As a general rule of thumb, any business, whether it's home-based or brick and mortar, can expect to write off between 3-5% of debt as bad. That's if the business's receivables are managed properly. If not, that percentage will be much higher.
For any small business, especially one that's in its first couple of years of operation, cashflow is a paramount consideration. Many small businesses fail simply because they run out of cash during this period.
So don't throw away money owed to your business just because collecting money is unpleasant. The very survival of your business may depend on it.
In this article we consider whether you should extend credit and, if so, what processes you should implement to maximize your chances of getting paid.
WHETHER TO EXTEND CREDIT
You may prefer to have a strict payment-up-front or on-delivery payment policy but the realities of a competitive business environment are such that, in order to be competitive, you may have very little choice.
Assuming you have no real alternative in your line of business other than to extend credit, you need to have a policy for your business about who gets credit and who doesn't.
How rigorous your policy is depends on how much money we're talking about for a particular job. If you're performing a service or selling products worth several thousands of dollars, you're obviously going to be more concerned about the credit worthiness of your customer than if you're only talking about a $50 sale.
So what are the considerations you should take into account for major orders?
1. Character
When thinking about the character of your customer, what you are concerned with is the willingness of the customer to pay debts.What do you know about your customer? What is the history of the business and experience of its management? Does it have a history of litigation for unpaid debts? Does it or any of its principals have a history of insolvency?
2. Financial Capacity
Here we are concerned, not with the customer's willingness to pay debts, but with its capacity to do so. So find out about the financial position of your customer before deciding to extend credit.
How do you get the information you need to make a determination about your customer's character (willingness to pay) and financial capacity (ability to pay)? You should ask for this information in an Application for Credit form you
develop for this purpose. Any prospective customer who is reluctant to complete such a form should be treated with caution. Any reputable organization should understand your concern to only extend credit to credit worthy applicants.
And don't just accept at face value the information that you are provided with. Carry out credit checks (use Equifax, for example, in the case of individuals and Dun & Bradstreet for corporate credit checks). Also check with your customer's bank and two or three customers. You should ask for credit references such as these on the Application for Credit.
If the result of any of these enquiries is even slightly negative be cautious. If you're just not comfortable extending credit to a particular customer, don't. Don't be coy here. This is your business's livelihood you're dealing with. So, in such cases, require payment prior to shipment or prior to performance of services.
EXTENDING CREDIT
Once you have decided to extend credit to a particular customer, make sure your supply terms are crystal clear.
Your supply agreement should cover:
1. In the case of provision of services, what services are you to perform for the customer? In the case of sale of products, what are you selling? In other words, what is the subject matter of the contract?
2. The fee for your services or price for your home business products.
3. When delivery will be made.
4. When ownership of goods passes. If you're shipping goods to your customer, consider including a retention of title clause in your supply terms. A retention of title clause has the effect that ownership of the goods doesn't pass to the customer until payment is made. This means you can, at least in theory, repossess the goods if you don't get paid.
Note this will usually only be effective if your goods can be specifically identified. If your goods can be sourced from any number of sources and can't be identified as coming specifically from you, a retention of title clause may offer
little real protection. If you're selling goods that are identified with serial numbers though, or if you're the only vendor of a particular product, such clauses are effective.
5. When payment is due. In the case of major jobs, consider requiring part payment up front with the balance due on completion or in stages throughout the project.
INVOICING
You should issue your invoice upon delivery of the goods or completed service (unless you are receiving payment in instalments throughout the project in which case you issue an invoice for each stage of the project at which payment is to be made).
Make sure your invoice is clearly laid out and easy to understand. Make sure payment terms are unambiguous. There should be no doubt when payment is due. For example, "Payment is Due on Receipt", "Net 30 days" etc.. If you intend to impose a late payment penalty if the invoice is not paid on time, make sure this appears on the face of the invoice as well as details of any discount you offer for early payment.
GETTING PAID
Most customers will simply pay you when due. Others, unfortunately, will not. You need to have a process to make sure you get paid.
To begin with, pay attention to your receivables position. Set aside time each week to review and take action on outstanding accounts. This will undoubtedly be one of your least favorite activities. No-one likes having to call up debts. Don't put this off though. You have the best chance of getting what's yours if you act quickly and decisively, before a debt has the chance to become doubtful, let alone bad.
So, monitor your receivables and be on the lookout for danger signals which include habitual slow payment, broken payment promises, unreturned calls and postdated checks. Keep an eye on accounts where you know the customer is changing banks or refinancing too. This can be a symptom of cashflow problems.
When an account becomes overdue, take immediate action. Establish a debt collection routine and carry it out. Here's how to go about collecting overdue debts:
1. Call customers whose invoices are overdue.
First off, find out the name of the person responsible for accounts payable. If that person is not available when you call, try and find out when is the best time to reach them. Make sure you get the name of the person taking the message (this is an excellent way of increasing the chance that your message will actually get passed on!) and ask when the person you need to speak to will be available. If the person you need to speak to uses voicemail, leave a detailed, complete message and a clear request that he or she returns your call as soon as possible.
Create a sense of urgency but be pleasant and courteous at all times. After all, there may be a problem you don't know about. The customer may not have received your invoice, for example. This sometimes happens if the delivery address is different from the billing address. If you enclose your invoice in the delivery package that goes to the delivery address, the billing address may never receive it! Or there may have been a problem with shipment. At least you'll find out if you make the call.
If there is no good reason why the account hasn't been paid, get a commitment from the customer to pay you today. Expect payment and convey that expectation to your customer. After all, if you don't believe it, neither will your customer.
2. The Check Is In The Mail
If you're told the check is in the mail, ask when it was mailed and also ask for the check number, the amount and the address it was mailed to. If the check hasn't been mailed at all, you'll know.
3. Don't be Fobbed Off
If you believe you're being fobbed off, it's time to escalate things to the next level. Remain courteous and polite but start pushing for a resolution. If the person you're dealing with says they need to make enquiries and will get back to you, establish a time to call back and follow through. Make sure the other person knows you're not going to just let this go. No one likes to be hounded so if it's within their power, they'll get you paid and off their back.
Other ways to push for resolution are to make arrangements to send a courier to collect the check, agree a new payment date or even agree to payment in installments if you believe the problem is a genuine inability to pay as opposed to mere unwillingness. If, however, you conclude that your customer has the ability to pay but, for whatever reason, is trying to avoid payment, don't be offering any compromises. That just sets the scene for a repetition in the future.
4. If All Else Fails
In most cases, being persistent and firm in your insistence that you be paid will result in exactly that. In a very few instances, however, despite your best efforts, a customer will simply not pay you.
Your response to non-payment in these circumstances will depend on your customer's capacity to pay and the amount of the debt. After all, there's little point going to the expense of hiring a collection agency or a lawyer to recover a debt that your customer is simply unable to pay. Similarly, you have to weigh these costs against the amount of the debt.
Sometimes the best business decision is to cut your losses and write the debt off. Naturally, you NEVER extend credit to this customer again.
If, however, the debt is significant and you have reason to believe the customer is capable of paying, then by all means engage a collection agency or a lawyer to pursue recovery. In these cases be sure to include your recovery expenses in the amount to be recovered.
And don't forget your supply terms. If these included a retention of title clause and the goods can be specifically identified as belonging to your shipment, by all means, repossess!
Saturday, December 30, 2006
Friday, December 29, 2006
Start and Manage a Business From Your Home
Introduction: "There's No Place Like Home"
The cottage industry, an old-fashioned enterprise, is enjoying a revival so strong that it's difficult to find out just how many Americans are now working at home.
Because women now enter business at a rate five times faster than men, the trend of operating from home is growing. A natural starting place for many businesses seems to be the garage, basement, or den.
Homemakers, hobbyists, retirees, people interested in a second income, and the disabled are just a few of the groups attracted to home enterprises. A young mother's craft business began when she started appliqueing decorations on her children's clothes.
A retired government worker bought 36 beehives and sold honey to local health food stores and at craft fairs. A teacher did typing and secretarial jobs for her husband and friends until she realized the potential market and opened a full-time secretarial service from her apartment. Others have become home business owners by using their skills in catering, counseling, teaching, day care, sewing, writing, photography, consulting, market research, and landscape design.
The list of services that have been successfully operated from home is endless: chimney sweeping, maid services, messenger services, wake-up and answering services, home nursing, mail order businesses, party planning, dog grooming, kitchen and closet planning and organizing, and others too numerous to mention. You can target exactly the right type of business for your skills, your home space, your market, and your part of the country.
Home Entrepreneurship: Is It For You?
The first step in deciding whether to start a business is to ask yourself this important question: "Do I have what it takes to be an entrepreneur?" Studying the characteristics of successful business owners will help you to tell whether your personality traits, experiences, and values are similar to those who have succeeded. And assessing your experience, skills, and life goals will also help you decide if you want to invest the energy, time, and resources that successful entrepreneurship requires.
Who is the "Typical" Entrepreneur?
What makes an entrepreneur successful is a hotly debated and vigorously researched subject. The following questions are designed to help you determine your "Entrepreneurial Quotient."
Do you reconcile your bank account as soon as the monthly statement comes in?
Entrepreneurs are careful about money. They usually know how much money they have so they can seize opportunities on short notice. They know what things cost, whether prices are going up or down, and whether they are getting a bargain.
Did you earn money on your own from some source other than your family before you were 10 years old?
Most people who are going to make money in business show an affinity for making money at an early age--by babysitting, selling lemonade, delivering newspapers, or some such strategy.
Do you get up early in the morning and find yourself at work before others are out of bed?
Entrepreneurs sleep and eat enough to keep up their strength, but they don't usually tarry at these pursuits.
Do you tend to trust your hunches rather than wait until you have a lot of information on hand?
Hunches are judgments based on factors that cannot be quantified. A big part of entrepreneurship seems to be risk-taking based on these hunches.
Do you keep new ideas in your head instead of writing them down?
Entrepreneurs keep a lot of things in their heads, including their most creative ideas.
Do you remember people's names and faces well?
Ease in remembering names and faces is very important in the business world.
Were you good in "hard" subjects--mathematics, biology, engineering, accounting, and so forth--in school?
People who major in business administration in college are more likely to be successful entrepreneurs than anyone else. They prefer subjects in which the answers are conclusive rather than open-ended conclusions full of contingencies.
In school, did you pretty much stay away from such organizations as Scouts and student government?
Most entrepreneurs tend to be loners rather than joiners, unless joining is a useful tactic for making contacts and gathering business information.
In courting the opposite sex, did you tend to go for one person at a time as opposed to playing the field?
Most entrepreneurs preferred one person because to play the field would have taken too much time away from business activities.
Do you close deals with a handshake rather than insisting on written contracts and guarantees?
Good entrepreneurs are often comfortable with something less binding than written contracts. When the only bond is a word, it becomes a matter of honor, and no entrepreneur can afford to lose honor.
Do you devote considerably more time and thought to work than to other activities, such as hobbies?
Entrepreneurs may have some leisure time activities, but their principal hobby is their work.
Was your parent an entrepreneur?
Having a close relative who was an entrepreneur is the single most telling indicator of a successful entrepreneur.
What size company do you now work for?
The typical entrepreneur comes from a medium-sized company -- 30 to 500 employees.
Have you ever been fired?
Entrepreneurs make poor employees. That's why they become entrepreneurs.
If you had a new business going, would you play your cards close to the vest, or would you be willing to discuss problems with your employees?
Typical entrepreneurs have a secretive streak. If they confide in anyone, it is likely to be another entrepreneur.
Are You Ready, Willing, and Able?
Now that you have studied the characteristics of others who have succeeded, look at your reasons for wanting a home-based business. Are you dissatisfied with your current job? What are your skills? What is your business experience, especially in the business you want to start? What are your life goals? What resources do you have
that might help?
Answering these questions will provide reality testing for ideas that can sound incredibly glamorous when chatting with friends or seductively attractive when you are irritated or bored by your present job.
How does your family react to the idea of a home business? Will you expect them to help out? What changes would your business use of the house mean for them? Will you have to remodel to create a usable business space?
What resources are available to you? Will you start by keeping your job and "moonlighting" for a while? Do you have a small nest egg, inheritance, or retirement income to live on until you get the business going? Do you already own tools or machines that will help (for instance, a computer for a secretarial business or professional cameras and a darkroom for a commercial photography business)? Are you able to go back to school for training if necessary? Have you built up a network of contacts and possible customers through your previous lines of work or will you be starting from scratch?
