Best Cold Calling Methods

As I try to build a side cleaning business, I am trying to find the best and easiest way to get potential clients, hopefully without dialing prospects cold. I plan on using the following methods in this order:

  1. Emailing
  2. Postcards
  3. Personalized letters
  4. Door Hangers
  5. Phone calls
  6. Drop ins

EMAILING

The easiest and cheapest method is cold emails. I spent the past month emailing 100 potential clients. I received a response rate of 9% (9 out of 100.) Of those, most do not use an outside cleaning service or family does the cleaning. Only one is a potential client, but they did not reply to my follow-up for an appointment.

My initial email was very simple. I sent the prospects a one sentence email, questioning whether they used an outside cleaning service. The three that did, I sent a follow-up email requesting an appointment. Two declined stating they had family members do it and as mentioned above, one did not respond.

Email marketing with a small prospect list (less than two thousand) appears to be ineffective. Maybe coupled with other methods, such as calling and drop ins, it will be more effective.

I spent a total of 12.5 hours building the list, emailing and following-up.

POSTCARDS

I ordered 100 postcards from Vistaprint. The cost was only $21.38. Coupled with stamp costs, it will cost me $56.38 ($0.56 per prospect) to mail. I had a 50% first month discount offer added to the card to encourage business.

Once I receive the cards and mail out, I will continue the post. The responses will most likely be delayed with mailings.

What has been your best method of marketing a brand new service?

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Negotiating A Raise

When I left my last position, I did not negotiate properly. I felt that I was underpaid compared to others (since payroll was under my duties, I saw what everyone else made.) I gave a two-week notice, but gave them the opportunity to keep me on at a 20% higher salary. They did not flinch.

I had wanted to start my own business anyway, but I should have waited until my wife started receiving paychecks first. Since leaving, I have read how to properly negotiate for a raise.

In I Will Teach You To Be Rich, Ramit Sethi outlines a three-month plan for asking for a raise.

  • Three months before you ask, start tracking everything you do and the results received.
  • Three months out, you also need to sit down with your boss and discuss expectations and opportunities to exceed.
  • Two months before, ask to sit down with your supervisor again. Show your results and ask what you can do to improve.
  • One month before, schedule a meeting with your manager and mention that you want to discuss compensation. Ask what information you need to bring to the meeting. You should be able to judge at this point whether s/he is receptive to the idea.
  • Two weeks before, role play with co-workers or good friends with business experience. Get competitive salaries for your position. www.salary.com and www.payscale.com are the ones listed in the book. (Note from me: I use Robert Half’s salary guide, but there are others specific to industries. Depending on where you live, the cost of living is different so the salaries may not be relevant. For example, the average site controller salary (nationwide) is $90,000, but the cost of living in my area is 84 (100 is average.) Multiply the 90,000 by .84 to get the salary average in your area, which is $75,600 using this example.

If your request is denied, the next step could be to look for another job. Since most employers ask for your salary history, a 10% raise is common.

Erin Burt with Kiplinger magazine gives similar advice, but not in the 3 month time frame. She advocates using timing after a big win on your behalf. Your boss will be happy with your performance and may be more open. She also mentions considering additional benefits and perks in lieu of a salary increase.

I should have used either pieces of advice, but I was chomping at the bits to get started.

What steps have you taken to successfully get a raise?

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Finding Your Desire

I started reading Think and Grow Rich by Napoleon Hill this weekend. Last week was a difficult week in my journey, so I needed an uplifting book. I have seen numerous posts in the past where this book has been credited with changing lives. Click the link above to get your own copy (Affiliate Link.)

This afternoon I am reading the chapter on desire. I have always thought goals important, and the book outlines how to take your financial goal and turn into the outcome desired. “Consists of six definite, practical steps:

  1. Fix in your mind the exact amount of money you desire. Be definite as to the amount.
  2. Determine exactly what you intend to give in return for the money you desire.
  3. Establish a definite date when you intend to possess the money you desire.
  4. Create a definite plan for carrying out your desire, and begin at once, whether you are ready or not, to put this plan into action.
  5. Write out a clear, concise statement of the amount of money you intend to acquire. Name the time limit for its acquisition. State what you intend to give in return for the money, and describe clearly the plan through which you intend to accumulate it.
  6. Read your written statement aloud, twice daily, once just before retiring at night and once after rising in the morning. AS YOU READ, SEE AND FEEL AND BELIEVE YOURSELF ALREADY IN POSSESSION OF THE MONEY.”

