[sdiy] Pitfalls of the synth 'small business'

[Paul Schreiber]

Rule #1: you must value your time at either $0.00/hr or $75/hr. There is 
*nothing* in-between that makes sense.

$0.00/hr is if you have no children, and your wife/girlfriend has a job, or you 
live alone.
$75/hr if married with kids. If you have a 'day job', the rate is $100/hr.

Point: if married, you have to very carefully balance the time factor. Expect to 
do the *majority* of the work late at night (say 9PM-1AM, like me!). Time is 
what you have the least of: you have to *plan in advance* exactly what you will 
do every day to generate $$$. You can't afford to dwadle on the internet. You 
have to go-go-go with a purpose.

Rule #2: Electronics is NOT A CHEAP HOBBY/BUSINESS.

In order to do it "right", you have to have decent stuff, a large workspace 
(seems to be difficult in EU) and inventory. You need bench test equipment that 
HP or Tek made, not you :) You need parts storage, record storage, book-keeping. 
You need boxes, tape, puffy folders, stamps, labels and customs forms.

For pcb: this issue is minimum buys. I have to buy 50pcs at a time or more. 
There is a big price drop over 150pcs (not *total*, for each module) but then 
that's more total $$$. You can panelize so that 1 large panel has 6 *different* 
pc boards, but then you have no control over inventory levels if 1 is a big 
seller and 2 are not.

Rule #3: Cash flow is *KING*.

Cash flow is what kills off most "hobby-to-business" ventures. Your suppliers 
want to be paid *before you can ship*. If you then try to get money up front 
(like "pay me 1/2 now"), expect many hostile emails because human nature is that 
once you have *some* money, you are under more pressure (and all of it negative) 
to ship. Even though you've been in business 8 years (cough), people act 
*COMPLETELY DIFFERENTLY* if you have more than $10 of their $$$ versus just a 
order in hand. The attitude is: You have MY money, I want MY STUFF!!! Ask Brice 
about PSIM and Cynthia at Cyndustries about this. Personally, I'll never do this 
again.

If you have no money to begin with, *DON'T EVEN TRY*. You are better off *saving 
up for 6 months first*, get a few $1000 in the bank, THEN start. NEVER use 
credit cards to buy stuff unless you pay 100% of the bill when due.

Rule #4: do not be afraid to charge what is needed.

Don't try to offer Moog 960 clone pc boards for $10/set. Charge at LEAST 3X what 
stuff costs you. I remember talking to Dave Rossum of EMu in 1977 about this 
thing: he said they charged 6X the parts cost and made just enough money to 
support 2 full-time people.

Rule #5: the market is big, but not THAT big.

Understand that selling 100 of *anything* in this market is A LOT. Focus on 
doing a good job selling 25 at a time.

Paul S.