Get Ready, Get Set, and Get Started in a Profitable Home Business
According to a study by the Office of Advocacy of the U.S. Small Business Administration (SBA), America’s home-based sole proprietors generate $102 billion in annual revenue. With a steady rise in inflation and living expenses and less job security than ever, an increasing number of people are leaving their jobs to start home-based ventures. If you are ready to join these entrepreneurs, here are ten essential steps to turn your entrepreneurial dream into a successful home-based business reality.
STEP ONE: FIND THE BEST BUSINESS OR WORK-FROM-HOME OPTION FOR YOU
This may be the most difficult step to starting a home business: finding a venture that is the best match for you and your goals, and one with the most potential for success.
Decide If You Are an Entrepreneur
It helps to have right the aptitude and characteristics to own and operate a business. Many successful entrepreneurs are creative problem-solvers who do not give up when faced with challenges. They are risk-takers who are not afraid of failing and learn from their mistakes. They continually ask questions and persist until they find the answers or the right people to help them. Entrepreneurs are also self-starters with sometimes seemingly boundless energy. Though few entrepreneurs possess all of these characteristics, you are more likely to succeed if have several of them.
Build Your Business on Your Strengths
In deciding on a business, assess your skills, education, and background to see if your qualifications are adequate for a prospective venture or if you will need further training or know-how. Your chances of success are enhanced if your business idea is something with which you have already had some experience as in a former job, hobby, or volunteer activity. Also be realistic as to the amount of time you can reasonably devote to a business venture, considering your present commitments.
If you still need assistance in deciding what your “passion is” consult with a business coach or work in the industry that interests you to see if you enjoy it. Contact the International Coach Federation for referrals.
Factor in Family
Discuss your business plans with those who depend on your earnings. Child care coverage, lack of a predictable income, double-amount of hours an independent venture often requires, and loss of paid benefits, are just some of the factors that will impact you and your family. Discuss these scenarios and seek solutions that everyone can agree upon.
Consider Starting Part-Time
If you are not able to quit your full-time job, start your business on the side like a majority of home business owners do. Operating part-time may take your business longer to show a profit, but will incur less debt and allow more time to test-market your products or services; perfect your business’s operations; and build a solid customer base.
Find (Possible) Riches in Market Niches
Your goal in conducting preliminary market research is to choose a product or service that will be in demand by potential customers; and to size-up your competitors so you will know how to make your business standout from theirs. Look especially for those people whose needs are not being met by larger companies. Business experts label these “niche markets,” and fulfilling their wants are making many solo entrepreneurs rich.
Check sources like the U. S. Census Bureau or U. S.
Department of Labor for the current statistics and demographics of different population groups to assess see what types of business products or services they might need or may wish to purchase online. If your business can solve a problem, or save people time or money, your venture will be more likely to have an “edge” over your competitors and succeed. People will have a reason to buy from you. When you believe you have a good idea and a potential profitable market, then write a business plan.
Write a Business Plan
A business plan sets goals and will be your business’s blueprint and operations’ guide. If you need assistance in writing one, contact volunteers at local offices of the Senior Core of Retired Executives (SCORE) or use books and software such as Automate Your Business Plan or Business Plan Pro.
How you finance your start-up will depend on a number of factors: The type of business—a service-related business versus a product-oriented one; going full- or part-time; buying a franchise or opportunity; the equipment required; and the operating funds you will need until your business is profitable. Do not underestimate the amount of capital your start-up will require. Investing your own money will help you start with less debt and make it easier to attain a credit loan. Establishing business credit is another important thing you can do to obtain money for your business start up.
New entrepreneurs often find it difficult in determining what to charge. Factors that will influence your pricing include the value your customers place in your products and services and what they are willing to pay for them; your industry’s pricing guidelines; and your own pricing strategy and “formula.” Your accountant can guide you in determining how to charge enough for each “billable” hour or product to cover your expenses and to ensure you will be making a profit.
Consider Additional Work-From-Home Options
Some entrepreneurs prefer alternative work from home situations like telecommuting; working for network marketing companies like Avon or Mary Kay Cosmetics; or buying business opportunities or franchises. They prefer the security and support of established companies rather starting their own businesses from scratch.
Thus, in selecting your business idea or work-from-home situation, it is important to contemplate overall, how your choice will affect your life now and in the future.
STEP TWO: TAKE CARE OF LEGALITIES
Make sure you handle all the legalities involved with your business start-up. Pleading ignorance will probably not suffice as an excuse for failing to comply with a business regulation, zoning, or other legal requirement. It is also wise to choose a business attorney when you first start your business for ongoing consultations.