To apply this to myself:

  1. $500,000
  2. I intend to give up 8 hours per week. I will work an additional 8 hours on my “side hustle” to generate the income needed, invest and grow to $500,000. Considering the average person watches 4.5 hours of TV per day, I can reduce TV and other time wasters without sacrificing family time.
  3. November 1, 2043 (turn 66 in the month.)
  4. My plan is to have a side business (office cleaning), publish eBook (working on a book to write business plans) and offer information products on my blogs. I will need to save nearly $8,000 per year, but each year I do not reach, the amount will increase. I will invest all savings, primarily in quality stocks.
  5. & 6. Done!

What are your retirement goals? How are you achieving?

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Writing A Business Plan

Your business plan is a document that:

  • Describes your new or existing business
  • Defines your customer’s needs and your ability to meet them
  • Examines your competitors strengths and weaknesses
  • Addresses barriers to success
  • Details marketing strategy to get your share of the market
  • Sets goals for start-up, development and net income
  • Tells lenders or investors what they have to gain by investing in you

While creating a business plan is burdensome, there are 3 important reasons to create one:

  • Easier to secure financing
  • Gives you a well defined goal
  • Operational guidance for the next several years

Business plans are usually 15-20 pages long and broken down into seven parts:

  1. Executive summary – Highlights the major points from the other parts in the plan.
  2. Company description – Detailed description of your business, goals and mission statement.
  3. Products/services offered – Describe what makes your products or services unique or able to compete in the market you plan to serve. Also include any future products or services planned and a feasibility statement.
  4. Market analysis – Description of your target market (ie. specific customers or industry.) To make sure your business has a chance to succeed before starting, you need to spend a considerable amount of time researching:
    1. Industry
      1.  market size
      2. market potential
      3. current trends
      4. future of the industry
    2. Competition
  5. Strategy and implementation – Marketing and operating strategies you plan to use. You will give information on your pricing, position in the market, location, advertising & promotions and how you will handle demand.
  6. Organization and management team – Highlight you and your team’s experience. Include copies of all key personnel’s Resume. List the company ownership and the business structure you are using.
  7. Financial plan and projections – The other parts give your lender a “feeling” about whether you can succeed, but this section is going to be thoroughly reviewed. You need: 
    1. Investment Needed
      1. start-up costs
      2. loan application
      3. equipment and supply inventory
    2. Income Projections
      1. year one, break out by month
      2. year 2 – 3, detail quarterly
    3. Summarize Financial Needs

If any of the following apply, add to support your plan:

  • Personal Financial Statements (sometimes requested from a lender) prepared by a CPA
  • Contracts entered
  • Lease agreements

RESOURCES FOR CREATION OF YOUR BUSINESS PLAN

There are numerous programs that will help you create a business plan, most at a cost. You can get examples of plans at BPlans.com, but they link to LivePlan software, which is $19.95 per month. They do have sample plans you can use to create your own, I like the accounting service one.

The Small Business Administration(SBA) allows you to create a business plan for free and save as a PDF file. All you need to do is register for an account. I will create mine on this site and make available sometime in the future. The SBA also has a 30 minute web course on creating your business plan.

Other resources:

  • SCORE – Find a local mentor or take part in web based training, mostly free
  • Local or area college or university business program
  • Local chamber of commerce (you will have to join to use resources)
  • CPA or accounting firm
  • Local economic development program (usually affiliated with city/county government)

USING A PROFESSIONAL BUSINESS PLAN CONSULTANT

First of all, I would not recommend this if you are just starting out or planning to go into business. The reason why is you may skip some of the most important parts (see profit motivated section below) to complete. Plus, if you are boot-strapping like me, you may not have the cash to invest. Having said that, if you are determined to pay someone, get in touch with me:)

Hiring outside help will cost you anywhere from $150 for a generic plan to $10,000 for a comprehensive plan. It all depends on the amount of research required, turnaround time and details needed. If you are wanting a significant loan, a generic plan will not be sufficient. Depending on who you use, the hourly rate will usually be in the range of $25-200 per hour. I personally charge $36/hour for this type of service, but I am an accountant and marketer, not a professional writer.

