The usual paradigm of an entrepreneur is one who wants to work for himself or herself and create a business from scratch. In contrast, the reluctant entrepreneur was once happy working for someone else, as long as he or she received a regular paycheck and health benefits. However, this new class of entrepreneur is forming home-based businesses as a survival response,

They never intended to start a business and are finding the challenges more demanding than they ever imagined. Though they enjoy continuing to do what they love, be it accounting, architecture, or computer programming, they also must manage a business, including all the marketing, cash flow, invoice collecting, etc. These extra duties, though necessary, are what made these entrepreneurs ‘reluctant’ in the first place.

If you fit into this class of entrepreneur, you are not alone. Here is some advice to help give you encouragement as you grow your new business:

• Grow your network – An entrepreneur’s success can be measured by the number of contacts he or she has. You must generate your own business, and simply hanging a shingle is not sufficient. Call your old boss. Call your friends. Call everyone you know to start drumming up business. And get involved with networking events to extend your contact base.

• Be persistent – Did you encounter a potential client who said no? Keep trying. A successful entrepreneur is persistent and doesn’t let a single decline stop him from trying again.

• Create a plan – And change it often. Business plans are a great way to keep you on track of what you want to accomplish. However, remember that change is the only constant, so review your plan regularly and update it as needed.

Just because you formed a business out of necessity doesn’t mean you will fail or have a tough time succeeding. Remember, you are doing what you love. With that in mind, you will find the way to make your business succeed.

Social networking has seen steep increase in usage over the last few years. In fact, about 67% of all online users have an account with at least one popular social network, such as Facebook, Twitter, or LinkedIn. With such astronomical numbers, marketers are having a field day using available data to offer credit products to consumers.

The Company You Keep Could Impact Your Credit

Although your social activity has no impact directly on your credit score, your visible activity can clue credit card companies about your likes and dislikes and the type of people you have as friends and acquaintances. Your visible activity, including all your updates, groups, and comments, can be compared to a social graph, which is comprised of large amounts of social networking data. Your position can inform credit card companies whether you are connected to a community of good credit customers or poor risks. Their presumption is that your responsibility with credit is predictable to the company you keep.

The Social Networking Debate

However, is it fair for credit card companies to assume risk based on your social activity? Consumer advocacy groups say no. Linda Sherry, a spokesperson from the consumer group, Consumer Action, states, “they may be gaining information from people who are naive and not understanding how their profiles are set. It verges on privacy violation.”

The bottom line is that marketers will use the data that is available to them. With so much social networking data collected, it is possible to spot consumer trends, which makes it a potentially great marketing tool for credit card companies.

Protecting Your Profile – and Credit

Thankfully, there is a way you can avoid being profiled based on your online social activity. Marketers can only pick up data that is public. You can assure that your social activity is not used for consumer profiling by changing your privacy settings on each account.

For instance, Facebook allows you to adjust privacy settings to allow only your acknowledged friends see your activity. Twitter has similar privacy settings.

If you fear that your social activity could be used against you, don’t let creditors have a look at it.

What is the best way to handle contract disputes with clients?  My company has a business agreement for clients to sign.  Is there ever a time when a company should sign a clients’ independent contractor agreement?

Washington:

Whenever possible, get clients to sign your contract.  If the attorney who drafted your contract did their job well, your contract should more favorable to your company.  It would specify that arbitration or disputes being handled in your state, not the client’s (if they are out of state), plus include other stipulations that are fair to your client but also advantageous to you.

There are exceptions.  If you are using software or an online service, you typically review terms online and agree to them by clicking a checkbox before you proceed to use the tool.  But for consulting engagements or high ticket items that require a written signed contract, try to use your own contract.

That said, some clients will absolutely insist that you sign their agreement.  Make sure that there is nothing in their contract that is detrimental to you.

I once had a big brand name client agree to signing our agreement.  However, their lawyers wanted to modify parts of it, which wasn’t surprising since that’s what lawyers at big firms do.  The document they returned looked like it went through an episode of Extreme Makeovers – Lawyers Edition.  It contained so many negative and heavy handed attributes that I was very uncomfortable signing it. The client was frustrated because she really wanted to use our company and did not feel our initial terms were out of line, but she was only authorized to sign what her lawyers agreed to.  In the end, the deal broke down.

Be prepared to walk away from a deal if the contract terms could put you in a bind.

Ed, the answer depends on the kinds of professional photographs you will be taking, your connections into your proposed distribution channels, and what your earning requirements are. Sites like istockphoto.com, which provide licenses for millions of stock images at extremely low prices, have put a big dent in traditional stock photography license fees. This prompted Getty Images, the largest of the lot, to buy istockphoto a few years ago as a bet against declining sales for their expensive stock images. The quality of images in these less expensive sites is fairly good so if your hope is to make money through stock images, you might find a tough market that generates very nominal income for you.

