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Getting Down to Business

After I got all my tax work done, I was feeling so good that I tackled getting my The Hobbyist Machine Store (THMS) bookkeeping in first class condition. I worked on that second most favorite thing to do (next to doing the taxes) until bedtime last night. I got it finished.

I had the end of year (2011) balanced, closed and reports printed as needed for taxes, but I had let the first quarter of 2012 slide by without doing serious month end work. I can get by with that since my little business is a sole proprietor with no employees. The bookkeeping is accrual but THMS pretty much runs on a cash basis on sales and purchases. In-state sales are so low that Texas lets me report only once a year on sales tax. I did that in January.

My inventory is pretty much JIT (just in time) and I do some drop shipping so cash demand is low and cash turnover is good. I only stock rather fast moving items. I am considering investing more in inventory as I begin to contemplate when retirement from my main occupation might occur. Then I can spend a lot more time figuring how to buy in larger quantities and reducing cost for me and my customers.

The personal time spent in sole owner business management is considerable. I actually enjoy doing it but it does take away a lot of R&R time after putting in a 12 hour work day in my regular occupation. A person really has to like doing it. I have spent half my career running small businesses. I was in fact a trained business management consultant to about 20 HVAC contractors when I lived in New England (USA).

I currently work and devote most of my talent to a multibillion dollar worldwide corporation, earning a workable salary. So I have lived on both sides of the business tracks. Both have great advantages. But if you want to be independently wealthy, personal labor or working as an employee alone won’t do it. (That is unless you are a sports star or other overpaid performer.) Earning your fortune requires upper business management where you can share in profit from selling the work of others.

I currently could not make a survivable living with the low volume and margins from a simple one man business such as THMS. However, the money currently invested (without removing profit for my time spent) earns a better return than any other current traditional investment plan. That is a good enough reward for now.

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