When speaking with a consultant, make sure to communicate the following:

  1. What you need. Clarify who does what. Who provides the research on customers, competition, area economy and finances? If the consultant is researching and not local, how will they get that information? Does the consultant have experience in your industry?
  2. What you want. The consultant will need to know who is reviewing the final plan and a list of specific needs. You need to share your goals for the now and future of your business.
  3. What you have. The consultant will need any current research, access to an accountant or attorney if they need financial or legal information, and anyone else that will provide specific data.
  4. When you need. The consultant needs a deadline date.

PROFIT MOTIVATED

If you spend the time putting together your business plan correctly, you may come to realize that your business will not generate a profit very easily. Take emotions out and DO NOT START A BUSINESS. That is what a plan and research are for, if you cannot make a profit, do no proceed. You will cause yourself stress and potential financial ruin if you keep going with a bad plan or business idea.

NON-DISCLOSURE AGREEMENT

Now that you have written the plan, you will share with bankers, venture capitalists or other professional lenders. They are bound by confidentiality, but if you share with anyone else, make sure you get a written non-disclosure agreement. Your ideas are your property, you do not them to be shared with other parties.

I hope this helps serve as a guide for when you prepare your own plan. I am creating an eBook that goes into more detail. Subscribe below to get a .pdf copy of my book so far.

Please comment or reach out to me at contact@sidehustleretirement.com.

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My First 30 Days Working For Myself

Now that I have started a business, what do I do next? I would love to spend the summer with the wife and kids, but need to earn $3,000 in May.

The summer is typically a slower season for accountants. I have chosen to specialize in school audits since they have a year end of 6/30 and tax. If I get clients, that will keep me busy into December. From there, tax season should hold me over.

I will also look for PT contract work, start a janitorial company with my brother-in-law and whatever else comes my way.  My goal is to contact 2 prospects daily for janitorial service and 3 schools every day.

RESULTS:

In my first week of self-employment, I agreed to purchase an interest in an accounting firm. The morning before I was going to finalize the purchase, the seller got cold feet and wanted me to work for the firm a year instead and renegotiate the purchase after a year. Needless to say, I was heartbroken that it fell apart.

My contacts for the first 30 days included 22 emails to companies advertising the cleaning service. As part of the emails, I mentioned that I was trying to grow my other business. None wanted the cleaning service, but one was interested in help with bookkeeping. Unfortunately, I sent her to the company I was buying in to. So I lost a potential client along with the opportunity. I also failed to market any services for a week since I was going to be with a different company.

I sent 44 emails to local companies offering to help with accounting needs on a part-time or temporary basis. I also sent 5 letters to those I could not find an email for. I did not get many responses from these, most just “nothing current” or “will keep your Resume on file for a year.”

I sent 102 emails advertising audit services.  The problem with audits is that they only go out for bid every 3 to 5 years. I got 2 request for proposals from my emails, so not a terrible return. One is a small Fiduciary Fund audit, which I bid less than $10K on. It would take me about 100 hours during July and August. I am finishing the proposal next week for the other. That one will take over 300 hours and I will bid close to $30K.

If I get both audits, I will have enough work through the year between audits, taxes and the one cleaning account my brother-in-law had setup before leaving my job to pay my bills. I feel good about the smaller audit, but not as much about the larger audit.

I have also been speaking with a consulting firm with 8 offices across the United States about doing temporary accounting and consulting engagements. They are currently considering me for a position that will take me out of town for two months.

It will take a bit to get the ball rolling, but I have no choice but to keep plugging away.

What have you done in your first 30 days of starting a business?

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Trend Analysis In Sales Forecasting

Plato once said “a good decision is based on knowledge and not on numbers.” 

That stood for approximately 2,400 years, but I do not believe that is the case anymore. We can use numbers coupled with knowledge to guide our actions now.

