Starting a Business - So Much to Do

Yesterday I alluded to a new business I am hoping to start. While I've explored what it would take to do this, and indeed, I worked at a start up technology company for 7 years so I saw a lot in the early days, I've never had to deal with the details.

My business partner and I got serious about this business a month ago when two things happened. First, he lost his management job unexpectedly when a major client pulled a project representing over half his company's revenues. Second, we found an investor. Funny thing is, our investor had been lurking in the shadows for quite some time.

I mentioned persistence yesterday. Set your mind to something, be laser focused, and ignore the naysayers. Our seed money can be attributed to our persistence. That investor could have stepped up at any time. It was our unwavering desire to do this that convinced our investor we could turn this into a successful investment.

I don't want to spill the beans just yet about what I'm doing. There's one more obstacle that I want to overcome before officially announcing anything. For now, let me tell you some of the things we have been working on:

• Site selection. After looking at several potential sites, we have identified a site we think will work. Next step is negotiating a lease.
• Formalizing the business. We will establish an LLC. The paperwork will be filed to make this a living business any day now.
• Creating a budget. I have created an exhaustive set of scenarios in Excel using variables such as revenues, fixed and variable expenses. My goal is to be able to plug in our expected revenue amount and let Excel tell me what we can budget to each line item expense and then estimate our profit or loss.
• Creating our product. No hints just yet. Well, maybe a little one: We are entering a somewhat commoditized market with a unique offering. We have a lot of competition, but none of our competitors will be doing exactly what we are doing.
• Networking. I have a small network of people I trust and can bounce ideas off. For example, the CFO of the company I used to work for (the start up I was at for 7 years) is meeting with me in a few days to review my plan and offer feedback.
  

Crazy Week

This has been a busy week in a busy month. I like busy. First off, mystery shopping has picked back up a little and I've had a few 14+ hour days. I am really happy to see the pace back to where it was earlier in the summer. It should continue through mid-November as I have already signed up for more than 70 shops and merchandising jobs over the next 2-3 weeks.

If that wasn't enough, I expect to have a major announcement soon. One of my lifelong dreams has been to operate my own business. While mystery shopping does put me in charge, it's not quite what I mean when I say I want to run my own business. It looks like I have found an investor and business partner to execute on an idea I've had for several years. More on this soon.

Nothing takes the place of persistence.

A Week in the Life of a Mystery Shopper

October 10th - October 16th...

I earned $464 in fees and $235 in reimbursements last week. Most of my work was with restaurant shops though I also completed a couple business verifications, a payday advance and an office supply store. On Saturday I started a round of gas station audits and completed 8 of 32 visits I am doing over a four day period.

This week I am doing the remaining 24 gas audits and a few retail stores. I hope I will be able to pick up some bonused shops this last week of the month.

Cutting the Electric Bill - October Bill

Back in June I set a goal to reduce my electricity usage 20% over the next 6 months.

In October 2009 I used 264 kWh of electricity. In October of this year, I only used 203 kWh. I reduced consumption by 61 kWh, a 23% reduction! Finally a month where I reached my goal. However, just as I blamed a hotter summer on higher bills over the last few months, I know the mild weather is the reason my bill was so low this month: I've neither used the air nor the heat.

One frugal measure: I unplugged the refrigerator while I was in Miami last week. We intentionally used up almost all our food before we left. Our neighbor stored the few things we had in her refrigerator.

My total bill for October was $36.19!

November will be a tougher month to beat. Last year I used 189 kWh over 28 days, or 6.75 kWh per day. I used 7.25 kWh in October this year, so I need to find other ways to cut electricity since the A/C was completely off and even the fridge was off for several days. What else can I cut? This will be difficult!

Clutter Roundup: Update

At the end of last month I set a goal to declutter my home. Specifically, I will remove 30 of my possessions in October. I wanted to post my first progress report:


Yesterday I sold 10 groups of things to one of my tenants. I earned $132 by selling, among other things, a 13" LCD TV, large suitcase, painting (which, by the way, a previous tenant had left behind), and various office and kitchen supplies. I am surprised I was able to earn so much from old possessions I do not need. This motivates me even more to comb through my stuff for unnecessary belongings.