Answering these questions honestly and completely will help you assess not only your chances for success but also which type of home-based business to choose. For instance, if your past professional life and contacts are all in the educational, teaching, child-oriented school area, then you should have powerful reasons for leaving that and opening a mail-order seed business. Possibly a tutoring business
or a tot exercise franchise would use more of your resources and networks. On the other hand, if your assessment of your life goals and preferences helps you realize that you are burned out from working with kids, then perhaps a business planning birthday parties could later be built into a general party planning and catering business. You would be using your old contacts to build a long-range business
plan that focuses on a service business for adults.
The Advantages of Home-Based Business
Why have millions of Americans chosen to work and live in the same place? Why are cottage industries sprouting faster than we can count them? Some home-based businesses start by accident rather than by conscious design. Secretarial services, day-care centers, craft ventures, and the like may start out as weekend activities
in the recreation room. After a while their owners are surprised to see how profitable or enjoyable the venture has become. The glimpse of a healthy market lures them into a full-time venture. This low-risk, low-overhead, gradual kind of start-up is very attractive to new business people.
Many home-based business people cite decreased commuting time and other lessened business expenses as advantages for working at home. If your place of work is just 30 minutes away, that's five hours a week in commuting time, many dollars in gasoline and car maintenance or transit fares, and untold stress fighting traffic. Getting out of the high-fashion rat race is a plus for many who dislike having to dress up and continually buy new clothes to feel comfortable in settings outside the home.
Homemakers--mostly women but also an increasing number of men--are choosing a home-based business in order to have a more flexible lifestyle and to be closer to family. A parent who has a home office can eat lunch with the children or more easily attend special school or sports events. The home-based business person has more control over work hours than someone with a 9 to 5 job. Night owls who like to work until 3 a.m. can then sleep late (remembering, of course, to turn on the answering machine and let customers know the business hours). On the other hand, early birds can work without the usual disturbance from the telephones.
The tax advantages of operating a business from home are numerous but sometimes complicated. Wise business owners keep careful records and work with accountants, attorneys, and financial planners to make sure they are filing for the legal maximum write-offs and benefits.
The Disadvantages of a Home-Based Business
If you were hard at work in an office downtown, it is unlikely that three children would come storming in to ask for snacks or that you would end up using the ironing board for a bookshelf or have to think twice about hiring others because they might resent working at your kitchen table. These are just a few of the problems that make the glamour of working at home fade fast. Some disadvantages of working at home can be minimized by self-discipline, by setting clear limits with family and friends, and by projecting a professional image. Other disadvantages "come with the turf" and just have to be lived with. If a delivery man comes to the door, you will probably be the one to interrupt your work and sign for the package.
It takes time and discipline to establish steady, at-home work patterns. Often it seems easier to water the plants or do the laundry than to call a client, design a new brochure, or prepare bills for customers whose work you've completed. Without the deadlines imposed by supervisors or peers, it can be hard to do the least appealing jobs on your list. To make matters worse, others may not take you seriously. Neighbors may stop by to chat or friends may call your business number knowing you will answer. Without supervisors or managers, you are the one who must set limits and plan your time. There also is the problem of isolation. While you are now your own boss, you won't have the chats, the parties, the companionship of
fellow workers. Losing such social contact requires adjustments.
As the business grows and changes, the home entrepreneur has to put up with cramped or inappropriate space. No more simply putting in a request for a bigger file cabinet or a new copy machine; now you must visit showrooms or garage sales, evaluate features, compare prices, and probably pick the item up yourself.
Your teenager may resent having to keep the stereo low because you're meeting with a client in the next room. Your spouse may be irritated by having to fry that freshly caught trout on the backyard grill so your office won't smell of fish. Your son
may not want to give up the recreation room pool table so you can cut out 100 doll patterns this weekend. Neighbors may comment on the extra traffic your customers create on their quiet street. Family privacy and lifestyle patterns may be disturbed. And you will probably find yourself wrestling with laws and regulations
you never dreamed could exist before you went into business.
Your Professional Image
Developing a professional image may be hard if you work out of your home. Projecting a businesslike image is an important part of building credibility with your customers and contributes to your own professional self-image. Design a logo or have one designed; order business cards and stationery. Set regular business hours.
Use an answering machine or answering service. If other members of the family also answer the phone, make sure they know what to say. Have a businesslike office or "showroom" if you meet customers face to face. Consider referring to your apartment number as your "suite number" or rent a post office box rather than using your street address. Such practices might improve your chances of doing business
with potential customers.
Your Next Steps
Now that you have reflected on the characteristics of successful entrepreneurship and assessed your skills, experience, and life goals, it's time to plan your next steps. Ask yourself: Given the disadvantages of working out of my home, do I still want to? Now that I know more about what's involved in starting a business, is it still for me? Do I need further training or experience? Should I begin part-time in order to test the waters, check out market potential, or refine my product or service? Do I need more time to research possible products or services? Have I decided on a particular business?
Answering The Big Question: What? Who? Where? How? and How Much?
What's the perfect home business for you? You've listed your skills. You've outlined your interests. You've described your family's preferred lifestyle. You've come up with a business idea. Next, consider such questions as: Are there customers for my product or service? How do I know? How will I find them? Who are my competitors?
What will I charge? How will I promote my product or service? Finding the answers to these questions is the challenging and sometimes tedious homework that will help you determine your chances for success, and whether you should look for another more marketable idea.
What Is My Product?
"I bathe and groom poodles and small dogs." "I design, construct, and sell roll-top desks." "I provide accounting services to small business clients." "I make dried flower arrangements." "I teach intermediate and advanced piano to children." "I design and implement direct mail advertising campaigns for small businesses and nonprofit organizations."
The first step in creating a business is to decide what your product is. What are you selling? Practice writing a short, specific statement describing your product or service. Getting a clear idea of a business concept is one of the most difficult
tasks in creating a business. Your statement may change several times as you experiment with the market and test your skills.
Who Will Buy It?
To develop and test your business idea, answer the question "Who will buy my product or service?" Make a list of potential customers: individuals, groups, segments of the population, or other businesses that need your product or service. If you are making fabric-covered lap boards for people confined to bed, how will you quickly and inexpensively find a market? Through hospitals or home nursing care organizations? Through craft stores by displaying them as gift items? In mail order catalogues? Is there a market avenue that will reach children? Ask friends and colleagues for help in brainstorming all the possible markets (customers) and uses for your product or service.
Who Is the Competition?
Your business planning must also include an up-to-date analysis of your competition. Why? Because you need to plan your market position--how you will fit into the marketplace. Will your product or service be cheaper or more expensive than that of the major competitions? Will it be more durable? Will you be open during hours
that your competitors are closed? What benefits can you build into your product or service that your competitors don't offer? Will you do rush jobs?
In planning your business, look for a unique niche that will give you freedom from strong competition or that will make your product or service more valuable than others in the market. If you plan to open a day-care center and find that none in your area is open before school, early opening might make your service more competitive. If you discover that local caterers have overlooked the office party
market, you might highlight that in your brochure. The more you can learn about your competition, the better you'll be able to decide how to position yourself in the market.
Where Are the Buyers? How Can I Find Them?
As you become more familiar with the competition, you will also be discovering where and how to find buyers. Whatever the type of home business you want to open, you will need to do market research to determine if there are buyers for your idea, where they are, and how to find them. (And in the process, you will also be gathering information on pricing.)
When your marketing research is completed you will have 1) identified your potential customers; 2) found out all you can about their habits, needs, preferences, and buying cycles; and 3) decided how to reach them to generate sales.
How Much Shall I Charge?
Four main factors will help you decide what to charge for your product or service: 1) your direct and indirect costs; 2) the profit you want to make; 3) your market research data on competitors' prices; and 4) the urgency of the market demand. There is rarely an exact "right" price but rather an acceptable price range within which you will want to fall. Avoid the common mistakes made by many new business owners--charging too much or too little. Use several approaches to arrive at a cost and "test" the price. If your ego is too involved, your price may be too high. On the other hand, if you have the attitude that "this is just a little something I
do in my spare time" or "anybody could do this," then your price may be too low.
Here is a formula for setting a fair price. Calculate your price using other approaches, too, before you make a final decision on price:
Typical Pricing Formula
1. Direct Material Costs--Figure the total cost of the raw materials you have to use to make up your item. Figure the cost of a group of items and then divide by the number of items to find the cost per item. If you can easily and immediately determine the material cost of a single item, fine. Some items are produced in batches, however, and it is easier to get an item cost by dividing the cost of a batch by the number of items eventually produced.
2. Direct Labor Costs--Figure what you pay to employees to produce the item (whether or not you have employees now). You must assign a wage figure, even if you are the only one producing the item. Take the weekly salary you pay someone to produce the necessary number of items and divide it by the number of items. Add this figure to
the Direct Material Costs total.
Materials + Labor = $__________.
3. Overhead Expenses--These expenses include rent, gas and electricity, business telephone calls, packing and shipping supplies, delivery and freight charges, cleaning, insurance, office supplies, postage, payroll taxes, repairs, and
maintenance. The accuracy of your costing depends on estimating logical amounts for all categories of expenses. If you are working at home, figure a portion of your total rent or mortgage payment(in proportion to your work space and storage areas), or assign a reasonable, competitive rent figure for the same amount and type of space. List all overhead expense items and total them. Divide the total overhead figure by the number of items per month (or time period you used above). The answer is your overhead per item.
Overhead + Materials + Labor = Total Cost/Item
4. Profit--Include an amount added to the cost of each item so you won't end up just breaking even or making the employees' wages. Check your competition and see what they are charging. (Retailers generally double the wholesale price.) If your product is a little better than the competition, charge a little more. If your product is comparable, price it similarly. Remember, you will get the profit from each sale,
in addition to the salary figure. Add the profit figure you have chosen to the total cost per item to get your total price per item.
Profit + Total Cost/Item = Total Price/Item
Remember, the main purpose in operating a business is to make a profit. Don't undersell your product or service just because "I'd be baking cakes anyway" or "I'm just starting out" or "I work out of my home." If you have a new, rare, handmade product or personalized service, the demand may be so high that customers are willing to pay a little more.
Promotion
Promotion is an overall, long-range plan designed to inform potential customers about what you have to sell. Advertising is usually thought of as the paid communication part of the promotion program.
To develop a total promotional campaign you must answer these questions: 1) What image or message do I want to promote? 2) What are the best media and activities for reaching my potential customers? 3) How much time and money can I spend on the effort?
Develop a long-range, consistent program for building image and reaching customers. Your image should be reflected in your business card, logo, stationery, brochure, newsletter, telephone answering service, signs, paid ads, and promotional activities.
Word-of-mouth recommendations from satisfied customers are the very best promotion any business can have. Consider which promotional tactics will build the confidence and image you are looking for--giving speeches and interviews (often good for
counselors, teachers, lawyers, consultants), having an open house or holiday home sale (for craftspeople), holiday recitals or shows (for music and dance teachers or day-care operators), free demonstrations and samples (for retailers, decorators,
caterers).
Several small ads may have more impact than one large, splashy ad. Conduct a campaign rather than having a one-shot ad or event. If you hire a public relations firm, look for one that can give you personal attention and develop a total marketing plan for you, not just a couple of ads.You're The Boss.
Now that you have decided to open a home-based business, all decisions will be your responsibility, not just those you previously enjoyed because they involved your area of expertise. You are the boss now and the good health of your business depends on your management skills.
Choosing Your Form Of Business Organization
One of the most important decisions you will make is how to set up the business as a 1) sole proprietorship, 2) partnership, or 3) corporation. Remember, the small business owner risks it all, no matter what form of organization.
The forming of a business organization depends on the following factors:
* Legal restrictions
* Need for capital
* Liabilities assumed
* Number of people associated in the venture
* Kind of business or operation
* Tax advantages or disadvantages
* Intended division of earnings
* Perpetuation of the business
Most home-based businesses are sole proprietorships or partnerships, but a comparison of the advantages and disadvantages of each type of organization follows:
A sole proprietorship is the least costly way of starting a business. You can form a sole proprietorship by finding a location and opening the door for business. There are the usual fees for registering your business name and for legal work in changing zoning restrictions and obtaining necessary licenses. Attorney's fees for starting your business will be less than for the other forms because less document
preparation is required.
Sole Proprietorship
Advantages Disadvantages
* Easiest to get started * Unlimited liability
* Greatest freedom of action * Death or illness endanger
business
* Maximum authority * Growth limited to personal
energies
* Income tax advantages in * Personal affairs easily
very small firms mixed with business
* Social Security advantage to
owner
A partnership can be formed by simply making an oral agreement between two or more persons, but such informality is not recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. You would be wise, however, to consult an attorney to have a partnership agreement drawn up to help resolve future disputes.