A large part of my last position as an accountant for a large food service company was sales forecasting and creating operating budgets. If you are creating a sales forecast, trend analysis is probably the easiest method to figure sales and expenses if you have been operating for a while.

Using a restaurant as the example, if you had 100,000 in revenues last May, that would be a good starting point to base this year’s May revenues if nothing else has changed. Most companies take that figure and add a stretch goal, such as 10%. You can also use last years expenses and subtract any unusual or one-off expenses to budget your costs. I typically budgeted costs using sales and multiplying by defined labor targets, food cost and other direct expenses. So if food cost is 28%, labor 27.5% and supplies 10%, I would expect to net $34,500 based on sales of $100,000.

Besides year-over-year budgeting, trend analysis can be used to tell you where you are going.  You can use Excel to build a trailing 12 month sales chart.

Step 1 is to create a date column:

Step 2 is to add a monthly sales column:

Step 3 is to create a column that adds sales year-to-date. You will need to create a formula to add the previous months sales to the current month. In the picture below, I showed the simple formula I used:

The final step, Step 4 will be to chart your sales. The chart below was created using the following order of steps: Highlight the 3 columns -> Select Insert at the toolbar -> From the selections go to the Line Graphs -> Choose Line with markers. Your chart will look like this:

This chart will give you your YTD sales and monthly sales. Examine months where sales are not uniform, such as what caused a great month or a sales miss. Use that knowledge to budget and improve on the future. Then you can prove Plato wrong!

No matter what method you use to forecast sales and expenses, it is important to do so in order to effectively guide you in your daily decisions.

If you need any help creating sales forecasts or financial planning and analysis, join my email list.

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Credit Utilization Rate

As mentioned in a previous post, 30% of your FICO credit score is based on your credit utilization rate. If you have a $2,000 balance on your credit cards and a total credit limit of $5,000, your credit utilization rate is 40%.

Some research done by Ben Luthi for Nerdwallet describes a 30% utilization ratio being preferred by lenders. To maintain that threshold, multiply your credit limit by .30 and try not to exceed that dollar amount.

One common mistake people make, including me when I paid down all my debts 15 years ago, is cancelling cards when paid off. While this is a psychological win, it hurts your credit utilization rate, thus credit score.

Of course, if you maintain a debt balance of $0, you can close all of your accounts. I do not recommend that though since credit cards can double as an emergency reserve if you are ever in a pickle.

Other than paying down debt, you can also decrease your credit utilization rate by asking your current card companies for a credit line increase or apply for new cards. While this may improve your credit utilization ratio, if hurts your credit score due to credit inquiries, which make up 10% of your score.

It’s best to pay as much as possible every month, but if you are getting ready to apply for a mortgage or car loan, you may want to try to play the “credit utilization game” outlined by Lindsay Konsko.

I would love to see comments from you. Especially how you overcame the burden of debt.

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Managing Credit Responsibly

I have very good credit now, my current FICO score is 821. This has allowed me to finance used cars below 3.9% APR or obtain credit cards if needed. I only have 3 cards currently, a Discover, Master Card and Visa.

I use the Discover card for day-to-day purchases, so I had my balance reduced to $1,500 several years ago. The other 2 are for emergencies and each have one recurring payment to keep them open. In total, I have $9,900 in available credit if needed.

When I graduated college I had about $2,500 in credit card debt at a very high interest rate. 18 months later, my balances had ballooned to over $9,000 between 3 cards. Plus I took a loan of $15,750 for a 2 year old Nissan Maxima at 10.5% APR (this was 2002, so while high, not unusual for the time.)

I worked full time, but could never seem to pay down the debts. That is when I decided to take a second job to pay down my debts. This was before Dave Ramsey made the idea popular. I got the idea from seeing how much the people that cleaned our offices made and how quick it was. I bought a bunch of equipment from a retiring individual, most of which was never used. Then I sent out 100 letters.

One company bit. I bid $4,500 per month and was awarded a one year contract. It was more than I could do by myself, so I called my best friend (now brother-in-law) down to help and split the profit with me. We ended up having that account for 3 years before a large public company bought them out and took the service in-house.