Choose a Legal Form or Structure
Select a legal form or structure for your business: a sole proprietorship; partnership; a corporation; or a limited liability company (LLC). Choosing one is based on such factors as how much liability will be involved in your business; if you will have employees; your goals for business’s growth; tax issues, and other aspects.
Choose and Legalize Your Business’s Name
Choosing a good business name is crucial, because it becomes part of your identity and an important marketing tool as part of your business’s brand.
You can use your own name in your business, like “Myers’ Painting and Wallpapering,” and like this example, it should indicate what product or service you are offering. If you decide to take a fictitious name, you will have to register it with your county and state as a d.b.a. (doing business as) and publicize it to ensure it is not already in use.
If you plan to conduct business on state-, nation-, or worldwide levels, consider getting a trademark to protect your name and/or business logo. You can conduct a trademark search with the U. S. Patent and Trademark Office or hire an attorney who specializes in intellectual property law.
Check Your Contracts
If your home business will be in the same industry in which you worked for a former employer, make sure you are free of any non-compete agreements that you may have signed. Meet with your lawyer to consider any business liabilities and for any disclaimers you should have drawn-up for legal protection. A lawyer can also recommend contracts you should have if you plan to work as an independent contractor or to subcontract work out.
Know Your Regulations
Check your local authority’s zoning and permit regulations pertaining to home-based businesses. These can vary widely from area to area. Most are concerned how your business will impact your neighborhood such as customer parking or shipping traffic. Check, too, with state or federal agencies for required licenses or requirements your business may need.
Additional legal matters you will want to check pertaining to your business may include advertising guidelines and labeling requirements regulated by the Federal Trade Commission; complying with labor laws if you have employees – U. S. Department of Labor; abiding by environmental regulations – U. S. Environmental Protection Agency’s (EPA); and paying business taxes – IRS. SBA provides a guide to federal government rules and regulations.
Fulfilling your business’s legalities is necessary to prevent possible fines, penalties, or possibly being forced to shut down your business.
STEP THREE: GATHER YOUR EXPERTS AND SUPPORTERS
In your home business preparations, do not forget to line-up your experts and professionals that will help and support you in starting a home business.
Find Experts & Resource People
In addition to a lawyer, bookkeeper, accountant, and insurance agent, you may need to work with tax specialists, enrolled agents (EAs), business coaches, marketing experts, technology experts, information brokers, virtual assistants (VAs), and industry consultants.
You will also want to gather a network of business owners and resource people. These people could include a business mentor, another entrepreneur in the same industry or profession, and additional business owners or leaders you meet at local organizations’ meetings or through Internet groups. These people may also be sources for future outsourcing work or collaborative ventures.
Contact your local state representatives or senators and U. S. Congress members for information about entrepreneurial-assistance programs and regulations pertaining to your business. Experts at local offices of the SBA’s Small Business Development Centers or volunteers at SCORE offer entrepreneurs free or low-cost business counseling and management programs.
Choose the Best
Ask for referrals and recommendations from other home and small business owners, or contact professional and trade associations to find the experts and people you need. Before hiring your experts, ask them for references, their qualifications, their pricing, and their experience with home business issues.
STEP FOUR: LEARN ESSENTIAL HOME OFFICE MANAGEMENT
To set up a productive home office and operational systems, it is important to gain knowledge of the essentials.
If you are new to entrepreneurship, you can enroll in business start-up classes offered at area schools, colleges, or government SBDCs, Women’s Business Centers, and local SCORE offices. Consult with a professional organizer, a time management specialist, and/or a computer consultant to set up an efficient workspace, schedule, and an operational system with the best technology and communications for your type of business.
“Crunch” the Numbers
You cannot have a profitable home business without keeping accurate records of your business’s finances and taxes. Books like Minding Her Own Business: The Self-Employed Woman’s Essential Guide to Taxes and Financial Records by Jan Zobel, EA, can give you some basics.
Ask your accountant and/or local IRS agents about filing tax forms, tax payment schedules, obtaining an EIN number, and allowable deductions. Have your financial advisors setup an organized business record keeping system with software that enables you to monitor your cash flow. Set up a business bank account and a merchant account if you will be accepting credit cards for payments.
Bartering or work trade arrangements are options to obtain items or services you cannot afford. You can join a barter exchange, or make your own arrangements with other entrepreneurs. It is best to have a contract between both bartering parties. Keep accurate records, because the IRS considers bartering of business goods or services as taxable sales or income.
STEP FIVE: DAILY MARKETING IS A MUST!
New business owners may spend as much as 50 to 75 percent of their time marketing their start-ups. Marketing includes all your promotional efforts that create interest in your product or service. Selling involves the transactions. Continuous marketing is essential to success.