Partnership
Advantages Disadvantages
* Two heads better than one * Death, withdrawal, or
bankruptcy of one partner
* Additional sources of endangers business
venture capital
* Better credit rating than * Difficult to get rid of bad
corporation of similar size partner
* Hazy line of authority
You can incorporate without an attorney, but you would be unwise to do so. You may think a small family corporation does not need an attorney, but an attorney can save members of a family corporation from hard feelings and family squabbles. Attorney's fees may run high if organization problems are complex. The corporate form is usually the most costly to organize.
Corporation
Advantages Disadvantages
* Limited liability for * Gives owner a false
stockholders (while true sense of security
for big business, may not
be for small business) * Heavier taxes
* Continuity * Power limited by Charter
* Transfer of shares * Less freedom of activity
* Easier to raise capital * Legal formalities
* Possible to separate * Expensive to launch
business functions into
different corporations
Recordkeeping
Keeping accurate and up-to-date business records is, for many people, the most difficult and uninteresting aspect of operating a home-based business. If this area of business management is one that you anticipate will be hard for you, plan now how you will cope. Don't wait until tax time or until you are totally confused. Take a course at the local community college, ask a volunteer SCORE (Service Corps of Retired Executives) representative from the Small Business Administration to help you in the beginning, or hire an accountant to advise you on setting up and maintaining a recordkeeping system.
Your records will be used to prepare tax returns, make business decisions, and apply for loans. Set aside a special time each day to update your records. It will pay off in the long run with more deductions and fewer headaches.
If your business is small or related to an activity that is usually considered a hobby, it's even more important that you keep good records. The IRS may decide that what you are doing is only a hobby, and you won't be allowed to deduct expenses or losses from your home-produced income at tax time. So keep records of all transactions in which you spend or bring in money. Pick a name for your business
and register it with local or state regulatory authorities. Call your city hall or county courthouse to find out how.
Your records should tell you these three facts:
* How much cash you owe,
* How much cash you are due, and
* How much cash you have on hand.
You should keep five basic journals:
1. Check register--Shows each check disbursed, the date of disbursement, number of the check, to whom it was made out (payee), the amount of money disbursed, and for what purpose.
2. Cash receipts--Shows the amount of money received, from whom, and for what.
3. Sales journal--Shows the business transaction, date, for whom it was performed, the amount of the invoice, and the sales tax, if applicable. It may be divided to indicate labor and goods.
4. Voucher register--A record of bills, money owed, the date of the bill, to whom it is owed, the amount, and the service.
5. General journal--A means of adjusting some entries in the other four journals.
Choosing a Recordkeeping System
Set up your records to reflect the amount and type of activity in your particular business. There are a wide range of pre-packaged recordkeeping systems. The SBA's pamphlet Small Business Bibliography No. 15 (see "For Further Information") lists many such systems. The most useful system for a small, home-based business is usually based on what is called the "One-Write System." It captures information
at the time the transaction takes place. These One-Write Systems are efficient because they eliminate the need for recopying the data and are compatible with electronic data processing if you should decide to computerize.
Even though you may be small and just beginning, it is probably wise to consult an accountant to help you decide which recordkeeping system is best for your business. Once it is set up, you can record the daily transactions or periodically have a bookkeeper post your daily transactions in your General Ledger and prepare your financial statements.
Be sure to establish a separate bank account for your business--even before the first sale. Then you will have a complete and distinct record of your income and expenditures for tax purposes, and you won't have to remember which expenses were business and which were personal.
It is important to choose a recordkeeping system that you understand and will use. It will help you see how well the business is doing and is the first step in responsible financial management.
Tax Obligations And Benefits
Significant tax savings are available to the home-based businessowner in the form of deductions, credits, and depreciation allowances. The time, money, and energy you put into keeping good records and keeping current on tax laws will be worthwhile and ensure that you operate within the law. You will need to plan for income tax, social security (all self-employed persons must pay a federal self-employment tax), employees' taxes (if you hire anyone), property tax on your home and business-related taxes, such as sales tax, gross-receipts or inventory tax (in some states and localities), and excise or individual item taxes (on certain commodities).
As a home-based business owner you should be aware that every business decision--each purchase and transaction you make--has tax implications or built-in tax advantages or disadvantages. Deductions may be available for home maintenance and improvements; automobile expenses; telephone expenses; office and work space; inventory space; major purchases, such as a computer; and a wide variety of other items such as uniforms, coffee service, trademarks, a safe deposit box, credit bureau fees, and business cards.
Each business situation is different and tax laws change, so consult up-to-date references, a trusted attorney, and an accountant who can advise you on your particular obligations and benefits.
Insurance
Insurance helps to safeguard your business against losses from fire, illness, and injury. You cannot operate without it. Talk with an insurance representative about your business needs. Check with the insurance carriers on your home policy and make sure business use of your home is compatible with your homeowner's policy. In addition to a homeowner's policy (personal plan), now that you have a business,
you will need a commercial policy for full protection. Discuss these other possible needs with your agent:
* Product Liability Coverage--to protect you in case
your product causes injury to the user
* Auto Liability and "Non-owned" Auto Liability
Insurance--if a car is ever used to support the
business in any way
* Medical Payments Insurance--payable if someone is
injured in your home whether or not it was your
fault
* Worker's Compensation--if you have employees
* Business Interruption Insurance or Earnings
Insurance--in case your business is damaged by fire
or some other cause and you must totally or partially
suspend operations
* Disability Income Protection--a form of health
insurance in case you become disabled
* Business Life Insurance--to provide funds for
transition if you die
Be sure to keep all your insurance records and policies in a safe place--either with your accountant or in a safe deposit box. If you keep them at home for convenience sake, then give your policy numbers and insurance company names to your accountant or lawyer or put it in your safe deposit box.
Final advice for the wise business person is to read and understand the fine print in all policies and to reevaluate business insurance needs about every six months.
Other Considerations
Another aspect of planning is sheltering tax dollars through a Keogh Plan or corporate pension and profit-sharing plans, if your business is incorporated, or a retirement plan.
If you have a partnership, consider making a Buy and Sell Agreement with your partner(s). This agreement requires the surviving partner(s) to buy, and the heirs to sell, the deceased partner's interest. The surviving partner(s) then becomes the sole owner(s) and the heirs receive cash for their share of the business.
Dealing With Laws: Zoning, Licensing, Permits, and Others
Unfortunately, many home-based business people try to "slide" into business, saying "I'll just try it for a few months and see how things go" or "It's not really a business. I have only ten clients." This attitude can lead to a lack of planning and big disappointments. If you set up your studio, print business cards and flyers announcing classes, and then find that regulations make it illegal to operate out of your home, you may have to start all over.
Zoning
Before you start your home-based business, do a thorough investigation of the zoning laws in your community. Zoning regulations spell out activities permitted and prohibited in specific portions of a city or county. Call your town hall, zoning office, or local library to get a copy of zoning laws. Find out the structure of your local zoning groups. Most areas have Planning, Zoning, and Appeals Boards.
If the home business you are planning conforms to zoning regulations, then all you need to do is keep abreast of new proposals that may affect your situation. It's a good idea to stay in touch with others operating from their homes by joining business organizations or neighborhood groups in case you ever need to band together to propose or oppose new regulations. Maintaining a low profile and friendly
relations with your neighbors will result in more support from them should adverse regulations affecting your business ever be proposed.
If through your research you discover that the home business you are planning would violate the zoning code, there are several possible ways to proceed. You might wish to check with an attorney who specializes in zoning law to look for a legal way around the regulation. You might decide to apply to the Zoning Board for a
variance or exception. Or you may be able to change your business enough to make the operation fit the law. If the regulation outlaws businesses that employ people other than the owner at home, maybe you can have employees take work to their own homes. If your business will create too much traffic, consider another strategy for product distribution. If your business will create too much noise, maybe you can soundproof your house. At last resort, ask yourself "Is it worth it to organize a drive to change the law?" Considering the rapid growth in the number of home-based businesses, you just might find other entrepreneurs who are also interested in
submitting a change in the regulations to the Zoning Board. Go to meetings of the Board and try to identify the person who appears most active and most sympathetic to your position.
Keeping Up With Zoning Legislation
There are two ways to keep up with zoning legislation in your community (and with other topics of interest to home-based entrepreneurs). One way is to read local newspapers, especially the business section and the local or "neighborhood" sections. Be sure you notice local items about such things as proposed subway stations or the county's plan for revitalization. Changes like these could eventually influence zoning in your area. The other way to keep abreast of trends and zoning issues is to join the local chapter of a business group, such as the Rotary Club, the National Association of Women Business Owners, the National
Family Business Council, or a Business and Professional Women's Club. Through newsletters, meetings, and friendships that develop, you will hear all the latest local (and national) issues discussed while you learn valuable business skills and make useful contacts.
Working With Professionals
Even the smallest and newest business needs help from at least two kinds of specialists: an attorney and an accountant. Depending on your type of business and your skills you may, from time to time, ask the advice of other professionals, such as a direct mail or marketing specialist, an insurance representative, management
consultant, a computer specialist, a realtor, a public relations expert.
Several guidelines will hold true no matter what type of expert you are dealing with: 1) Interview professionals to see if you will be comfortable working with them. Make sure they have served other small businesses similar to yours. Find out ahead of time exactly what service you are buying, what the working relationship
will be, and what fees will be charged. 2) Be completely honest about your business situation. Advice based on partial or incorrect information is no advice at all. If you are having problems, don't be embarrassed. If your sales are down, give the experts all the information you have and work as a team to solve the problem. If
business is good, don't be afraid that professionals will steal your idea or expect a raise. Build a trusting, businesslike relationship. 3) Expect the professionals you hire to spend at least some of their time teaching you and explaining complex
concepts. But don't expect to be spoon-fed or delegate all decisions to them. Take a course at the local community college in recordkeeping and taxes or public relations to develop more skill in areas where you are inexperienced. 4) Keep your appointments and pay your bills promptly.
Your Lawyer
A lawyer can help you decide which is the most advantageous business structure (sole proprietorship, partnership, or corporation). He or she can help you with zoning, permit, or licensing problems; health inspection problems; unpaid bills; contracts and agreements; patents, trademarks, copyright protection; and some tax problems. Because there is always the possibility of a lawsuit, claim, or other legal action against your business, it is wise to have a lawyer who is already familiar with your business before a crisis arises. A lawyer experienced with your type of venture should also advise you on laws, programs, and agencies--(federal, state, and local)--that help small businesses through loans, grants, procurement set-asides, counseling, and other ways. He or she will tell you about unexpected legal opportunities and pitfalls that may affect your business.
Your Accountant
Most businesses fail not for lack of good ideas or good will, but rather for lack of financial expertise and planning. Look for an accountant as you would an attorney. Get referrals from trusted friends, business associations, or professional organizations. Discuss fees in advance and draw up a written agreement about how
you will work together. Your accountant (along with your lawyer) can advise about initial business decisions, such as the form of the business. Your accountant will help set up your books, draw up and analyze profit and loss statements, advise on financial decisions (e.g., buying a computer), and give advice on cash requirements for your start-up phase. He or she can make budget forecasts, help prepare financial information for a loan application, and handle tax matters.
State and Federal Laws That May Apply to Your Business
Most localities have registration and licensing requirements that will apply to you. A license is a formal permission to practice a certain business activity, issued by a local, state, or federal government. You may have the type of business that requires a permit from the local authorities. There is often a small fee for licenses and permits (usually $15-25). A license may require some kind of
examination to certify that the recipient is qualified. Your business name must be registered and a sales tax number must be obtained. Separate business telephones and bank accounts are usually required. Of course, you will want to have the latter anyway for accurate bookkeeping purposes, If you have employees, you are responsible
for withholding income and Social Security taxes. You must also pay worker's compensation and unemployment insurance and comply with minimum wage and employee health laws.
Think twice about the liabilities of operating without proper licenses and registrations. If you begin to advertise or are fortunate enough to "make the news" in some way, you will probably hear from a local official. You will pay with
embarrassment, time, and money if your business is not properly licensed.
Understanding the Financial Side
Who Needs Financial Planning? You do! All businesses run on money for the purpose of making money. A major reason for business failure is the lack of financial planning. Although it is nearly impossible to make exact estimates, approximate ones will help. The very process of thinking through these financial questions will develop
your business acumen and lead to solid planning. Get your accountant involved in reviewing your plans and advising you, too.