With the second job, I was completely debt free within 18 months.  However, I bought a house in 2004 and a waterfront lot in 2005, both with debt financing. The house was purchased with a FHA loan at 6%. One of my biggest mistakes has been never refinancing while rates are so low. 

I sold the lot in 2009, netting a profit of over 30%. Of course, I could have made much more if I had sold in 2007!

Currently I do not have any credit card debt and would like to keep it that way. Building a cash reserve can be difficult. It also may be a better idea to save in tax deferred investment accounts and fund emergencies with debt, as long as you can do so responsibly.

KNOW YOUR FICO SCORE

FICO scores range from 300-850. Several services provide the score for a fee. I am able to see mine for free through both Discover and Ally.

Lenders use this score to determine credit risk and the rate of interest they will charge you. The higher the score, the less risk you are perceived to be. Anything above 800 is considered exceptional and above 740 is very good. 670-739 is the median in the US and below 669 is considered high risk. Below 660 and you may not get mortgage premium insurance for a FHA loan.

Scores are calculated based on:

  • 35%: payment history: Timely payments and lack of derogatory information. Bankruptcy, liens, judgments, settlements, charge offs, repossessions, foreclosures, and late payments can cause your FICO score to drop.
  • 30%: debt burden: There are several metrics including the debt to limit ratio, number of accounts with balances, amount owed across different types of accounts, and the amount paid down on installment loans.
  • 15%: length of credit history: As a credit history ages it can have a positive impact on its FICO score. There are two metrics in this category: the average age of the accounts on your report and the age of the oldest account.
  • 10%: types of credit used: Its best to have a good mix of different types of debts (installment, revolving, mortgage and consumer finance.)
  • 10%: recent searches for credit: credit inquiries, which occur when you apply for a credit card or loan can hurt your score, especially if doing often.

CHECK YOUR CREDIT REPORT

https://www.annualcreditreport.com/index.action

You can check your credit reports with Experian, Equifax and TransUnion from the website above for free each year. I recommend choosing one of the above every six months.

Your payment history, balances, recent credit inquiries and any derogatory information will be included in your report. Check your addresses, jobs, and credit accounts to make sure you recognize everything. You can dispute anything you do not recognize directly from this site.

PAY YOUR BALANCES OFF IN FULL EVERY MONTH

This is easier said than done. Credit cards are great if you can pay them off. You are getting an interest free loan plus whatever reward included with purchasing. However, I would try to use cash or a debit card if you carry a balance. Depending on your FICO score, you are paying anywhere from 12%-25% interest on the balance each month.

MINIMIZE OR ELIMINATE FEES

Unless you make thousands of dollars in purchases each month and are offered great rewards, you should not have an annual fee. If you are re-establishing your credit after a bankruptcy or collections, you may also have an annual fee. For the most part, credit card companies are very competitive and you should find one with good rewards and no annual fees.

REGULARLY RENEGOTIATE YOUR ANNUAL PERCENTAGE RATE

Every year, I call Discover to see what the best rate they can offer me. If the rates are higher than Citi or PNC, I will use them instead. I switched to PNC for 2 years when Discover raised my rates. Sometimes they give me a limited time rate (9.9% for purchases during the next 12 months) or a lower permanent rate option. Even if you pay in full every month, you should never skip this in case you cannot pay in full one month.

RESEARCH ONLINE FOR THE BEST CARDS

There are numerous credit card comparisons online. One of the best is NerdWallet’s. I would stay away from the credit cards solicitations in your mailbox and any store offers. Most stores charge extremely high interest rates, plus they want more of your business. Saving 10% off a $100 purchase is not worth it.

I personally have used the store offer twice in the past 2 years. 1st was for an Amazon purchase of a mattress, a $400 purchase. The discount was worth it, although not the best mattress. The second was at a Belk’s department store. I had an interview and needed a suit. I found a $600 Banana Republic suit on sale for $400. On top of that, Belk’s gave 20% off if using a Belk’s card and another 20% if a new account. I got the card, suit and job!

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Closing The Income Gap In Starting a Business

I started a business, but I do not make enough money to pay the bills. Now what do I do?

Considering tax preparation is my primary income driver, leaving a stable (but disliked) job the day after tax season ended, may not have been my best idea!