A Week in the Life of a Mystery Shopper

October 10th - October 16th...

I had a great time shopping south Florida last week. I didn't earn as much in fees but did not expect to. I earned $216 in fees and $1,203 in reimbursements. I shopped four hotels, seven restaurants and a grocery store. I merchandised one retailer and did a "blind check" of my local drive-in. The blind check is where you anonymously count customers so that the actual count can be compared to the reported count. This keeps the theater companies honest. The trip to the Miami area was wonderful and I am itching to put together another trip.

Another benefit from last week worth mentioning is that I earned enough Hilton Honors points for two free room nights at a Level 1 Hampton Inn. Combine those points with what I already have and I can smell a vacation in 2011 to somewhere tropical.

This week I have a handful of shops scheduled until Saturday when I have several gas station audits beginning.

I just found out one company that shops quite a few hotels - and pays a fee- has a new President who is determined to turn the company around. Previously I was concerned the company would go out of business (their Payables exceeded 270 days according to some shoppers). I might take a chance on them now. It's possible the new President also injected some cash into the business, or maybe they had cash all along and it was just a poorly managed company - who knows.

Thoughts from Miami

My shopping/vacation is going well. I've completed five of the six restaurant shops and two of the four hotels. Later this morning I will finish the third hotel and then tonight I check into the last one. The last shop is reimbursement only but the shop is much easier than the ones that pay me a fee.

scene from an overcast Biscayne Bay, taken from my hotel balcony

Much of my time has been spent working but it's the kind of work I really don't mind. I write my reports in the room. Wednesday night/Thursday morning I did much of my report sitting on an 8th floor balcony overlooking Biscayne Bay and the Miami Beach skyline. The actual work - eating, walking around a resort - that's not hard. The hardest part for me is keeping up with names, particularly when the employee doesn't even have a name tag and I have to ask for their name while not revealing my identity. I've gotten used to that now so I never worry about blowing my cover.

There's also some fun. I hunted down some sites from Dexter along Ocean Drive in South Beach. That's my favorite show - too bad I have to wait for the DVD of each series to be released. I also had my picture taken on the steps where Versace was killed. Later today we are going to drive by Enrique Iglesias' house - at least I think I have his address.

I've always thought you should integrate your passion with your work. It's not that hard to do when I am afforded opportunities such as these. Have a great weekend!

More About My Frugal Vacation

So just how does one go about putting together a low-priced vacation? Here's how I did it:

• Air... I booked the trip a couple months ago without knowing exactly what I would be doing. I knew a couple companies I shop for have hotels in the area but had no idea whether I would find an opportunity since the shops weren't posted until the last 10 days of September. My companion pass on Southwest expires at the end of October so I wanted to take one last trip while it was still valid.
• Hotels... I knew ahead of time the day hotels would be posted on the job boards. I still had to keep an eye on my email since I wasn't sure what time of day they would post - these shops go fast so you have to be vigilant. I selected four hotels. This became the basis for my trip and I built everything else around where I was sleeping for free. While multiple brands are shopped, I purposely selected four Hilton-branded properties to juice my Hilton Honors account - I anticipate earning enough points to get two more room nights free at a less expensive property like Hampton Inn.
  
• Food... Now that I knew where I would be, I looked for food. I wanted meals for two, and since I did not want to be spending a ton of time writing reports, I narrowed my search to alcohol compliance shops. I picked up six of these.
• Car... The only out of pocket expense remaining was a car rental. Not satisfied with the list of rentals at the airport, I looked for off-airport agencies so that I could avoid all the fees you have to pay when you rent from an airport location. I found an Enterprise location one mile from the airport, called and asked them if they could pick me up. That wasn't an option, but they did tell me they regularly have customers take a taxi from the airport. This will save me $65 off the total rental, less the $20 or so I will spend for a cab.

My partner's birthday is tomorrow. I wonder if we can find any freebies?

