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SMALL BUSINESS | SMALL TALK: Advice From the Small-Business
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Before Venturing Into Specialty Niche, Do Your Homework

November 04, 1998|KAREN E. KLEIN | SPECIAL TO THE TIMES

Question: My husband and I bought a small home-based business, Whimsical Windows, for $10,000 in April. We have had no success in selling any product, despite advertising on the Internet (http://www.WhimWindows.com) and in some magazines. We would like advice on marketing and selling, as we feel the business has great potential.

--Joyce Macconnell, Lancaster

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Answer: Purchasing and operating a specialty, niche-marketing mail-order company can be downright confusing. Perhaps the single most important element of deciding to purchase a specialty niche company is doing your homework, including reviewing such things as the seller's books, receivables, payables and sales lists.

Since you've already bought this business, I'll presume that you have the customer purchase history in hand. Analyzing it will help you mine key historical sales information, if any exists. You should categorize prior sales by type, e.g., purchases by individuals, stores and mail order.

Then you should conduct phone interviews with many of those prior purchasers to determine the event that triggered the purchase decision, who made the purchase, what appealed to them about your product and what price range they were shopping in. Ask them if they have any suggestions for enhancing the product. These interviews should provide key information that will help you direct your marketing.

If there is no purchaser history available, you'll need to show the product to people in your potential target marketplaces. A Web site offers only a limited opportunity to sell these specialty products, but it does enable you to enhance your product's recognition to already-interested shoppers.

I looked at your Web site and found it very difficult to see and understand what your product is all about. It's not shown in context, such as hanging on a wall or standing on a dresser. The details of the product should be enlarged. The copy describes the product's features, but you can't see them in the picture. For your sales graphics, you should change the first name used on your sample window. Instead of "Kasra's Toy Shop," "Barbara's Toy Shop" would be far more effective, along with a tag line that says, "Your child's name here."

Through your research, determine whether baby magazines would be an effective place for you to advertise. Also, explore the gift market and stores that create personalized items. Since buyers want to walk out the door with a completed gift, ready to give, you might explore repackaging your product as a partially assembled kit, so that stores can personalize the windows for an immediate sale. And if you market through stores, you'll need to create a point-of-purchase display to showcase your product.

--Sharon Berman, principal, Berbay Corp. marketing consultants, Tarzana

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Q: I started exporting general merchandise about a year ago. As far as I know, I don't need a license, but some businesses insist on charging me sales tax because I don't have a resale number and I can't get one from the Board of Equalization as an exporter. The other day I made a purchase for export and was told I would be exempt from sales tax if I brought in closed containers that would be picked up by a licensed freight broker. Well, I'm not in that league yet. What can I do in the meantime?

--Name withheld by request, Los Angeles

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A: A business is not required to have an export license to engage in export sales, unless the Department of State regulates the products or technology, as with military articles, some kinds of software and satellite equipment.

However, the sale of certain kinds of products requires an export license from the Department of Commerce's Bureau of Export Administration (http://www.bxa.doc.gov) or some other agency. Sales to certain destinations and businesses or individuals also require a license from the Department of Treasury's Office of Foreign Assets Control (http://www.ustreas.gov/ofac). The good news is that close to 95% of exported goods require no license.

Your question about California sales tax touches on a frequent problem for exporters. The state of California requires retailers to apply for and receive a "resale number," which is a seller's permit number issued by the California Board of Equalization. The board will not issue a resale number to a business that is selling exclusively to customers out of state or out of the country.

The ready solutions are either to develop California customers and get a seller's permit based on local sales, or to prepare a resale certificate and deliver it to the seller. Unfortunately, the board does not have a form specifically for export transactions, but the general purpose resale certificate can be used. It can be obtained from the board's offices or Web site at http://www.boe.ca.gov and from some stationery stores. Fill in the blank left for "seller's resale number" with the words "Exempt/Export."

--Michael Doram, customs and international trade law, Creskoff & Doram, Pasadena

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If you have a question about how to start or operate a small business, mail it to Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia 91016 or e-mail it to kklein6349@aol.com. Include your name, address and telephone number. The column is designed to answer questions of general interest. It should not be construed as legal advice.

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