Now that we are in a freelance economy, finding side-work shouldn’t be a problem, right? I checked out Upwork and Moonlighting, but neither offered much for experienced accountants. Most jobs would translate to less than $5 per hour. I can make that completing tasks at Mechanical Turk, but that would take more than full time hours to make $3,250 per month now and $2,150 starting in August.

I think it will be easier and better to take a part-time job or create another business.

My brother-in-law is also wanting to leave his job. He has started retail arbitrage (buys items at local stores and sells on Amazon primarily and eBay occasionally.) He is making a few hundred per month now. His income gap is $1,800 per month, considering his wife makes more than him now as a nurse.

We are starting a janitorial service company, which we did 2003-2006 and made good money. This is one of the easiest and cheapest businesses to start. You only need about $10 in supplies for small offices to start. You most likely already have a vacuum. It costs another $40 locally to get a business license.

We got our first account, which will gross me $625 per month. I should net $550 per month after mileage and my share of the chemical costs each month. Considering it takes about 5 hours per week, I will net approximately $25 per hour. Not bad for an easy job that doubles as exercise!

We plan on getting more of those accounts. I am going to spend Monday’s making calls and sending emails to setup more appointments until I generate enough to pay most of my bills.

I spend every Tuesday making phone calls and sending emails to get clients in my personal accounting business.

The rest of the week I plan on trying to get part-time work. I currently have a part-time job at a hospital, but will only work limited hours September thru January. I worked 45 minutes in April, but will not bill until I can invoice at least $100.

This type of work is more specialized. Upwork and Moonlighting have plenty of jobs like this posted, but at very poor rates. Depending on the type of company and level of specialization, I will charge $25-40 per hour plus travel charges if out-of-town.

I used LinkedIn to “connect”and message the one client I have. The way I hope to find more clients is to look for jobs in the newspaper, Monster and Indeed and offer to do part-time or temporary until they fill the position. I will also email other companies that have not posted a position, in hopes that something comes up in the future.

I’m hoping the janitorial service and part-time accounting service drive enough business to hold me over while I build my primary business. My last ditch effort will be to look for part-time evening jobs that are not related to accounting.

Keep checking back to see how I’m doing. Wish me luck!

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Advantages and Disadvantages of a Limited Liability Company

What entity structure do you choose? A lot of the time a Limited Liability Company is a good fit, but make sure you know and trust your partners. Below are some advantages and disadvantages.

Advantages

  • A limited liability company can have more than one member (owner.)
  • Members do not have to contribute money, they can contribute any tangible or intangible property in exchange for a membership interest.
  • Member interest is transferable.
  • All of the members have the benefit of limited liability from the obligations and liabilities of the entity, including if they participate in the management of.
  • Can be taxed as a partnership, on a Schedule C if a single-member LLC or husband-wife LLC, or elect to be taxed as a corporation.
  • If taxed as a partnership or on your personal return, the income of the business is only taxed once and losses can be used to offset other income.
  • A limited liability company taxed as a partnership can divide the gains and losses between the members for tax reporting without regard to how much capital they contributed.
  • A LLC taxed as a partnership can be converted to another business structure in a tax-free transaction.
  • A LLC can be managed by either its members or by a manager. This allows the LLC to choose the best structure for decision-making purposes.
  • If a manager-managed LLC, those that do not participate in the management do not have to pay self-employment taxes on their share of income.
  • If a manager-managed LLC, the business survives death or incompetence of a manager that is not a member.
  • No requirement to have formal meetings.
  • Depending on the State organized in, you may be able to withdraw and receive fair value of your interests from the limited liability company.

Disadvantages

  • Unless a manager-managed LLC, members will have to pay self-employment taxes.
  • Since all members and managers have the right to participate in management, disagreements between members can occur.
  • Other members or managers have the authority to bind the entity in the ordinary course of business.
  • All members must provide consent if transferring your interest to another party.
  • A limited liability company could be dissolved if a member withdrawals, dies, goes bankrupt or is otherwise incapacitated, unless there is an operating agreement in place that provides instructions as to what happens in the event of that happening to a member.
  • Requires a State filing in the State of organization and the States doing business in.
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