Brand Your Business
As you write your business’s market plan, consider creating a brand for your business. A brand is what makes your business standout in your customers’ minds. It is the total marketing package that includes your name, your logo, your promotional materials (business cards, brochures, stationery) your advertising and publicity methods, your business’s mission and its inherent value to your customers. Creating a brand will drive your marketing efforts and form a memory that customers will recall first whenever they need services or products like yours.
Use a Marketing “Mix”
Throughout the life of your business, you will use a combination of advertising (paid ads) and publicity (media coverage) to attract potential customers. Your aim should be to find an affordable mix of marketing methods that will maintain your business’s visibility and increase profitable leads.
Use creative marketing strategies to stretch your advertising dollars and tap into your network of friends and associates for leads and referrals.
Launch with a Well-Written Press Release
Getting your press release published in publications that are read by your target customers is one of the most effective ways to launch your home business. Send the editors or producers news worthy releases to announce the opening of your business, along with photos. If you hold an event or contest in conjunction with your business’s launch, you are more likely to have your release published and receive free media coverage.
Monitor Your Marketing
Continually monitor and evaluate the effectiveness of your advertising and publicity campaigns and eliminate those that did not work. Do not become too complacent or satisfied with even your best strategies. Always look for new ways to market the benefits your customers will derive from using your products or services. Marketing communicates what your business is and why people should buy from you and not your competitors. Your business cannot survive without it.
STEP SIX: CONCENTRATE ON YOUR CUSTOMERS
Maintaining a profitable business means you must satisfy loyal customers while continually attracting new ones.
Make Customers Your Silent Sales Force
Word of mouth and referrals are crucial to getting new clients. Satisfied customers “spread the good word” and are the secure foundation on which to build your business. Treat all customers with respect and demonstrate that you care by delivering top quality offerings and optimum customers service. Thank loyal customers with cards, exclusive specials, and other expressions of your appreciation. Remember it takes less effort and money to satisfy existing customers than it does to get new ones.
Prepare for Complaints
If a customer complains, it may be hard not to take it personally, because it is your business. Establish set policies or procedures to handle any complaints, whether it is a refund or a revision of your products or services. Consult with your lawyer for the proper wording and posting. Survey customers often for feedback, so you can head-off complaints.
Customization is Crucial
You can give customers what many of your larger competitors cannot: customization. You do not need a huge selection, but if you offer your customers some tailored choices or selections of your products and services, they will appreciate the attention.
If you continually go beyond your customers’ expectations, and give them proven value for their money, they will become loyal, repeat buyers who will express their satisfaction to friends and acquaintances.
STEP SEVEN: STAY COMPETITIVE
To stay ahead of your competitors, keep informed of the changes in your market and your customers’ preferences, so you can adjust your business’s products and/or services accordingly.
Promote a Professional Image
You may work from home, but how you conduct business should be as professional as any business office protocol dictates. This includes having well-designed and written promotional materials; how you handle your communications with customers and business associates; and the delivery and quality of your products or services.
Belonging to an industry trade group or local business organization and participating in activities that support nonprofit groups in your area, will enhance your public relations image. Your business’s image is a reflection of your ethics and the products and services you produce.
Stay informed on the latest trends (not fads) in your industry by reading business and industry publications, attending trade shows, and studying reports by respected futurists and researchers like Gerald Celente and business strategist, Chuck Martin.
Purchase Quality Technology, Equipment and Furniture
You do not have to purchase the most expensive software, hardware, equipment, and furniture to set up your home office and operate your business, but all should be built to last and have the capability to meet your needs and the needs of your customers. Again, stay current with technological changes in your industry to remain competitive.
STEP EIGHT: TAKE FULL ADVANTAGE OF THE INTERNET
The Internet is here to stay, so you must decide the type of business Web
“presence” you want.
Make the Most of Your Web Site
Will you want a web site for mainly advertising and promotions; for communications with your customers; for e-commerce; or a combination of these? High speed Internet access through a DSL (digital subscriber line) from your local phone company or a cable company is preferable.
You can start simply by using the Web’s free pages for business advertising that are part of the benefits of a business ownership membership, or by testing your products’ sales potential at online auctions sites. If your preliminary sales are good, you can then purchase a domain name/URL and build a basic site with tools like Microsoft’s FrontPage or Adobe Dreamweaver; or hire a Web designer. Keep web your site simple and easy to navigate. You can use PayPal to first accept online payments. If your Internet sales increase, consider adding a shopping cart program and applying for a merchant account so you can offer credit card processing. (Your site should be hosted by a service that provides a secure server for your credit card orders.)