Estimating Start-Up Costs
Begin your financial planning by estimating your initial or start-up costs. Include all items of a nonrecurring nature such as fees, licenses, permits, franchise fees, insurance, telephone deposit, tools, equipment, office supplies, fixtures, installation of fixtures and equipment, remodeling and decorating, funds for your
opening promotional event if you plan to have one, signs, and, of course, professional fees for your attorney and accountant.
Depending on your type of operation, the amount of money you invest, and the energy you expect to put in (part-time to full-time) can determine how much working capital you will need. Many business experts say if you expect a profit in six months, double that time and be ready to operate without profits for twelve months to give
yourself a cushion in case of unanticipated expenses or delays. Study the growth patterns of other similar business and ask for advice from your accountant and attorney.
Projecting Operating Income and Expenses
Next, estimate the "working" capital you will need to keep operating for six to twelve months. Operating expenses include salaries; expenses for telephone, light, heat, office supplies, and other supplies or materials; debt interest; advertising fees; maintenance costs; taxes; legal and accounting fees; insurance fees; business
membership fees; and special services expenses, such as secretarial, copying, and delivery service.
In addition to business operating capital, you will need to plan for reserve capital to cover personal expenses. This estimate will include all your normal living expenses, such as food, household expenses, car payments, rent or mortgage, clothing, medical expenses, entertainment, and taxes for you and your family.
After you have estimated start-up costs, working or operating capital needed for six to twelve months, and personal expenses and obligations, you may see that you need more start-up capital than you thought. What will you do? Discuss this with your accountant, attorney, and trusted business associates and family. Entrepreneurs secure needed capital in a variety of ways. You can:
* Get loans or gifts from family members or friends. Make
businesslike, written agreements and be sure to disclose
fully the potential risk as well as the possible profit.
* Apply for a bank loan. For this you will need a
comprehensive statement of your personal financial condition
and a business plan with financial projections to present
to the loan officer. If you need help in preparing your loan
application, take a course for small business people at a
local community college or visit your nearest SBA office
to get assistance from a SCORE counselor.
* Apply for an SBA loan guarantee. The SBA is not a bank,
but it does extend guarantees and may rarely participate
in a loan when the bank is unable or unwilling to provide
the entire financing itself. The SBA loan officer will ask
you the same hard questions as a loan officer in a
commercial bank and require the same carefully considered
data on your personal finances, start-up costs, and
business projections.
* Search for some sort of venture capital. For start-up
entrepreneurs some prior managerial or entrepreneurial
track record is usually necessary in order to get venture
capital. The main disadvantage of venture capital is that
you will probably have to give up between 50 to 90
percent ownership of the new business in return for the
capital. A home business is extremely unlikely to attract
venture capital.
Understanding Your Balance Sheet
Your Balance Sheet is a summary of the status of your business--i.e., its assets, liabilities, and net worth--at an instant in time. By reviewing your Balance Sheet along with the Profit and Loss Statement and Cash-Flow Statement, you will be able to make informed financial and business planning decision.
The Balance Sheet is drawn up using the totals from the individual accounts kept in your General Ledger. It shows what you have left when you pay all your creditors. Assets less liabilities equal capital or net worth. The assets and liabilities sections must balance--hence the name Balance Sheet. It can be produced quarterly, semi-annually, or at the end of each calendar or fiscal year.
While your accountant will be most helpful in drawing up your Balance Sheet, it is you who must understand it. Current assets are anything of value you own such as cash, inventory, or property that the business owner can convert into cash within a year; fixed assets are things such as land and equipment. Liabilities are debts
the business must pay. They may be current (such as amounts owed to suppliers or your accountant) or they may be long-term (such as notes owed to the bank). Capital (also called equity or net worth) is the excess of your assets over your liabilities.
Prepare a Balance Sheet for your new business during the planning phase to estimate its financial condition at that time and also a projected one for the first year of business. This will help you decide on the feasibility of your venture and make modifications to ensure profitability. You can also use these statements as part
of the documentation in a loan application.
Understanding Your Profit and Loss Statement
Your Profit and Loss Statement is a detailed, month-by-month tally of the income from sales and the expenses incurred to generate the sales. It is a good assessment tool because it shows the effect of your decision on profit. It is a good planning tool because you can "try out" decisions on paper before actually going ahead.
The Profit and Loss Statement includes four kinds of information:
* The Sales information lists the number of units sold and
the total revenues generated by the sales.
* The Direct Expenses category includes the cost of labor,
materials, and manufacturing overhead (but not normal
overhead).
* Indirect Expenses are the costs you have even if the
product is not produced or the service is not delivered. They
include the fixed costs or normal overhead of salaries,
rent, utilities, insurance, depreciation, office supplies,
taxes, and professional fees for your lawyers and
accountant.
* Income or Profit is the last category on the
Profit and Loss Statement. It is shown both as pre-tax and after-tax
or net income. The IRS will look at your pre-tax figure,
whereas your loan officer and you are more concerned
with your after-tax figure.
Your Profit and Loss Statement should be prepared at the very minimum once a year--and more often in the beginning or growth stages of your business. It is a key document from which the economic health of a business can be determined. Make certain you do it properly and understand its meaning.
Understanding Your Cash Flow Statement
Your business must have a healthy cash flow to survive. Cash flow is the amount of money available in your business at any given time. To keep tabs on cash flow, forecast the funds you expect to disburse and receive over a given period of time. Then you can predict deficiencies or surplus in cash and decide how to respond.
A cash flow projection serves one other very useful purpose in addition to planning. As the actual information becomes available to you, compare it to the monthly cash flow estimates you previously made to see how accurately you are estimating. As you do this, you will be giving your self on-the-spot business training in making more accurate estimates and plans for the coming months. As your ability to estimate improves, your financial control of the business will increase.
The creative business owner works with his or her accountant to use the information gleaned from all of these financial tools to make a variety of managerial decisions--decisions on buying supplies, expansion, when to hire more employees, how to get the best tax breaks, and many other important steps that will shape the future of the business.
Make it Easy on Yourself
Successful home-based business owners learn from experience--their own and that of others. Eentrepreneurs use failures as learning experiences and try to understand their role in causing the failure in order to avoid similar problems in the future.
How to Learn From Experience
You can learn from experience in several ways:
First, work closely and creatively with professional advisors, such as your lawyer and your accountant. As you continually review your business records, you will see "mistakes," but you will also begin to develop skill in planning and managing.
Second, continue to learn about all areas of business operations, constantly acquiring new ideas. Most community colleges have short, inexpensive, practical courses for business owners in topics like "Financing a Small Business," "Choosing a Small Business Computer," and "Starting and Operating a Home-Based Business."
Third, get to know other business owners with similar needs or problems. Talking with others may be a way to avoid repeating the mistakes they have made and benefiting from their experience. Local and national organizations offer membership, social events, networking opportunities, newsletters, and seminars for homebased
business owners. Through these organizations you can often advertise your product or service to other business owners. They also provide a way to learn about services you may need, such as accounting, public relations, or a responsible secretarial service. These organizations offer updates in such areas as taxes and zoning in
their newsletters and workshops.
Finding and Using Resources, Networks, and Support Groups
Start out with the attitude "Whatever my current business problem, I can find the solution. Somewhere there is information, a book, a person, an organization, or a government agency that can help." A word of warning though: finding resources and building networks can be very time-consuming. Joining organizations can turn out to be expensive, especially if you are too busy to use their services and support once you join.
As a home-based business person you can overcome feelings of isolation and give and receive valuable information if you tap into networks and resources. Being active in professional and trade associations will help to build a good marketing network
for your service or product. Take the time and invest the money for memberships. Then continually evaluate which organizations and resources best serve your business information and networking needs.
Managing Time and Stress
Expect to encounter stress and time problems similar to those of other business owners but accentuated by the fact that you work at home. Follow these guidelines to make it a little easier on yourself:
1) Plan your time and establish priorities on a daily "to do" list. Decide what your "prime time" is and do your most important or difficult tasks. Set "business hours," specific times when you are at work and times when you turn on the answering machine because you are "on duty but off call." You, your customers, and your family will appreciate knowing your set routine, even though you know that for special events or emergencies you can break that schedule.
2) Notice what your four or five big time-wasters are and learn techniques to eliminate them or compensate for them. Some common ones are: telephone interruptions, visitors, socializing, excessive paperwork, lack of policies and procedures, procrastination, failure to delegate, unclear objectives, poor
scheduling, lack of self-discipline, and lack of skill in a needed area.
3) Stay in contact with people. Even though you prefer to work at home, you should plan work-related or social activities that provide frequent contact with others. This will help your morale if you feel isolated. Even for home-based business owners who like feeling isolated, keeping up with business and professional contacts is a must.
4) Build a fitness program into your day. Many successful entrepreneurs exercise in order to think creatively because physical activity sends oxygen to the brain and helps the mind function better. With regular exercise your health will improve, your stress level will go down, and your trim look will inspire people to have confidence in your abilities.
5) Give your home business as much of a separate and distinct physical identity as possible. Although you might save a few dollars by using the ironing board as a bookshelf and a cardboard box as a file cabinet, the stress and strain of operating without proper space and supplies will take its toll. Have a separate room or area
for your business, with a separate entrance if customers or suppliers visit. Consider soundproofing so your family won't be bothered by your noise and vice versa. (In addition to the psychological and physical comfort of having a separate office, the IRS requires it in order for you to make a legitimate claim for tax deductions.)
6) Take care of your major business asset: YOU. Being the boss can be exciting, fulfilling, and rewarding. It can also be lonely, stressful, and demanding. Learn to balance your professional and personal life. Go on vacation. Get a weekly massage. Join a health club. Take a class in meditation. Attend a business owner's breakfast club. Your business depends on you to be at your best.
The cottage industry, an old-fashioned enterprise, is enjoying a revival so strong that it's difficult to find out just how many Americans are now working at home.
Because women now enter business at a rate five times faster than men, the trend of operating from home is growing. A natural starting place for many businesses seems to be the garage, basement, or den.
Homemakers, hobbyists, retirees, people interested in a second income, and the disabled are just a few of the groups attracted to home enterprises. A young mother's craft business began when she started appliqueing decorations on her children's clothes.
A retired government worker bought 36 beehives and sold honey to local health food stores and at craft fairs. A teacher did typing and secretarial jobs for her husband and friends until she realized the potential market and opened a full-time secretarial service from her apartment. Others have become home business owners by using their skills in catering, counseling, teaching, day care, sewing, writing, photography, consulting, market research, and landscape design.
The list of services that have been successfully operated from home is endless: chimney sweeping, maid services, messenger services, wake-up and answering services, home nursing, mail order businesses, party planning, dog grooming, kitchen and closet planning and organizing, and others too numerous to mention. You can target exactly the right type of business for your skills, your home space, your market, and your part of the country.
Home Entrepreneurship: Is It For You?
The first step in deciding whether to start a business is to ask yourself this important question: "Do I have what it takes to be an entrepreneur?" Studying the characteristics of successful business owners will help you to tell whether your personality traits, experiences, and values are similar to those who have succeeded. And assessing your experience, skills, and life goals will also help you decide if you want to invest the energy, time, and resources that successful entrepreneurship requires.
Who is the "Typical" Entrepreneur?
What makes an entrepreneur successful is a hotly debated and vigorously researched subject. The following questions are designed to help you determine your "Entrepreneurial Quotient."
Do you reconcile your bank account as soon as the monthly statement comes in?
Entrepreneurs are careful about money. They usually know how much money they have so they can seize opportunities on short notice. They know what things cost, whether prices are going up or down, and whether they are getting a bargain.
Did you earn money on your own from some source other than your family before you were 10 years old?
Most people who are going to make money in business show an affinity for making money at an early age--by babysitting, selling lemonade, delivering newspapers, or some such strategy.
Do you get up early in the morning and find yourself at work before others are out of bed?
Entrepreneurs sleep and eat enough to keep up their strength, but they don't usually tarry at these pursuits.
Do you tend to trust your hunches rather than wait until you have a lot of information on hand?
Hunches are judgments based on factors that cannot be quantified. A big part of entrepreneurship seems to be risk-taking based on these hunches.
Do you keep new ideas in your head instead of writing them down?
Entrepreneurs keep a lot of things in their heads, including their most creative ideas.
Do you remember people's names and faces well?
Ease in remembering names and faces is very important in the business world.
Were you good in "hard" subjects--mathematics, biology, engineering, accounting, and so forth--in school?
People who major in business administration in college are more likely to be successful entrepreneurs than anyone else. They prefer subjects in which the answers are conclusive rather than open-ended conclusions full of contingencies.
In school, did you pretty much stay away from such organizations as Scouts and student government?
