13 Steps to Starting a Successful Home-Based Business!
If you’re seriously thinking about putting up a small home-based business, you should know that you’re not going at it alone. According to the National Association of Home-Based Businesses, at least 60 million U.S citizens are currently doing so, compared with only 6 million back in 1984. Ensure your success and follow these tips to start building the foundation to what could be the next great startup:
1. Pick Something You Enjoy and That Customers Will Pay For
Conducting a simple market research will help you select the right home-based business. Go to trade shows and get feedback from prospective customers about your potential product or service. Find out who’s in that business now and what advantages you might be able to offer over your competition.
4 Tips to Define your Ideal Business
– Turn your favorite hobby or interest into a home-based venture
– Use existing skills from your former job
– Solve a problem that people are willing to pay someone else to do for them
– Use technology and resources you already have around your automobile, house, or computer
2. Determine Your Niche Market
It is much easier to market yourself as a specialist serving a particular niche. This helps you stand out from the rest, and also allows you to charge a decent fee because you are more than just a general worker that people can hire as an employee or from a temp agency.
4 Primary Ways to Define your Niche
WHO you serve – a computer expert who works only with women; a PR firm that specializes in assisting environmentally-conscious companies; a chef who handles parties and weddings for the Italian community.
WHAT you provide – a computer expert who works only with Macs; a PR firm that specializes in doing publicity book tours for authors; a chef who prepares health food that looks and tastes decadent.
WHERE you work – a computer expert who focuses on the west side of town; a PR firm that specializes in getting media coverage in foreign countries; a chef who has attained renown for servicing a variety of outdoor events.
WHEN you are called upon – a computer expert who is available for weekend and after-hours calls; a PR firm that specializes in crisis communications for companies involved in scandals or tragedies; a chef who can be counted on to handle even last-minute dinner parties with composure.
3. Charge What You’re Actually Worth
The truth is that no one automatically knows what to charge; people generally have to discover what is both appropriate and competitive. Perception can be as important as the actual value of the product or service being offered. If your potential customers think your price as too steep, you’ll end up without a sale. By comparison, if buyers perceive something as being too cheap, they might worry that it may be inferior in quality. Above all, do not sell yourself short.
A simple, commonly-used pricing formula: Direct Costs + Overhead + Profit = Your Price
4. Smart Marketing and Operational Tactics
Logically, the space you select for your office will match your personal work style and budget, qualify you for tax benefits to which you’re entitled, and fit in with your household environment. To work effectively at home, most people need these basic work areas:
– Space for a desk and chair, where you can work with a computer, phone and other frequently-used equipment
– Conversation space with chairs or a couch where you can collect your thoughts or hold meetings
– Storage space for filing cabinets, books, and reference materials
– Shelf space for supplies and infrequently-used equipment
– Large work space for activities such as assembling materials and doing mailings shipping
5. Make Your Company Visible and Official
Many home-based businesses crumble because they do not make their operations official and visible. Consider the following actions to avoid that fate:
– Make sure you can operate a business from your residence and get a separate mailing address or apply for a use permit or variance to your zoning laws.
– Open a separate business bank account
– Get a separate phone line installed in your home for business calls
– Maintain regular business hours
– Select a memorable name that fits your business image
6. Create a Clear and Professional Image
A marginal business image leaves the impression that your home-based venture is not a truly professional one. So in setting up your enterprise, pay attention to key image components other than your business name that do not necessitate a big budget, but rather attention to detail. Here are some suggestions:
– Communicate quality with a custom-designed logo; avoid choosing one from a standard catalog
– Apply this logo in a consistent way to give your company a professional and identifiable image on business cards, stationery, invoices, faxes and any other visual communications elements
– Choose paper that looks and feels top quality for letterhead and business cards
– Select professional locations for meetings with clients. If clients come to your home, avoid having them walk through personal or family areas, or schedule meetings at outside sites such as restaurants or hotel lobbies.
