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Hot Businesses in 2009

By Bigg Success Staff
12-17-08

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It’s not easy to succeed in your own business even in good times. So why would anyone consider starting a business now?

You might be surprised to know that many people think it is a good idea. They learn they can’t easily replace the income earned from a lost job and decide to try their hand at self-employment. In addition, after losing a job, a person might want to feel a stronger sense of control over his or her own life. Being your own boss may be the answer.

Whether you’re considering starting your first business or adding to your empire, it pays to think about what will be hot in the near future. Here are our picks for the best businesses to be involved in for 2009:

Repairs

Consumers and businesses are expected to cut back on their major purchases in 2009. So rather than replace their old do-hickey, they will repair that old do-hickey. This will create tremendous opportunities for repair businesses.

As an example, shoe repair shops are reporting incredible demand. This is a highly fragmented industry with lots of possibilities. How about a service that picks up and delivers shoes that need to be repaired? A good place to start your investigation would be the Shoe Service Institute of America

Reports are that more people are staying home more often. So home repairs of any kind should do well in the coming year since people will be home to see, hear, or smell the problems they may not notice in good times. For example, handyman services were booming even before the recent financial storm. They are expected to continue to thrive in the current economy.

These are just two examples of repair businesses that are likely to thrive in 2009. It is impossible to list all of the possibilities. So think about your own repair skills or find a partner who can do the repairs while you run the business. Then research the industry to see if the service you’re thinking about is experiencing growth right now.

Used

Consumers and businesses are also expected to purchase “used” more often in 2009. In fact, used may become chic in a world where frugality is a status symbol. So look for opportunities in industries that offer lower-priced second-hand products rather than something new.

If you have a flair for fashion, consider starting a resale clothing business. There are many possibilities even within this category. In most cases, these businesses are racking up sales almost as fast as they can get clothes on the rack. 

Beyond clothes, there are many more businesses that sell second-hand items that are reporting boom times. From books to office furniture, if there’s been demand for new products in the past, there is probably demand for used items now.

Think about what you like to buy and then do some research to see where it’s being offered second-hand. Don’t be discouraged if you see some competition. Instead, think about what you could do differently (and better).

Seniors

The baby boom is starting to retire. This will create demands for products and services for seniors like never seen before. Many of these businesses will thrive in spite of economic conditions.

Start a senior service business to and help seniors do things that they don’t know how to do, don’t want to do, or can’t do. There are a number of ways to service this large and growing market including starting a(n):

  • adult day-care center
  • relocation service
  • home health-care service
  • concierge service

You could also think about combining opportunities. By this we mean, you could target seniors with your new repair business or think about used items that would be useful to seniors.

Free agency

Here’s something to ponder – if you have a job, you essentially have one customer. What kind of security does that offer? We think it’s possible to have freedom with security.

The overwhelming majority of small businesses are micro-businesses, often consisting of a single person. We think more people will continue jumping on this free agency bandwagon in the years ahead.

So instead of going for a new job, why not try to land two customers that pay you what you would expect to earn from a single job? Take that special skill you have and market yourself as a specialist rather than an employee.

Like any business, it’s usually not easy to get started. While start-up costs can be minimal, you still need the financial resources to weather times with little income or you can start part-time. However, many people find the lifestyle of a free agent very rewarding.

Consider a franchise

Franchisors often state that, when layoffs occur, they get more prospective franchise buyers. So expect franchise sales to do well in the coming year. Another piece of good news is that many franchisors will be more likely to help with the upfront financing, directly or indirectly, in light of the credit markets.

In addition to that, when you think of investment alternatives (e.g. stocks, real estate), a franchise may seem like a good option. Many people may prefer to invest in something over which they feel they have more control after the volatility of the last year. 

Many franchisors offer a proven business model. They are often less risky than a new franchise system. However, there may be more opportunity in a new franchise system. You have to determine what is best for you. Start by learning how to buy a franchise.

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Beware of scams

One word of warning – in tough economic times, scam operators come out in full force. Kiplinger has a great quiz that tests your ability to spot a scam. They present you with eight business opportunities, some which are legitimate and some which aren’t. See how you do!

Then apply this to the real world. With any opportunity you consider, trust your own instincts and do your own research. Prove to yourself that it is the right opportunity for you and the right time for the opportunity.

Hear today's lesson and laugh on The Bigg Success Show. 