Most entrepreneurs tend to be loners rather than joiners, unless joining is a useful tactic for making contacts and gathering business information.
In courting the opposite sex, did you tend to go for one person at a time as opposed to playing the field?
Most entrepreneurs preferred one person because to play the field would have taken too much time away from business activities.
Do you close deals with a handshake rather than insisting on written contracts and guarantees?
Good entrepreneurs are often comfortable with something less binding than written contracts. When the only bond is a word, it becomes a matter of honor, and no entrepreneur can afford to lose honor.
Do you devote considerably more time and thought to work than to other activities, such as hobbies?
Entrepreneurs may have some leisure time activities, but their principal hobby is their work.
Was your parent an entrepreneur?
Having a close relative who was an entrepreneur is the single most telling indicator of a successful entrepreneur.
What size company do you now work for?
The typical entrepreneur comes from a medium-sized company -- 30 to 500 employees.
Have you ever been fired?
Entrepreneurs make poor employees. That's why they become entrepreneurs.
If you had a new business going, would you play your cards close to the vest, or would you be willing to discuss problems with your employees?
Typical entrepreneurs have a secretive streak. If they confide in anyone, it is likely to be another entrepreneur.
Are You Ready, Willing, and Able?
Now that you have studied the characteristics of others who have succeeded, look at your reasons for wanting a home-based business. Are you dissatisfied with your current job? What are your skills? What is your business experience, especially in the business you want to start? What are your life goals? What resources do you have
that might help?
Answering these questions will provide reality testing for ideas that can sound incredibly glamorous when chatting with friends or seductively attractive when you are irritated or bored by your present job.
How does your family react to the idea of a home business? Will you expect them to help out? What changes would your business use of the house mean for them? Will you have to remodel to create a usable business space?
What resources are available to you? Will you start by keeping your job and "moonlighting" for a while? Do you have a small nest egg, inheritance, or retirement income to live on until you get the business going? Do you already own tools or machines that will help (for instance, a computer for a secretarial business or professional cameras and a darkroom for a commercial photography business)? Are you able to go back to school for training if necessary? Have you built up a network of contacts and possible customers through your previous lines of work or will you be starting from scratch?
Answering these questions honestly and completely will help you assess not only your chances for success but also which type of home-based business to choose. For instance, if your past professional life and contacts are all in the educational, teaching, child-oriented school area, then you should have powerful reasons for leaving that and opening a mail-order seed business. Possibly a tutoring business
or a tot exercise franchise would use more of your resources and networks. On the other hand, if your assessment of your life goals and preferences helps you realize that you are burned out from working with kids, then perhaps a business planning birthday parties could later be built into a general party planning and catering business. You would be using your old contacts to build a long-range business
plan that focuses on a service business for adults.
The Advantages of Home-Based Business
Why have millions of Americans chosen to work and live in the same place? Why are cottage industries sprouting faster than we can count them? Some home-based businesses start by accident rather than by conscious design. Secretarial services, day-care centers, craft ventures, and the like may start out as weekend activities
in the recreation room. After a while their owners are surprised to see how profitable or enjoyable the venture has become. The glimpse of a healthy market lures them into a full-time venture. This low-risk, low-overhead, gradual kind of start-up is very attractive to new business people.
Many home-based business people cite decreased commuting time and other lessened business expenses as advantages for working at home. If your place of work is just 30 minutes away, that's five hours a week in commuting time, many dollars in gasoline and car maintenance or transit fares, and untold stress fighting traffic. Getting out of the high-fashion rat race is a plus for many who dislike having to dress up and continually buy new clothes to feel comfortable in settings outside the home.
Homemakers--mostly women but also an increasing number of men--are choosing a home-based business in order to have a more flexible lifestyle and to be closer to family. A parent who has a home office can eat lunch with the children or more easily attend special school or sports events. The home-based business person has more control over work hours than someone with a 9 to 5 job. Night owls who like to work until 3 a.m. can then sleep late (remembering, of course, to turn on the answering machine and let customers know the business hours). On the other hand, early birds can work without the usual disturbance from the telephones.
The tax advantages of operating a business from home are numerous but sometimes complicated. Wise business owners keep careful records and work with accountants, attorneys, and financial planners to make sure they are filing for the legal maximum write-offs and benefits.
The Disadvantages of a Home-Based Business
If you were hard at work in an office downtown, it is unlikely that three children would come storming in to ask for snacks or that you would end up using the ironing board for a bookshelf or have to think twice about hiring others because they might resent working at your kitchen table. These are just a few of the problems that make the glamour of working at home fade fast. Some disadvantages of working at home can be minimized by self-discipline, by setting clear limits with family and friends, and by projecting a professional image. Other disadvantages "come with the turf" and just have to be lived with. If a delivery man comes to the door, you will probably be the one to interrupt your work and sign for the package.
It takes time and discipline to establish steady, at-home work patterns. Often it seems easier to water the plants or do the laundry than to call a client, design a new brochure, or prepare bills for customers whose work you've completed. Without the deadlines imposed by supervisors or peers, it can be hard to do the least appealing jobs on your list. To make matters worse, others may not take you seriously. Neighbors may stop by to chat or friends may call your business number knowing you will answer. Without supervisors or managers, you are the one who must set limits and plan your time. There also is the problem of isolation. While you are now your own boss, you won't have the chats, the parties, the companionship of
fellow workers. Losing such social contact requires adjustments.
As the business grows and changes, the home entrepreneur has to put up with cramped or inappropriate space. No more simply putting in a request for a bigger file cabinet or a new copy machine; now you must visit showrooms or garage sales, evaluate features, compare prices, and probably pick the item up yourself.
Your teenager may resent having to keep the stereo low because you're meeting with a client in the next room. Your spouse may be irritated by having to fry that freshly caught trout on the backyard grill so your office won't smell of fish. Your son
may not want to give up the recreation room pool table so you can cut out 100 doll patterns this weekend. Neighbors may comment on the extra traffic your customers create on their quiet street. Family privacy and lifestyle patterns may be disturbed. And you will probably find yourself wrestling with laws and regulations
you never dreamed could exist before you went into business.
Your Professional Image
Developing a professional image may be hard if you work out of your home. Projecting a businesslike image is an important part of building credibility with your customers and contributes to your own professional self-image. Design a logo or have one designed; order business cards and stationery. Set regular business hours.
Use an answering machine or answering service. If other members of the family also answer the phone, make sure they know what to say. Have a businesslike office or "showroom" if you meet customers face to face. Consider referring to your apartment number as your "suite number" or rent a post office box rather than using your street address. Such practices might improve your chances of doing business
with potential customers.
Your Next Steps
Now that you have reflected on the characteristics of successful entrepreneurship and assessed your skills, experience, and life goals, it's time to plan your next steps. Ask yourself: Given the disadvantages of working out of my home, do I still want to? Now that I know more about what's involved in starting a business, is it still for me? Do I need further training or experience? Should I begin part-time in order to test the waters, check out market potential, or refine my product or service? Do I need more time to research possible products or services? Have I decided on a particular business?
Answering The Big Question: What? Who? Where? How? and How Much?
What's the perfect home business for you? You've listed your skills. You've outlined your interests. You've described your family's preferred lifestyle. You've come up with a business idea. Next, consider such questions as: Are there customers for my product or service? How do I know? How will I find them? Who are my competitors?
What will I charge? How will I promote my product or service? Finding the answers to these questions is the challenging and sometimes tedious homework that will help you determine your chances for success, and whether you should look for another more marketable idea.
What Is My Product?
"I bathe and groom poodles and small dogs." "I design, construct, and sell roll-top desks." "I provide accounting services to small business clients." "I make dried flower arrangements." "I teach intermediate and advanced piano to children." "I design and implement direct mail advertising campaigns for small businesses and nonprofit organizations."
The first step in creating a business is to decide what your product is. What are you selling? Practice writing a short, specific statement describing your product or service. Getting a clear idea of a business concept is one of the most difficult
tasks in creating a business. Your statement may change several times as you experiment with the market and test your skills.
Who Will Buy It?
To develop and test your business idea, answer the question "Who will buy my product or service?" Make a list of potential customers: individuals, groups, segments of the population, or other businesses that need your product or service. If you are making fabric-covered lap boards for people confined to bed, how will you quickly and inexpensively find a market? Through hospitals or home nursing care organizations? Through craft stores by displaying them as gift items? In mail order catalogues? Is there a market avenue that will reach children? Ask friends and colleagues for help in brainstorming all the possible markets (customers) and uses for your product or service.
Who Is the Competition?
Your business planning must also include an up-to-date analysis of your competition. Why? Because you need to plan your market position--how you will fit into the marketplace. Will your product or service be cheaper or more expensive than that of the major competitions? Will it be more durable? Will you be open during hours
that your competitors are closed? What benefits can you build into your product or service that your competitors don't offer? Will you do rush jobs?
In planning your business, look for a unique niche that will give you freedom from strong competition or that will make your product or service more valuable than others in the market. If you plan to open a day-care center and find that none in your area is open before school, early opening might make your service more competitive. If you discover that local caterers have overlooked the office party
market, you might highlight that in your brochure. The more you can learn about your competition, the better you'll be able to decide how to position yourself in the market.
Where Are the Buyers? How Can I Find Them?
As you become more familiar with the competition, you will also be discovering where and how to find buyers. Whatever the type of home business you want to open, you will need to do market research to determine if there are buyers for your idea, where they are, and how to find them. (And in the process, you will also be gathering information on pricing.)
When your marketing research is completed you will have 1) identified your potential customers; 2) found out all you can about their habits, needs, preferences, and buying cycles; and 3) decided how to reach them to generate sales.
How Much Shall I Charge?
Four main factors will help you decide what to charge for your product or service: 1) your direct and indirect costs; 2) the profit you want to make; 3) your market research data on competitors' prices; and 4) the urgency of the market demand. There is rarely an exact "right" price but rather an acceptable price range within which you will want to fall. Avoid the common mistakes made by many new business owners--charging too much or too little. Use several approaches to arrive at a cost and "test" the price. If your ego is too involved, your price may be too high. On the other hand, if you have the attitude that "this is just a little something I
do in my spare time" or "anybody could do this," then your price may be too low.
Here is a formula for setting a fair price. Calculate your price using other approaches, too, before you make a final decision on price:
Typical Pricing Formula
1. Direct Material Costs--Figure the total cost of the raw materials you have to use to make up your item. Figure the cost of a group of items and then divide by the number of items to find the cost per item. If you can easily and immediately determine the material cost of a single item, fine. Some items are produced in batches, however, and it is easier to get an item cost by dividing the cost of a batch by the number of items eventually produced.
2. Direct Labor Costs--Figure what you pay to employees to produce the item (whether or not you have employees now). You must assign a wage figure, even if you are the only one producing the item. Take the weekly salary you pay someone to produce the necessary number of items and divide it by the number of items. Add this figure to
the Direct Material Costs total.
Materials + Labor = $__________.
3. Overhead Expenses--These expenses include rent, gas and electricity, business telephone calls, packing and shipping supplies, delivery and freight charges, cleaning, insurance, office supplies, postage, payroll taxes, repairs, and
maintenance. The accuracy of your costing depends on estimating logical amounts for all categories of expenses. If you are working at home, figure a portion of your total rent or mortgage payment(in proportion to your work space and storage areas), or assign a reasonable, competitive rent figure for the same amount and type of space. List all overhead expense items and total them. Divide the total overhead figure by the number of items per month (or time period you used above). The answer is your overhead per item.
Overhead + Materials + Labor = Total Cost/Item
4. Profit--Include an amount added to the cost of each item so you won't end up just breaking even or making the employees' wages. Check your competition and see what they are charging. (Retailers generally double the wholesale price.) If your product is a little better than the competition, charge a little more. If your product is comparable, price it similarly. Remember, you will get the profit from each sale,
in addition to the salary figure. Add the profit figure you have chosen to the total cost per item to get your total price per item.
Profit + Total Cost/Item = Total Price/Item
Remember, the main purpose in operating a business is to make a profit. Don't undersell your product or service just because "I'd be baking cakes anyway" or "I'm just starting out" or "I work out of my home." If you have a new, rare, handmade product or personalized service, the demand may be so high that customers are willing to pay a little more.
Promotion
Promotion is an overall, long-range plan designed to inform potential customers about what you have to sell. Advertising is usually thought of as the paid communication part of the promotion program.
To develop a total promotional campaign you must answer these questions: 1) What image or message do I want to promote? 2) What are the best media and activities for reaching my potential customers? 3) How much time and money can I spend on the effort?