However, if your photographs will be from assigned projects, you stand a much better chance at earning decent income. Such projects are usually assigned by organizations based on your relationship with them. Contact magazines, ad agencies, and others who routinely outsource projects to local photographers to take pictures of people or events nearby. Create a web site and post your portfolio (you can use software to watermark your images if you are concerned about unauthorized use). You might consider starting it off as a side business so you can gauge the marketplace and your growth rate, then make it a full-time effort once you have established connections and can project your cash flow more accurately.

To help, we are putting together an “Ask the Expert” section where small business owners and budding entrepreneurs can submit specific questions and get usable answers without the expert pitching his or her consulting services.

Each week, or every few days depending upon how many questions we get, we will pick one or two to showcase on this blog.  Suggestion: the more specific the question, the better the chance of it being profiled (i.e., it is unlikely we will respond to “How do I start a business?” – answer: read our Start-Up section).

Do you have a business issue that is keeping you up at night?  Fill out our morebusiness.com contact form and we’ll try to help with expert business advice!

I want to buy an existing company. How do I determine what it is worth?

Ollie

Dear Ollie,

Publicly traded companies make it pretty easy: just see what other people are paying for it! Take their share price and multiply it by the number of shares and you know exactly what (collectively) someone is willing to pay to own the company. Of course it's not a perfect calculation because the market is not always perfect but it's a good start. The best calculation is appropriately called “Enterprise Value” and it works well for any company.

market value — (cash and investments) / (divided by) net earnings

Best regards,
Buzz

I'm concerned about the week between Christmas and New Year. I'm a freelance graphic designer working out of my home and I need the work during that time, however, many people are away or not interested in doing work over that week. How can I pay my bills and feed my family?

Dan

Dear Dan,

I talked to a few successful freelance business owners about this and received a mixture of responses. Some said that they plan their personal holidays during this time to coincide with the quiet time.

Another piece of advice I heard was to acquire as much business as possible early in November, even if it means earning slightly less for the job… but committing to a delivery time in early January. You'll be busy for the month of November and early December and the boost in income should carry you through the last of the month.

Still a third freelancer suggested tightening your belt for that one week and working on the business planning, identity development, website building, and brainstorming that you likely mean to do during the year but never actually complete.

Buzz

Our family's business has grown and now we have to rearrange our organizational chart. Should we rearrange it by function? By our newly developed regions? By product line-up? How?

Lorraine

Dear Lorraine,

Unfortunately, this isn't an easy question to answer because every industry is different. I think that functional organization charts can often create unnecessary bureaucracy in a company, reducing customer service in the long run. Regions are a good way to do it, especially if you are looking to expand even further or if those regions have a lot of unique business requirements.

Another way to consider changing it is by customer base, if you serve more than one type of customer. However you decide to do it, don't think about tomorrow… think about ten years from now when you've grown 100 times the size. Will you still be able to operate with the same chart?

While changing your organizational chart from time to time is okay, it does reduce your efficiency and your ability to serve customers for a time while everyone figures out who answers to whom and whether there are any gaps in service, so having a scalable chart now is best. And, to help drive down costs, think about what common aspects are shared by all departments (such as administrative functions) and create a department to deal with that.

Buzz

I've just started a new business, a B2B software solution, and I'm out “knocking on doors” and selling my products. But I'm not meeting a lot of success. I'm pretty sure that I've targeted my audience and priced my products competitively. I don't want to lower my price, what should I do?

Marty

Dear Marty,

This is a common problem in sales. Many sales people knock themselves out by trying to build up additional service or by cutting the price down to practically nothing. However, neither of these two options is profitable.

Assuming that you're offering a quality product and excellent service, see if there's another way you can sell the product: perhaps it's your method and not the product that's keeping it from selling. (Do your competitors sell this way? If not, it could be an opportunity but there may also be a good reason why they don't.)

Another option is to think about a creative solution. For example, charge more for your product and work out a deal with a business consultant and corporate trainer who specializes in a related area and offer an entire solutions package: software, consultation, and training in that specific area.

Buzz

Dear Laura,

According to SBTV , there are 13 million sales people making door-to-door calls resulting in over $28 billion in sales. The numbers show us that it is effective. But aside from the numbers we need to also do a gut check: What do your instincts tell you about door-to-door sales?

While it does generating buying activity, it may lower the perceived respectability of your business. I'm not saying that there's anything wrong with it, but I am suggesting that consumers may lump your business in with other door-to-door contact, including religious organizations or those companies that sound like they are the power company offering to lower your energy bill.

If you do want to use the face-to-face method of sales, it's okay to use door-to-door methods as long they are not your primary method of contact. Let people connect with you through the telephone or Internet first and then offer the value of coming to their home to display your wares. This makes you seem like you add value to their lives by saving them time.

Buzz