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I Need Money! Should I Borrow from my Retirement Plan?

balancingWe’ve been talking about money decisions in tough times and how it may affect your 401(k). We started by looking at 1059 cashing out a 401(k)], which is the absolute last resort.

Next, we looked at 1084 cutting back on 401(k) contributions]. This is a much better option than cashing out, but you should try to contribute up to the limit of your employer’s matching contribution. That’s found money so you’ll be thankful you did.

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Now, we want to look at borrowing from your 401(k). The best advice we can give you on this is … don’t listen to us! Seriously, we can only talk about this in a general sense. So before you make a decision, talk with your professional financial advisor about the specifics of your situation. Then you can do what’s best for you with confidence.

There may be a better solution

Before you borrow from your 401(k), consider whether a home equity line-of-credit might be a better solution. You may already have one you can tap into. If not, consider applying for this type of loan instead of borrowing from your 401(k).

These loans are not as easy to get as they were a couple of years ago. You also won’t get as much of a line as you might have then because house values in many areas.

How much can you borrow?

If you decide a home equity line-of-credit isn’t your best bet, you can tap your 401(k) up to two times each year for money. It’s your money, so there’s you don’t need to be approved for the loan. You can borrow up to half of the vested portion of your portfolio, with a $50,000 limit.

Pay back is purgatory!

A loan from your 401(k) is a relatively inexpensive source of money. However, you’ll be paying the loan back with after-tax dollars (i.e the interest isn’t deductible). Compare that to a home equity line-of-credit, which is deductible in most cases.

In the eyes of the government, you and your 401(k) are two separate “entities”. So even though you think you’re borrowing from yourself, you’re not – you’re borrowing from your 401(k) so you have to pay it back within five years with an exception for first time homeowners who may have a longer payback term.

You can do that with each paycheck or you can do it in installments. You have to make a payment at least once every quarter. For example, if you borrowed $10,000, you would have 20 quarters to pay back the loan so you would have to pay $500 every quarter plus interest.

Of course, while you’re paying back the loan, you’ll have less money to spend every paycheck or every quarter, depending on which way you choose to pay back the loan. If things are tight now, what will they be like with even less free cash flow?

The other thing to consider about paying back your loan is that the dollars that were taken out of your portfolio are only earning whatever interest rate you’re paying. If that rate is less than what you could have earned if you kept it invested in your portfolio, you’re losing money you would have had at retirement.

No pay back is hell!

So it may be tempting to “borrow” the money and then not pay it back. In the government’s eyes, that’s the same as cashing out. So you’ll have to pay income taxes and, if you’re under 59½, you’ll also pay a 10 percent penalty. 

Analyzing the scenarios

The Center for American Progress Action Fund recently analyzed a number of scenarios [pdf]. Let’s look at the two extremes:

IF you take out a loan, pay it back with interest, and continue making your regular contributions, THEN there is almost no effect on your expected portfolio at retirement. In fact, in all the scenarios they considered under these conditions, there is less than a one percent difference in the end portfolio. Not so bad, huh?

But that ignores the fact that we’re borrowing money because we need it now. So we’re likely to cut back on our 401(k), if not stop making contributions altogether. That’s the double whammy.

IF you do that (i.e. the double whammy), THEN you can expect your savings at retirement to be as much as 22 percent less. 

What if …

Before you borrow, ask yourself some questions. For example, what if your company cuts back and you lose your job? Let’s spin it in a positive direction, what if you get a great job offer? You want to consider these scenarios as well before deciding if you want to borrow now.

Bottom line

Look for other ways to cut back on your spending. Even a little bit here and there can make a bigg difference. Consider temporarily cutting back on your contributions, but don’t dip below your employer’s match if you can possibly avoid it. Borrow if you must, but don’t cash out unless there is just no other alternative.

 

   

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Couples Today are Rethinking Traditional Roles

By Bigg Success Staff
07-15-08

Work – Life Balance

family

If you’re half of a dual-income couple with kids, working out your work – life balance involves negotiating at home and at work. First, you and your spouse need to discuss how household duties as well as child care responsibilities will be divvied up. Who does what when?

The best solution is what works best for you, not what society has traditionally expected. If it works for the two of you and your family, it works!

Redefining roles

According to the Council on Contemporary Families, working couples have seen some significant change in responsibilities over the last 30 years. Men are assuming more duties at home and with the children.

This evolution has been a logical response. If a woman has greater career potential than a man, it may make sense for the man to shoulder more family duties. This is now the case about one-third of the time.