Develop a long-range, consistent program for building image and reaching customers. Your image should be reflected in your business card, logo, stationery, brochure, newsletter, telephone answering service, signs, paid ads, and promotional activities.
Word-of-mouth recommendations from satisfied customers are the very best promotion any business can have. Consider which promotional tactics will build the confidence and image you are looking for--giving speeches and interviews (often good for
counselors, teachers, lawyers, consultants), having an open house or holiday home sale (for craftspeople), holiday recitals or shows (for music and dance teachers or day-care operators), free demonstrations and samples (for retailers, decorators,
caterers).
Several small ads may have more impact than one large, splashy ad. Conduct a campaign rather than having a one-shot ad or event. If you hire a public relations firm, look for one that can give you personal attention and develop a total marketing plan for you, not just a couple of ads.You're The Boss.
Now that you have decided to open a home-based business, all decisions will be your responsibility, not just those you previously enjoyed because they involved your area of expertise. You are the boss now and the good health of your business depends on your management skills.
Choosing Your Form Of Business Organization
One of the most important decisions you will make is how to set up the business as a 1) sole proprietorship, 2) partnership, or 3) corporation. Remember, the small business owner risks it all, no matter what form of organization.
The forming of a business organization depends on the following factors:
* Legal restrictions
* Need for capital
* Liabilities assumed
* Number of people associated in the venture
* Kind of business or operation
* Tax advantages or disadvantages
* Intended division of earnings
* Perpetuation of the business
Most home-based businesses are sole proprietorships or partnerships, but a comparison of the advantages and disadvantages of each type of organization follows:
A sole proprietorship is the least costly way of starting a business. You can form a sole proprietorship by finding a location and opening the door for business. There are the usual fees for registering your business name and for legal work in changing zoning restrictions and obtaining necessary licenses. Attorney's fees for starting your business will be less than for the other forms because less document
preparation is required.
Sole Proprietorship
Advantages Disadvantages
* Easiest to get started * Unlimited liability
* Greatest freedom of action * Death or illness endanger
business
* Maximum authority * Growth limited to personal
energies
* Income tax advantages in * Personal affairs easily
very small firms mixed with business
* Social Security advantage to
owner
A partnership can be formed by simply making an oral agreement between two or more persons, but such informality is not recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. You would be wise, however, to consult an attorney to have a partnership agreement drawn up to help resolve future disputes.
Partnership
Advantages Disadvantages
* Two heads better than one * Death, withdrawal, or
bankruptcy of one partner
* Additional sources of endangers business
venture capital
* Better credit rating than * Difficult to get rid of bad
corporation of similar size partner
* Hazy line of authority
You can incorporate without an attorney, but you would be unwise to do so. You may think a small family corporation does not need an attorney, but an attorney can save members of a family corporation from hard feelings and family squabbles. Attorney's fees may run high if organization problems are complex. The corporate form is usually the most costly to organize.
Corporation
Advantages Disadvantages
* Limited liability for * Gives owner a false
stockholders (while true sense of security
for big business, may not
be for small business) * Heavier taxes
* Continuity * Power limited by Charter
* Transfer of shares * Less freedom of activity
* Easier to raise capital * Legal formalities
* Possible to separate * Expensive to launch
business functions into
different corporations
Recordkeeping
Keeping accurate and up-to-date business records is, for many people, the most difficult and uninteresting aspect of operating a home-based business. If this area of business management is one that you anticipate will be hard for you, plan now how you will cope. Don't wait until tax time or until you are totally confused. Take a course at the local community college, ask a volunteer SCORE (Service Corps of Retired Executives) representative from the Small Business Administration to help you in the beginning, or hire an accountant to advise you on setting up and maintaining a recordkeeping system.
Your records will be used to prepare tax returns, make business decisions, and apply for loans. Set aside a special time each day to update your records. It will pay off in the long run with more deductions and fewer headaches.
If your business is small or related to an activity that is usually considered a hobby, it's even more important that you keep good records. The IRS may decide that what you are doing is only a hobby, and you won't be allowed to deduct expenses or losses from your home-produced income at tax time. So keep records of all transactions in which you spend or bring in money. Pick a name for your business
and register it with local or state regulatory authorities. Call your city hall or county courthouse to find out how.
Your records should tell you these three facts:
* How much cash you owe,
* How much cash you are due, and
* How much cash you have on hand.
You should keep five basic journals:
1. Check register--Shows each check disbursed, the date of disbursement, number of the check, to whom it was made out (payee), the amount of money disbursed, and for what purpose.
2. Cash receipts--Shows the amount of money received, from whom, and for what.
3. Sales journal--Shows the business transaction, date, for whom it was performed, the amount of the invoice, and the sales tax, if applicable. It may be divided to indicate labor and goods.
4. Voucher register--A record of bills, money owed, the date of the bill, to whom it is owed, the amount, and the service.
5. General journal--A means of adjusting some entries in the other four journals.
Choosing a Recordkeeping System
Set up your records to reflect the amount and type of activity in your particular business. There are a wide range of pre-packaged recordkeeping systems. The SBA's pamphlet Small Business Bibliography No. 15 (see "For Further Information") lists many such systems. The most useful system for a small, home-based business is usually based on what is called the "One-Write System." It captures information
at the time the transaction takes place. These One-Write Systems are efficient because they eliminate the need for recopying the data and are compatible with electronic data processing if you should decide to computerize.
Even though you may be small and just beginning, it is probably wise to consult an accountant to help you decide which recordkeeping system is best for your business. Once it is set up, you can record the daily transactions or periodically have a bookkeeper post your daily transactions in your General Ledger and prepare your financial statements.
Be sure to establish a separate bank account for your business--even before the first sale. Then you will have a complete and distinct record of your income and expenditures for tax purposes, and you won't have to remember which expenses were business and which were personal.
It is important to choose a recordkeeping system that you understand and will use. It will help you see how well the business is doing and is the first step in responsible financial management.
Tax Obligations And Benefits
Significant tax savings are available to the home-based businessowner in the form of deductions, credits, and depreciation allowances. The time, money, and energy you put into keeping good records and keeping current on tax laws will be worthwhile and ensure that you operate within the law. You will need to plan for income tax, social security (all self-employed persons must pay a federal self-employment tax), employees' taxes (if you hire anyone), property tax on your home and business-related taxes, such as sales tax, gross-receipts or inventory tax (in some states and localities), and excise or individual item taxes (on certain commodities).
As a home-based business owner you should be aware that every business decision--each purchase and transaction you make--has tax implications or built-in tax advantages or disadvantages. Deductions may be available for home maintenance and improvements; automobile expenses; telephone expenses; office and work space; inventory space; major purchases, such as a computer; and a wide variety of other items such as uniforms, coffee service, trademarks, a safe deposit box, credit bureau fees, and business cards.
Each business situation is different and tax laws change, so consult up-to-date references, a trusted attorney, and an accountant who can advise you on your particular obligations and benefits.
Insurance
Insurance helps to safeguard your business against losses from fire, illness, and injury. You cannot operate without it. Talk with an insurance representative about your business needs. Check with the insurance carriers on your home policy and make sure business use of your home is compatible with your homeowner's policy. In addition to a homeowner's policy (personal plan), now that you have a business,
you will need a commercial policy for full protection. Discuss these other possible needs with your agent:
* Product Liability Coverage--to protect you in case
your product causes injury to the user
* Auto Liability and "Non-owned" Auto Liability
Insurance--if a car is ever used to support the
business in any way
* Medical Payments Insurance--payable if someone is
injured in your home whether or not it was your
fault
* Worker's Compensation--if you have employees
* Business Interruption Insurance or Earnings
Insurance--in case your business is damaged by fire
or some other cause and you must totally or partially
suspend operations
* Disability Income Protection--a form of health
insurance in case you become disabled
* Business Life Insurance--to provide funds for
transition if you die
Be sure to keep all your insurance records and policies in a safe place--either with your accountant or in a safe deposit box. If you keep them at home for convenience sake, then give your policy numbers and insurance company names to your accountant or lawyer or put it in your safe deposit box.
Final advice for the wise business person is to read and understand the fine print in all policies and to reevaluate business insurance needs about every six months.
Other Considerations
Another aspect of planning is sheltering tax dollars through a Keogh Plan or corporate pension and profit-sharing plans, if your business is incorporated, or a retirement plan.
If you have a partnership, consider making a Buy and Sell Agreement with your partner(s). This agreement requires the surviving partner(s) to buy, and the heirs to sell, the deceased partner's interest. The surviving partner(s) then becomes the sole owner(s) and the heirs receive cash for their share of the business.
Dealing With Laws: Zoning, Licensing, Permits, and Others
Unfortunately, many home-based business people try to "slide" into business, saying "I'll just try it for a few months and see how things go" or "It's not really a business. I have only ten clients." This attitude can lead to a lack of planning and big disappointments. If you set up your studio, print business cards and flyers announcing classes, and then find that regulations make it illegal to operate out of your home, you may have to start all over.
Zoning
Before you start your home-based business, do a thorough investigation of the zoning laws in your community. Zoning regulations spell out activities permitted and prohibited in specific portions of a city or county. Call your town hall, zoning office, or local library to get a copy of zoning laws. Find out the structure of your local zoning groups. Most areas have Planning, Zoning, and Appeals Boards.
If the home business you are planning conforms to zoning regulations, then all you need to do is keep abreast of new proposals that may affect your situation. It's a good idea to stay in touch with others operating from their homes by joining business organizations or neighborhood groups in case you ever need to band together to propose or oppose new regulations. Maintaining a low profile and friendly
relations with your neighbors will result in more support from them should adverse regulations affecting your business ever be proposed.
If through your research you discover that the home business you are planning would violate the zoning code, there are several possible ways to proceed. You might wish to check with an attorney who specializes in zoning law to look for a legal way around the regulation. You might decide to apply to the Zoning Board for a
variance or exception. Or you may be able to change your business enough to make the operation fit the law. If the regulation outlaws businesses that employ people other than the owner at home, maybe you can have employees take work to their own homes. If your business will create too much traffic, consider another strategy for product distribution. If your business will create too much noise, maybe you can soundproof your house. At last resort, ask yourself "Is it worth it to organize a drive to change the law?" Considering the rapid growth in the number of home-based businesses, you just might find other entrepreneurs who are also interested in
submitting a change in the regulations to the Zoning Board. Go to meetings of the Board and try to identify the person who appears most active and most sympathetic to your position.
Keeping Up With Zoning Legislation
There are two ways to keep up with zoning legislation in your community (and with other topics of interest to home-based entrepreneurs). One way is to read local newspapers, especially the business section and the local or "neighborhood" sections. Be sure you notice local items about such things as proposed subway stations or the county's plan for revitalization. Changes like these could eventually influence zoning in your area. The other way to keep abreast of trends and zoning issues is to join the local chapter of a business group, such as the Rotary Club, the National Association of Women Business Owners, the National
Family Business Council, or a Business and Professional Women's Club. Through newsletters, meetings, and friendships that develop, you will hear all the latest local (and national) issues discussed while you learn valuable business skills and make useful contacts.
Working With Professionals
Even the smallest and newest business needs help from at least two kinds of specialists: an attorney and an accountant. Depending on your type of business and your skills you may, from time to time, ask the advice of other professionals, such as a direct mail or marketing specialist, an insurance representative, management
consultant, a computer specialist, a realtor, a public relations expert.
Several guidelines will hold true no matter what type of expert you are dealing with: 1) Interview professionals to see if you will be comfortable working with them. Make sure they have served other small businesses similar to yours. Find out ahead of time exactly what service you are buying, what the working relationship
will be, and what fees will be charged. 2) Be completely honest about your business situation. Advice based on partial or incorrect information is no advice at all. If you are having problems, don't be embarrassed. If your sales are down, give the experts all the information you have and work as a team to solve the problem. If
business is good, don't be afraid that professionals will steal your idea or expect a raise. Build a trusting, businesslike relationship. 3) Expect the professionals you hire to spend at least some of their time teaching you and explaining complex
concepts. But don't expect to be spoon-fed or delegate all decisions to them. Take a course at the local community college in recordkeeping and taxes or public relations to develop more skill in areas where you are inexperienced. 4) Keep your appointments and pay your bills promptly.
Your Lawyer
A lawyer can help you decide which is the most advantageous business structure (sole proprietorship, partnership, or corporation). He or she can help you with zoning, permit, or licensing problems; health inspection problems; unpaid bills; contracts and agreements; patents, trademarks, copyright protection; and some tax problems. Because there is always the possibility of a lawsuit, claim, or other legal action against your business, it is wise to have a lawyer who is already familiar with your business before a crisis arises. A lawyer experienced with your type of venture should also advise you on laws, programs, and agencies--(federal, state, and local)--that help small businesses through loans, grants, procurement set-asides, counseling, and other ways. He or she will tell you about unexpected legal opportunities and pitfalls that may affect your business.