7. Utilize Word-of-Mouth Marketing
Once a business is established, word-of-mouth marketing means getting referrals from satisfied customers. Let your customers know you genuinely appreciate their referrals; by so doing, you multiply the number of mouths talking positively about what you have done or provided.
8. Make Sure People Can Reach You
Study shows that people working from home spend more time talking on the telephone than on any other single activity. As a result, you need to be sure clients can always reach you so as not to jeopardize any business opportunities. Fortunately, a variety of polished telephone equipment and services is available to ensure ongoing communication, as the following useful options demonstrate:
– Use voice mail to take messages when you’re out of the office or unable to answer the telephone.
– Use call forwarding to receive calls when you’re out of the office
– To handle incoming calls while you’re on the telephone, get call waiting or voice mail that picks them up so people never get a busy signal.
– To prevent unnecessary interruptions, subscribe to your local phone company’s VIP alert so only desired calls come through during the time periods you designate.
– If you are running short of phone lines, get distinctive ringing that gives you two phone numbers on one line, or double up on one line by purchasing a combination fax/phone/answering machine that automatically recognizes when a fax is coming through.
9. How to Deal with the IRS and Formal Business Requirements
Operating a home business on a full- or part-time basis may require taking certain legal steps to protect yourself and your venture, including the following:
– Get an employer’s ID number if you have employees or are incorporated or in a partnership.
– Obtain a federal license if your job is covered by federal laws, such as those who are investment advisors or firearms dealers; similarly, make sure you have any required state and local business licenses.
– Obtain the trademarks, copyrights or patents needed to protect any products or services you have created.
– Incorporate or form a limited-liability company or a partnership if you are not a sole proprietor and are working with other people.
– Find out if you are required to collect sales tax for your product or service. If so, register with the state agency responsible for collecting sales taxes.
– Register your business name if you are using a name other than your own or a variation thereof
– Consult a lawyer or the appropriate government agencies in your city and state if you’re not sure how these requirements may apply to your business or locale
10. Obtain Insurance
Many home-based firms don’t realize that their homeowner’s or apartment renter’s insurance may not protect them against three basic business contingencies:
– Home/apartment insurance usually doesn’t cover business property. Consider purchasing business property insurance to cover your computer and other office equipment and furnishings
– Home/apartment insurance usually doesn’t cover liability for accidents or injuries to customers or business visitors. If you use your car for business, be sure to indicate that on your policy and pay the additional amount required
11. Arrange for Start-up Funds
Fortunately, most home-based businesses do not involve extensive start-up costs. As a result, most people can “bootstrap” their fledgling operation using money from the following sources:
– Credit cards. You can put many business expenses on a credit card. However, try to limit charges to items that will pay for themselves by generating income relatively quickly.
– Personal loans. If you or a spouse has an existing job and a good credit record, banks will usually give you a personal loan more readily than a business loan.
– Home equity loans. If you own your home, refinancing it is one way to obtain a reservoir of start-up capital.
– Character-based micro-loans. The U.S. Small Business Administration and a variety of private foundations offer microloan programs for very small businesses to handle loans ranging from less than $1000 to $25,000. These loans are not based on a person’s assets but rather on good character and proven management ability.
12. Put Everything in Black and White
While contracts can be verbal or written, written ones are certainly preferable. The best way to develop contract agreements that are customized to your specific needs is to consult an attorney. You can also talk with colleagues about the contracts they use, ask your professional or trade association for information, or attend a workshop on contracting.
13. Keep The Cashflow… Flowing
To use an analogy, cash flow is to your livelihood what breath is to life. The following seven steps will help ensure that the money you’re owed comes in as quickly as possible:
– Get deposits, retainers or partial progress payments as often as you can
– Get payment up front for expenses or arrange to charge them to your client’s account
– Bill immediately upon delivery of a service or product, instead of waiting until the end of the month.
– Take bank cards instead of extending credit
– Use a check guarantee service so you can accept checks safely
– Offer discounts of two to five percent for receipt of payment within 20 days from the date of invoicing
– Act promptly on overdue accounts. The longer the account is overdue, the less likely it is to be paid
Subject Matter Expert – Home Business