Market to the World
Once your business is on the Web, you are in a worldwide market, so be aware of language and cultural differences as you post your content and ads.
Use inexpensive marketing methods to promote your web site such as submitting articles for online and print publications; publishing an e-zine; participating in online chats; and posting your web site URL on all your marketing materials and correspondence. Visit the SBA’s E-Commerce section: www.sba.gov/training/courses.html; and www.practicalecommerce.com/ for web site and marketing tips.
STEP NINE: BE PREPARED
While it is true that many entrepreneurs are risk-takers, you should still try to minimize potential hazards to your home business with adequate insurance and preparation.
Part of your preliminary start-up business research should include deciding what insurances you will need to protect your business and you as the owner.
The type of business you have, its size, and the amount of risks concerning liability or other possible threats will determine the insurance coverage you will need. Insurances include those that can be attached to your present homeowner’s or vehicle policies (if your vehicle is used in your business); separate commercial business policies; employees’ insurances; disability, life, and health insurances for you; and other specialized ones. Talk to a licensed insurance agent who represents numerous carriers to find the best policies. If you need health insurance, local business owner organizations usually have discount group plans for members.
Prepare for Disaster
Business owners’ lives can change forever with one storm or other catastrophic event. It’s better to be prepared than to lose everything if the unthinkable should wipe out your home or business. Keep records of all your important papers and contacts in a fire- or waterproof place; backup important computer files; update your insurance policies as your personal or business circumstances change; and stay current of any new dangers that could happen, so you will be adequately prepared.
Watch for Business “Danger Signs”
Your business will experience normal fluctuations in its sales and profits; however there are some signs that should alert you to possible trouble. If sales are down consistently, do a customer service questionnaire or survey; or check if you have lapsed in your marketing efforts. If your cash flow is negative, meet with your accountant to see if you can cut back on expenses and pay down or eliminate any business debt. If you find you have too much business and are not ready to hire help or outsource work, consider adjusting your prices so you can work less and earn the same or more. Consult with your experts whenever a serious problem arises so you can deal with it before it gets worse.
Avoid Common Start-Up Business Mistakes
Try to avoid some of these common start-up mistakes: not writing a business plan; not conducting adequate market research to see if a profitable market exists; inadequate marketing; poor customer service; and poor money management and attention to your cash flow. Business mistakes are inevitable, but if you concentrate on each aspect of your home business and follow the advice of your experts, your home business will survive where others’ might fail.
STEP 10: GET READY NOW FOR FUTURE GROWTH AND SUCCESS
As your business grows and becomes more profitable, you should start thinking about how to support the expansion and continued success.
Let Go and Outsource
Decide what tasks you prefer to do and what aspects you may outsource to professionals such as virtual assistants (VAs) or firms like Professional Employer Organizations.
While your business is small, it is a good time to cultivate professional business relationships within your networks with whom you might want to “join forces” for future projects. Even competitors can be a help to your business if they refer customers to you and vice versa if you both serve different markets.
If your home-based business’s development outgrows your space or you wish to expand outside your home, consider applying to a business incubator.
Incubators are establishments that “house” small businesses that are expanding and whose experts guide them in transition. Some incubators specialize, like “kitchen” incubators that house food-related businesses or e-business “hatcheries” for web-based businesses. Contact The National Business Incubation Association for information.
Watch for Profitable Sidelines
Many home business owners find profitable sideline or “spin-off” products, services and licensing opportunities. They sell informational products like books, newsletters or e-zine subscriptions; or audio-visual tapes and CDs; or they may lead seminars or become professional speakers.
Some sell other companies’ products that complement their business’s offerings; or invent new systems, software or other products that they license. Still other entrepreneurs package their business ideas and operations and sell them as franchises or opportunities.
Sometimes you will discover a spin-off when your customers ask for a product or service you had not thought about; or you can capitalize on an improvement you made to your products or services. A sideline and “spin-off,” can increase your profits and could become the biggest money-maker for your home business.
Review and Revise Your Plans
As your business grows, review, and revise: your business plan to see if you are achieving your goals; your marketing plan, to see what strategies were the most cost-efficient and had the best responses; your customer service plan to see if you are receiving satisfactory feedback; and your financial plan, to review your business’s current financial statement to ensure your business has a positive cash flow.
If growth comes too quickly, your business may fail. Better to make smaller adjustments now to your plans as your business grows, than to be forced later on to make major and costly modifications.
Starting a home-based business may seem daunting, but there are many experts, resource persons, and supportive entrepreneurs willing to provide you with all the information, guidance, and encouragement you need to run a successful and profitable home venture. Just ask!
For more information on starting a home business visit homebusinessexpo.com. HBM