Your Accountant
Most businesses fail not for lack of good ideas or good will, but rather for lack of financial expertise and planning. Look for an accountant as you would an attorney. Get referrals from trusted friends, business associations, or professional organizations. Discuss fees in advance and draw up a written agreement about how
you will work together. Your accountant (along with your lawyer) can advise about initial business decisions, such as the form of the business. Your accountant will help set up your books, draw up and analyze profit and loss statements, advise on financial decisions (e.g., buying a computer), and give advice on cash requirements for your start-up phase. He or she can make budget forecasts, help prepare financial information for a loan application, and handle tax matters.
State and Federal Laws That May Apply to Your Business
Most localities have registration and licensing requirements that will apply to you. A license is a formal permission to practice a certain business activity, issued by a local, state, or federal government. You may have the type of business that requires a permit from the local authorities. There is often a small fee for licenses and permits (usually $15-25). A license may require some kind of
examination to certify that the recipient is qualified. Your business name must be registered and a sales tax number must be obtained. Separate business telephones and bank accounts are usually required. Of course, you will want to have the latter anyway for accurate bookkeeping purposes, If you have employees, you are responsible
for withholding income and Social Security taxes. You must also pay worker's compensation and unemployment insurance and comply with minimum wage and employee health laws.
Think twice about the liabilities of operating without proper licenses and registrations. If you begin to advertise or are fortunate enough to "make the news" in some way, you will probably hear from a local official. You will pay with
embarrassment, time, and money if your business is not properly licensed.
Understanding the Financial Side
Who Needs Financial Planning? You do! All businesses run on money for the purpose of making money. A major reason for business failure is the lack of financial planning. Although it is nearly impossible to make exact estimates, approximate ones will help. The very process of thinking through these financial questions will develop
your business acumen and lead to solid planning. Get your accountant involved in reviewing your plans and advising you, too.
Estimating Start-Up Costs
Begin your financial planning by estimating your initial or start-up costs. Include all items of a nonrecurring nature such as fees, licenses, permits, franchise fees, insurance, telephone deposit, tools, equipment, office supplies, fixtures, installation of fixtures and equipment, remodeling and decorating, funds for your
opening promotional event if you plan to have one, signs, and, of course, professional fees for your attorney and accountant.
Depending on your type of operation, the amount of money you invest, and the energy you expect to put in (part-time to full-time) can determine how much working capital you will need. Many business experts say if you expect a profit in six months, double that time and be ready to operate without profits for twelve months to give
yourself a cushion in case of unanticipated expenses or delays. Study the growth patterns of other similar business and ask for advice from your accountant and attorney.
Projecting Operating Income and Expenses
Next, estimate the "working" capital you will need to keep operating for six to twelve months. Operating expenses include salaries; expenses for telephone, light, heat, office supplies, and other supplies or materials; debt interest; advertising fees; maintenance costs; taxes; legal and accounting fees; insurance fees; business
membership fees; and special services expenses, such as secretarial, copying, and delivery service.
In addition to business operating capital, you will need to plan for reserve capital to cover personal expenses. This estimate will include all your normal living expenses, such as food, household expenses, car payments, rent or mortgage, clothing, medical expenses, entertainment, and taxes for you and your family.
After you have estimated start-up costs, working or operating capital needed for six to twelve months, and personal expenses and obligations, you may see that you need more start-up capital than you thought. What will you do? Discuss this with your accountant, attorney, and trusted business associates and family. Entrepreneurs secure needed capital in a variety of ways. You can:
* Get loans or gifts from family members or friends. Make
businesslike, written agreements and be sure to disclose
fully the potential risk as well as the possible profit.
* Apply for a bank loan. For this you will need a
comprehensive statement of your personal financial condition
and a business plan with financial projections to present
to the loan officer. If you need help in preparing your loan
application, take a course for small business people at a
local community college or visit your nearest SBA office
to get assistance from a SCORE counselor.
* Apply for an SBA loan guarantee. The SBA is not a bank,
but it does extend guarantees and may rarely participate
in a loan when the bank is unable or unwilling to provide
the entire financing itself. The SBA loan officer will ask
you the same hard questions as a loan officer in a
commercial bank and require the same carefully considered
data on your personal finances, start-up costs, and
business projections.
* Search for some sort of venture capital. For start-up
entrepreneurs some prior managerial or entrepreneurial
track record is usually necessary in order to get venture
capital. The main disadvantage of venture capital is that
you will probably have to give up between 50 to 90
percent ownership of the new business in return for the
capital. A home business is extremely unlikely to attract
venture capital.
Understanding Your Balance Sheet
Your Balance Sheet is a summary of the status of your business--i.e., its assets, liabilities, and net worth--at an instant in time. By reviewing your Balance Sheet along with the Profit and Loss Statement and Cash-Flow Statement, you will be able to make informed financial and business planning decision.
The Balance Sheet is drawn up using the totals from the individual accounts kept in your General Ledger. It shows what you have left when you pay all your creditors. Assets less liabilities equal capital or net worth. The assets and liabilities sections must balance--hence the name Balance Sheet. It can be produced quarterly, semi-annually, or at the end of each calendar or fiscal year.
While your accountant will be most helpful in drawing up your Balance Sheet, it is you who must understand it. Current assets are anything of value you own such as cash, inventory, or property that the business owner can convert into cash within a year; fixed assets are things such as land and equipment. Liabilities are debts
the business must pay. They may be current (such as amounts owed to suppliers or your accountant) or they may be long-term (such as notes owed to the bank). Capital (also called equity or net worth) is the excess of your assets over your liabilities.
Prepare a Balance Sheet for your new business during the planning phase to estimate its financial condition at that time and also a projected one for the first year of business. This will help you decide on the feasibility of your venture and make modifications to ensure profitability. You can also use these statements as part
of the documentation in a loan application.
Understanding Your Profit and Loss Statement
Your Profit and Loss Statement is a detailed, month-by-month tally of the income from sales and the expenses incurred to generate the sales. It is a good assessment tool because it shows the effect of your decision on profit. It is a good planning tool because you can "try out" decisions on paper before actually going ahead.
The Profit and Loss Statement includes four kinds of information:
* The Sales information lists the number of units sold and
the total revenues generated by the sales.
* The Direct Expenses category includes the cost of labor,
materials, and manufacturing overhead (but not normal
overhead).
* Indirect Expenses are the costs you have even if the
product is not produced or the service is not delivered. They
include the fixed costs or normal overhead of salaries,
rent, utilities, insurance, depreciation, office supplies,
taxes, and professional fees for your lawyers and
accountant.
* Income or Profit is the last category on the
Profit and Loss Statement. It is shown both as pre-tax and after-tax
or net income. The IRS will look at your pre-tax figure,
whereas your loan officer and you are more concerned
with your after-tax figure.
Your Profit and Loss Statement should be prepared at the very minimum once a year--and more often in the beginning or growth stages of your business. It is a key document from which the economic health of a business can be determined. Make certain you do it properly and understand its meaning.
Understanding Your Cash Flow Statement
Your business must have a healthy cash flow to survive. Cash flow is the amount of money available in your business at any given time. To keep tabs on cash flow, forecast the funds you expect to disburse and receive over a given period of time. Then you can predict deficiencies or surplus in cash and decide how to respond.
A cash flow projection serves one other very useful purpose in addition to planning. As the actual information becomes available to you, compare it to the monthly cash flow estimates you previously made to see how accurately you are estimating. As you do this, you will be giving your self on-the-spot business training in making more accurate estimates and plans for the coming months. As your ability to estimate improves, your financial control of the business will increase.
The creative business owner works with his or her accountant to use the information gleaned from all of these financial tools to make a variety of managerial decisions--decisions on buying supplies, expansion, when to hire more employees, how to get the best tax breaks, and many other important steps that will shape the future of the business.
Make it Easy on Yourself
Successful home-based business owners learn from experience--their own and that of others. Eentrepreneurs use failures as learning experiences and try to understand their role in causing the failure in order to avoid similar problems in the future.
How to Learn From Experience
You can learn from experience in several ways:
First, work closely and creatively with professional advisors, such as your lawyer and your accountant. As you continually review your business records, you will see "mistakes," but you will also begin to develop skill in planning and managing.
Second, continue to learn about all areas of business operations, constantly acquiring new ideas. Most community colleges have short, inexpensive, practical courses for business owners in topics like "Financing a Small Business," "Choosing a Small Business Computer," and "Starting and Operating a Home-Based Business."
Third, get to know other business owners with similar needs or problems. Talking with others may be a way to avoid repeating the mistakes they have made and benefiting from their experience. Local and national organizations offer membership, social events, networking opportunities, newsletters, and seminars for homebased
business owners. Through these organizations you can often advertise your product or service to other business owners. They also provide a way to learn about services you may need, such as accounting, public relations, or a responsible secretarial service. These organizations offer updates in such areas as taxes and zoning in
their newsletters and workshops.
Finding and Using Resources, Networks, and Support Groups
Start out with the attitude "Whatever my current business problem, I can find the solution. Somewhere there is information, a book, a person, an organization, or a government agency that can help." A word of warning though: finding resources and building networks can be very time-consuming. Joining organizations can turn out to be expensive, especially if you are too busy to use their services and support once you join.
As a home-based business person you can overcome feelings of isolation and give and receive valuable information if you tap into networks and resources. Being active in professional and trade associations will help to build a good marketing network
for your service or product. Take the time and invest the money for memberships. Then continually evaluate which organizations and resources best serve your business information and networking needs.
Managing Time and Stress
Expect to encounter stress and time problems similar to those of other business owners but accentuated by the fact that you work at home. Follow these guidelines to make it a little easier on yourself:
1) Plan your time and establish priorities on a daily "to do" list. Decide what your "prime time" is and do your most important or difficult tasks. Set "business hours," specific times when you are at work and times when you turn on the answering machine because you are "on duty but off call." You, your customers, and your family will appreciate knowing your set routine, even though you know that for special events or emergencies you can break that schedule.
2) Notice what your four or five big time-wasters are and learn techniques to eliminate them or compensate for them. Some common ones are: telephone interruptions, visitors, socializing, excessive paperwork, lack of policies and procedures, procrastination, failure to delegate, unclear objectives, poor
scheduling, lack of self-discipline, and lack of skill in a needed area.
3) Stay in contact with people. Even though you prefer to work at home, you should plan work-related or social activities that provide frequent contact with others. This will help your morale if you feel isolated. Even for home-based business owners who like feeling isolated, keeping up with business and professional contacts is a must.
4) Build a fitness program into your day. Many successful entrepreneurs exercise in order to think creatively because physical activity sends oxygen to the brain and helps the mind function better. With regular exercise your health will improve, your stress level will go down, and your trim look will inspire people to have confidence in your abilities.
5) Give your home business as much of a separate and distinct physical identity as possible. Although you might save a few dollars by using the ironing board as a bookshelf and a cardboard box as a file cabinet, the stress and strain of operating without proper space and supplies will take its toll. Have a separate room or area
for your business, with a separate entrance if customers or suppliers visit. Consider soundproofing so your family won't be bothered by your noise and vice versa. (In addition to the psychological and physical comfort of having a separate office, the IRS requires it in order for you to make a legitimate claim for tax deductions.)
6) Take care of your major business asset: YOU. Being the boss can be exciting, fulfilling, and rewarding. It can also be lonely, stressful, and demanding. Learn to balance your professional and personal life. Go on vacation. Get a weekly massage. Join a health club. Take a class in meditation. Attend a business owner's breakfast club. Your business depends on you to be at your best.
Thursday, December 28, 2006
Home-Based Business Guide
Because tens of thousands of people all across America want to know how they can work at home and earn enough money to run a household, there is a special need for this report. Today the need for women to work out of the home is stronger than ever. According to recent surveys, almost 70% are married and contribute up to 50% and more to the family income. Because family responsibilities play such an important part in the lives of men and women, millions of individuals and couples are seeking ways to make money at home.
In the past decade money-making, home-based opportunities that match a person's skills, interests, abilities, and ingenuity have become almost limitless. The purpose of this report is to show you that it's simple and easy to join the ranks of success-minded people by choosing a work-at-home program that suits your interests and needs.
Business histories have shown over and over again that the rewards and advantages of working at home can go far beyond a person's wildest dreams! In fact, it's perfectly possible to launch a small business in your garage, backyard, basement, or a room in your home, and become a giant corporation.