So if a couple decides that’s the best trek for them, the next step involves negotiating at work. For men, this can be difficult because society still often regards household chores and child-rearing as the woman’s role.

Pay vs. flexibility

One of the most effective ways to get the flexibility you need is during a review. Especially if your employer is not able to offer you the pay raise you feel you deserve. Perhaps you can negotiate greater flexibility in lieu of the full pay raise you might like.

Balance your costs with your gains. You may not make as much money as you like, but you may also lower your costs. You can spend more time with your kids rather than paying someone else to do it. That difference may almost offset the lower pay raise.

Pay vs. telecommuting

A question to ask yourself (and your boss) is – can you do more work from home? Save both the time and money of commuting. With today’s high gas prices, you’ll save a lot of money. It doesn’t even have to be every day. Any day you don’t have to drive is a plus.

Once again, it may be best to bring this item up as part of a discussion of pay raises. Perhaps a concession to accepting less of a pay raise is to let you telecommute at least some of the time. You can quickly figure out if your savings equals what you had hoped to earn in additional income. And don’t forget – more income gets taxed, saving money on fuel doesn’t. So compare the after-tax income to the savings from not driving as much.

1100 Hear today’s lesson and laugh on The Bigg Success Show. ]

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I Want to Start a Home-Based Business. How Do I Make Sure It’s Legitimate?

With tough times, people are looking for ways to either save a little or make a little more money. We’ve been getting more questions about part-time and/or home-based business opportunities. Specifically, we’re being asked how to tell if they’re legitimate.

One of the first things to look at is what they’re promising you. Specifically …

Do they make earnings claims?

george "Many offers will tout how much you can make. Legitimate operators will do one of two things: they won’t make any claim at all, or … they will tell you both the number and percentage of people who actually earn what they’re claiming. In my experience, they’re more likely to not make any claim at all."

Some real world examples

marylynn "I did a search for “home based business opportunities.” I saw six on my screen without scrolling down. Of those six, five made an earnings claim. I saw claims like “$250 thousand or more at home”, “$500 to $8,000 per month”, and $30 to $150 thousand in 12 months”. Then I looked at the most regulated business opportunities – franchises. I typed in “franchise opportunities”. One out of the four franchise opportunities made an earnings claim and it was also one of the home-based business opportunities!"

biz_ad

We’re not saying that being a franchise automatically makes it a legitimate opportunity. Nor are we saying that just because it’s not a franchise means it’s a scam. But from these examples, you do see differences in behaviors of companies that are more regulated and those that are not.

Do they stand behind their own claims?

marylynn "I went to the site of one of the home-based business opportunities. This was the one that claimed you could make $250 thousand. I scrolled way, way, down to the bottom of the page and clicked on the tiny, little link that said 'Earnings Disclaimer'."

george "Mary-Lynn printed it out. It was in ALL CAPS. Unlike the small font used for the Earnings Disclaimer, this was in 13.5 point type. They’re covering their you-know-what."

Here are some highlights …

“ANY EARNINGS OR INCOME STATEMENTS,  OR EARNINGS OR INCOME EXAMPLES, ARE ONLY ESTIMATES OF WHAT WE THINK YOU COULD EARN.”

“ANY AND ALL CLAIMS OR REPRESENTATIONS, AS TO INCOME EARNINGS … ARE NOT TO BE CONSIDERED AS AVERAGE EARNINGS. TESTIMONIALS ARE NOT REPRESENTATIVE.”

And our favorite part …

“WE DO NOT GUARANTEE OR IMPLY THAT YOU WILL … GET RICH, THAT YOU WILL DO AS WELL, OR MAKE ANY MONEY AT ALL. THERE IS NO ASSURANCE YOU'LL DO AS WELL.  IF YOU RELY UPON OUR FIGURES; YOU MUST ACCEPT THE RISK OF NOT DOING AS WELL.”

So they make a claim and then they disclaim their claim!
When you see this, exclaim your skepticism!

We’re NOT (sorry, we got used to seeing ALL CAPS) saying this particular example is a scam, but you would definitely want more information before proceeding.

The thing about earnings claims, at least here in the U.S., is they are required by law to disclose both the number of people and the percentage of people who are earning any amount they quote you.

So don’t be afraid to ask for documented proof of any claim. Then check out our article that describes 403 your next steps are when investigating a business opportunity].

 

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