Taking Another Mystery Shopping Vacation

This is what I dreamed of when I heard about mystery shopping: living a lifestyle I wouldn't be able to afford on my meager salary, paid for in exchange for evaluating the places I visit. A free vacation - all by mystery shopping!

I am spending four nights in South Florida. Each night is at a different Hilton-branded hotel either in West Palm Beach, Fort Lauderdale or Miami. In addition to the free meals included with my hotel stays, we are shopping six casual dining restaurants. These are alcohol age-verification shops, where the most important aspect is whether we are carded when we order a drink. They are 90% easier than regular restaurant shops that require timings, evaluating the quality of the food, service and cleanliness, etc. All these require is a PASS or FAIL on whether we were carded, whether we were asked to join the frequent customer program and if we were told about food specials. I am reimbursed $35 for food and drink and paid an $8 fee.

Two of the hotels pay a fee, and all offer complete reimbursement of my expenses including lodging, valet, food, drinks, etc.

A Week in the Life of a Mystery Shopper

October 3rd - October 9th...

Last week was another slow one. I earned $375 in fees and $292 in reimbursements. Fortunately the work was not very hard. I shopped 8 gas stations which prevented me from having to buy any gas. I also picked up some new jobs that turned out to be fairly straightforward. I did a simple evaluation of a TV at two electronics stores. Each paid $12 and took about 15 minutes to shop and 5 minutes to report - NO NARRATIVE! I also shopped two mattress stores, a bus terminal, several tellers at two banks, got an oil change, ate at several restaurants and bought my mom a new purse for Christmas - at no cost to me.

The reimbursements last week were especially nice, and most of the work was simple - my kind of shop.

October Goals

I have decided to take the rental property I had for sale off the market and rent it. The first purchase fell through and I need to monetize the asset, even if that means renting it out for a while longer. By year end I have to pay almost $9,000 in property taxes and I need all the cash I can get my hands on right now.

I also will be exploring an opportunity to open a business with my best friend. His mother-in-law could help fund our start up costs. This is something we have discussed for years. He lost his job at the beginning of the month so the timing for both of us couldn't be better.

Below are my tangible goals. In addition to the three things listed below, I hope to identify a business opportunity and to have the vacant rental property occupied by the beginning of November.

October Goals:

• earn $2,000 from mystery shopping (last month I earned $1,864)
  
• reduce credit card debt and car loan to $38,500 (9/30/2010: $39,999)
• successfully dispose of 30 items as part of my October dejunking goal
  

Reviewing My September Goals

I mostly moved sideways in September. I guess that's better than falling behind.

September Goals:

• I earned $1,864 from mystery shopping (my goal was $2,000)
• My credit card/car loan balance decreased, to $39,999 (my goal was $40,000)
  
• I created my 2011 Capital Expense budget.
  

I achieved two of my three goals. Once again I had a slow month for mystery shopping. I tried to get to $2,000 (my goal) but even that is less than I made earlier this year. This really is hard work. It isn't challenging work (which would be nice every now and then), but it takes a lot of effort for little pay. What makes it so hard isn't the actual shopping but instead it's the hunt for work, training for each job and the paperwork involved in submitting my reports.

My Frugal Miser - September Expenses: $2,525

Fortunately I kept my expenses low in September. Even though my income was lower than normal, I still spent less than I earned.







September Expenses

$294 Auto ($50 CREDIT [reimbursement] for service, $51 for fuel, $293 Depreciation)
$0 Clothing
$108 Food (both groceries and eating out)
$243 Entertainment (movies, gambling, alcohol)
$0 Gifts Given
$0 Home Repair
$88 Household (new phone, Blu Ray player, etc.)
$107 Health Insurance
$54 Medical
$78 Interest on Debt (not including Mortgage Interest)
$0 Miscellaneous
$436 Mortgage Interest (primary residence)
$820 Mortgage Interest (rental properties)
$10 Personal Care
$0 Taxes
$197 Utilities
$102 Vacation

Total September Expenses : $2,525

Notes

• Thanks to mystery shopping, I spent $51 for fuel even though I drove over 3,000 miles.
• I was reimbursed the $50 I paid to Pop-a-lock in August by the roadside assistance service provided by my insurance.
  
