking beginning of next month.
So if you need something moved, recycled, or repaired, you may want to schedule it quick.