• I separate my mortgage interest by personal residence versus rental properties. I think this is an important distinction: the personal residence interest is an expense I should exercise control over moving forward when looking at ways to be frugal; the other is an expense that generates income.
• Spending on food was lower than my $5 daily goal at just $3.60 per day.

My Frugal Miser - September Income: $3,722

The contract on the property I was selling fell through, which means another month of no income for that home. It was a tough month, made even tougher by an unexpected expense. For my rental properties, I've always deducted the expenses I have in a given month from the total income rather than separating the two (which probably makes more sense). The new unit, combined with the vacant property, really hurt me in September.


September Income
$1,555 Mystery Shopping*
$1,176 Rental Income
$991 Other Sources
$3,722 Total Income for September
*note that the mystery shopping income will always vary from the monthly summary amounts I post. Here I report actual payments received (cash basis accounting) whereas in my monthly mystery shopping update I report the amount I earned for that month.

Notes:

• The new A/C unit cost $2,600 and the vacant property would rent for $1,100/month.
  
• The category "Other Sources" includes non-recurring (or semi-recurring) income since I always seem to have a little something that doesn't fall into the other buckets.
  

Losing Weight Will Save Me $.67 Per Day

I know I'm overweight, but now I realize it really is costing me money. I've been lucky thus far to have virtually no health-related problems besides the occasional cold. However, I am still paying a price for overeating - or I'm about to, anyway.

Since I lost my job last year I stayed on my old employer's health plan via COBRA. It's been subsidized through some plan Obama passed for those who are unemployed through no fault of their own, so I had no reason to switch.

Last month I received notice that my subsidy was about to end. Facing a $300 monthly insurance bill, I decided to shop around. I settled on a high deductible plan from Humana. The first $5,000 in annual health care expenses are paid directly by me, and I can fund a Health Savings Account to cover my out of pocket expenses for tax advantages. When I was filling out the application, I was originally quoted $80 per month. But when I received the approval email, the rate had changed to $100 per month.

The reason I was given for this change was "Body Build." Interested to know what I needed to do in order to eliminate this premium, I called Humana and found out that I weigh about 10 pounds more than the maximum they allow for my height. I know I need to lose a lot more than that.

Humana told me that if I can lose the weight without the aid of prescription medication or surgery, and keep it off for one year, they will remove the "fat penalty" from my account. One more reason for me to get in shape!

A Week in the Life of a Mystery Shopper

September 26th - October 2nd...

Last week was mediocre. I earned $427 in fees and $107 in reimbursements. Most of my work came from shopping or auditing gas stations. I took a chance on a couple of mobile phone stores. The fee was $15 each, which I considered fair for 15 minutes in store and another 15 minutes of reporting. I also did a handful of one-off merchandising jobs.

In my report last week I said this past week looked "dreadful". While it's not one of my better weeks, it certainly was better than I thought. Lesson learned: be persistent and optimistic.

Persistence is key to success. For example, I was about to give up on a special project that required me to schedule an inspection with the contact. No one would call me back ("Hi, I'm calling to schedule your inspection, when would it be convenient for you?" - I wouldn't call back, either!). Rather than give up, I decided to take my chances and just show up. Each visit took 15-20 minutes and paid $21. I wasn't about to give up that easy. It worked: I was able to complete 4 of the 6 inspections.

Vehicles and the True Cost of Ownership: How Much is My Car Really Costing Me?

As a mystery shopper I have to be aware of my costs. Depreciation is the cost of using my car in a given time period. Instead of expressing the cost of my car as a one-time expense when I bought it, I spread out the cost of my car over its expected life. Depreciation does not include other vehicle-related costs like gas, maintenance or insurance. I separate those out and report them as they occur.

I determined that each mile I drive costs me $.0867 in depreciation. I ended August with 35,152 and at the end of September there were 38,531 miles on the odometer. I drove 3,379 miles. For September, my vehicle depreciation expense was $292.96.