BECOME A GOAL SETTER!
If you expect any level of success you must set goals. If you expect to be successful, you must determine what that means to you and the best way to achieve it. There are two basic steps you can take to convert goals into achievements:
1) You can decide on a specific dollar amount; and
2) You can set a time frame for obtaining the dollar amount you want.
Your goal should be specific and indicate What, When, and Where. After making a list of every possible way you might accomplish a goal, select the method that best suits your situation.
IMPORTANT CONSIDERATIONS YOU MUST ASK YOURSELF
1) "How can I support my family while I build up by business?" This question must be worked out according to each individual' circumstances. Many people start out on a part-time basis after their regular jobs to see how much they can handle. Then when their incomes reach a certain level they will switch over and go full time.
2) "What are my abilities?" To determine your abilities you will have to take an inventory of yourself. Decide what you enjoy doing the most and what you "feel" you would be good at. Examine every possibility and include every skill you have no matter how slight.
3) "Is there a market for the produce of service I have chosen?" Be cautious before you invest any money! Check it out by making inquiries directly to the company, competitors, or firms who are marketing a product similar to the one you are interested in. Test it on a small scale. Check it out thoroughly.
4) "How long will it take this business to reach the financial goal I must have?" It's really a question of knowing how much time you can dedicate to your business, and what your profits are for that time. From there, a little simple addition will tell you how long it might take to reach a particular financial goal.
SUCCESS IS HAVING THE COURAGE TO BEGIN!
Starting a business at home is a economical way to start a small business that can easily grow into a larger one. Many entrepeneurs have proven that you don't need a huge manufacturing plant to develop a successful business. Some of the most successful businesses in existence today started in a spare room or garage. It isn't how you start out that is important. What really matters is, do you have the courage to begin.
SELECTING THE RIGHT PRODUCT OR SERVICE
Take a close look at your interests and abilities, and then decide what type of marketing you want to do. For example, do you want to assemble items and sell them back to the manufacturer; do you want to sell directly to people; or would you prefer selling wholesale to retail outlets? If you prefer doing piecework or assembling items for manufacturers, make certain it's something you enjoy working with. If you enjoy one-on-one-sales, then test the product out on your friends, relatives and neighbors. The object is to find out what has the most appeal.
DEVELOP A GOOD MARKETING TECHNIQUE
A good marketing technique is one part of a business plan that is absolutely essential to its success. In fact, the ability to properly market a product or service is actually more impaortant than the product itself. Even an inferior product can be a financial success if marketed properly. Seek out the advice of everyone in your field. Explain your needs and ask them questions. Experience is the best teacher. With good advice and a salable product, you should be able to develop a winning marketing plan.
FINANCING YOUR HOME-BUSINESS VENTURE
The first place to look for financing is right at home. Take an inventory of items you don't need and have a garage sale. Most people are pleasantly suprised a how much cash they can raise in a single weekend. Next, turn to members of your family or close friends who have faith in you and want to see you succeed. Offer to repay them through profit-sharing. Go to individuals in your community who believe in your personal worth. If you have a good credit history, your banker should consider you a good financial risk. Two other excellent sources would be your local Small Business Administration (SBA) and Chamber of Commerce. SBA has low-interest loans available for qualified applicants and your Chamber of Commerce can assist you with referrals and other helpful information.
WORK-AT-HOME OPPORTUNITIES ARE EVERYWHERE!
Anyone who is serious about work-at-home oportunities need only look around them. There are thousands of options everywhere! There are employment opportunities that involve becoming an independent contractor; working on a commission basis; working for a salary; freelancing for pay; getting paid by the hour, receiving pay for each piece assembled; getting paid by the project, or a combination of any of the above. No doubt, what you finally decide on will depend on your particular needs and interests.
In the past decade money-making, home-based opportunities that match a person's skills, interests, abilities, and ingenuity have become almost limitless. The purpose of this report is to show you that it's simple and easy to join the ranks of success-minded people by choosing a work-at-home program that suits your interests and needs.
Business histories have shown over and over again that the rewards and advantages of working at home can go far beyond a person's wildest dreams! In fact, it's perfectly possible to launch a small business in your garage, backyard, basement, or a room in your home, and become a giant corporation.
BECOME A GOAL SETTER!
If you expect any level of success you must set goals. If you expect to be successful, you must determine what that means to you and the best way to achieve it. There are two basic steps you can take to convert goals into achievements:
1) You can decide on a specific dollar amount; and
2) You can set a time frame for obtaining the dollar amount you want.
Your goal should be specific and indicate What, When, and Where. After making a list of every possible way you might accomplish a goal, select the method that best suits your situation.
IMPORTANT CONSIDERATIONS YOU MUST ASK YOURSELF
1) "How can I support my family while I build up by business?" This question must be worked out according to each individual' circumstances. Many people start out on a part-time basis after their regular jobs to see how much they can handle. Then when their incomes reach a certain level they will switch over and go full time.
2) "What are my abilities?" To determine your abilities you will have to take an inventory of yourself. Decide what you enjoy doing the most and what you "feel" you would be good at. Examine every possibility and include every skill you have no matter how slight.
3) "Is there a market for the produce of service I have chosen?" Be cautious before you invest any money! Check it out by making inquiries directly to the company, competitors, or firms who are marketing a product similar to the one you are interested in. Test it on a small scale. Check it out thoroughly.
4) "How long will it take this business to reach the financial goal I must have?" It's really a question of knowing how much time you can dedicate to your business, and what your profits are for that time. From there, a little simple addition will tell you how long it might take to reach a particular financial goal.
SUCCESS IS HAVING THE COURAGE TO BEGIN!
Starting a business at home is a economical way to start a small business that can easily grow into a larger one. Many entrepeneurs have proven that you don't need a huge manufacturing plant to develop a successful business. Some of the most successful businesses in existence today started in a spare room or garage. It isn't how you start out that is important. What really matters is, do you have the courage to begin.
SELECTING THE RIGHT PRODUCT OR SERVICE
Take a close look at your interests and abilities, and then decide what type of marketing you want to do. For example, do you want to assemble items and sell them back to the manufacturer; do you want to sell directly to people; or would you prefer selling wholesale to retail outlets? If you prefer doing piecework or assembling items for manufacturers, make certain it's something you enjoy working with. If you enjoy one-on-one-sales, then test the product out on your friends, relatives and neighbors. The object is to find out what has the most appeal.
DEVELOP A GOOD MARKETING TECHNIQUE
A good marketing technique is one part of a business plan that is absolutely essential to its success. In fact, the ability to properly market a product or service is actually more impaortant than the product itself. Even an inferior product can be a financial success if marketed properly. Seek out the advice of everyone in your field. Explain your needs and ask them questions. Experience is the best teacher. With good advice and a salable product, you should be able to develop a winning marketing plan.
FINANCING YOUR HOME-BUSINESS VENTURE
The first place to look for financing is right at home. Take an inventory of items you don't need and have a garage sale. Most people are pleasantly suprised a how much cash they can raise in a single weekend. Next, turn to members of your family or close friends who have faith in you and want to see you succeed. Offer to repay them through profit-sharing. Go to individuals in your community who believe in your personal worth. If you have a good credit history, your banker should consider you a good financial risk. Two other excellent sources would be your local Small Business Administration (SBA) and Chamber of Commerce. SBA has low-interest loans available for qualified applicants and your Chamber of Commerce can assist you with referrals and other helpful information.
WORK-AT-HOME OPPORTUNITIES ARE EVERYWHERE!
Anyone who is serious about work-at-home oportunities need only look around them. There are thousands of options everywhere! There are employment opportunities that involve becoming an independent contractor; working on a commission basis; working for a salary; freelancing for pay; getting paid by the hour, receiving pay for each piece assembled; getting paid by the project, or a combination of any of the above. No doubt, what you finally decide on will depend on your particular needs and interests.
Monday, December 25, 2006
Steps To Home Based Business Success
All around the country, people who want more control over their lives are starting a home based business.
People are living the new American dream of owning a home business, but avoiding the high overhead and start-up costs of a commercial location. If the idea of working from home is appealing, but you don't know where to begin, here is a step-by-step guide.
STEP #1 DECIDE WHAT PART OF THE HOUSE TO USE
Select an area away from family activity. The perfect space is a separate room (or perhaps the garage), but any area will do, if it can hold all the business supplies and equipment, and also provide enough work space for desks, tables, or counters.
STEP #2 DETERMINE HOW MUCH TIME YOU CAN SPEND ON THE BUSINESS
Many people start a home business on a part-time basis while raising children or working outside the home. Others start full-time when family and finances allow. However you begin, figure out how may hours per week you can devote to the business.
Make a weekly chart of your activities, examine it, and determine where the business fits. Don't assume you have time and find out later you don't.
STEP #3 DECIDE ON THE TYPE OF BUSINESS
Make a list of things you like to do, your work and volunteer experience, and items you own that can be used in a business. Look over this line-up, and using ideas from it, list possible businesses to start. Eliminate any business that isn't appealing or doesn't fill a need people have.
STEP #4 CHOOSE A LEGAL FORM
The four basic legal forms are sole proprietorship, partnership, limited liability company and corporation. The most common is the sole proprietorship. As its name implies, a sole proprietorship is owned by one individual. It is the oldest form of business, the easiest to start, and the least complicated to dissolve. Here are some of the advantages of this business form:
1. You own all the profits.
2. Your business is easy and cheap to organize. You don't need any government approval, although you may be required to carry a city, state or county license. Your only other obligation is to notify the Internal revenue Service (IRS) for the purposes of sales tax.
3. You're the boss.
4. You enjoy certain tax savings. You must pay regular individual taxes on your income, property, and payroll, but these are not levied as special taxes, as with a corporation. You will also have to pay sales tax which you have received from your customers.
5. Greater personal incentive and satisfaction. Since you have your investment to lose if your business is not successful, you should be more willing to put time, thought, and energy into the business. And when your business is successful, you enjoy maximum sense of accomplishment since you know its success was dependent upon your decisions about your management ability alone.
For more information about this and other forms of business, contact the U.S. Small Business Administration (SBA).
STEP #5 DETERMINE WHERE THE MONEY WILL COME FROM
There are three ways to finance start-up costs: use your own money, obtain a loan, or find investors. If possible, it is better to start small, use your savings, and not worry about repaying a debt. Also keep in mind that since you are home-based, chances of qualifying for a loan or finding investors are slim until the success of your idea is proven.
STEP #6 GATHER INFORMATION
Spend a few weeks researching home-based businesses. A library, bookstore or the Internet can provide numerous books and articles on business basics, and on the specific type of business that interest you.
STEP #7 CHECK ON ZONING RESTRICTIONS
Find out how your property is zoned, the call City Hall and ask what regulations apply to home businesses in that zone. Also, if you rent or live in a condominium, check the lease or homeowner's association rules to be certain a home business is allowed.
Generally, if you do not annoy your neighbors with excess noise, odors, and traffic, you will not be deterred from running a business at home. The neighbors may not even be aware of the business, but it is necessary to know exactly what you can and can't do before you start. This is important should any problems or questions arise later.
STEP #8 PICK A BUSINESS NAME AND REGISTER IT
If the business you choose is different from your name, file an assumed (or fictitious) name certificate with the county or state. You are notified if another business already has that name, so you can select a new one.
Do this before investing in expensive stationery and brochures. It costs only a few dollars to file, and it protects the business name from being used by someone else in the county.
STEP #9 WRITE A BUSINESS PLAN
A good business plan clarifies your ideas and establishes a plan of action. A good business plan should include a description of what you are selling, your background and qualifications, who the prospective customers are and where they can be found, what is needed to build the business, how you plan to promote, and how much money is need for start-up costs.
STEP #10 GET AN IDENTIFYING NUMBER
If you are the sole proprietor of the business and have no employees, you may either use your Social Security number or an Employee Identification Number (EIN) as the business number on official forms. If you have employees, or the business is set up as a partnership or corporation, you must obtain an EIN. To do this, complete IRS Form SS-4 (Application for Employer Identification Number) and file it with the nearest IRS Center.
STEP #11 OBTAIN A SALES TAX PERMIT
If the product or service you sell is taxable, you need a state sales tax permit. Call the local tax agency, explain the type of business you have and what you sell, and ask if you need to collect sales tax. If you do, they will send you the necessary information and forms to complete. You also use this tax number when your purchase items for resale.
STEP #12 OBTAIN LICENSES & PERMITS
It's very important not to overlook any necessary license or permit. For example, some cities and counties require a general business license, and most have special laws regarding the preparation and sale of food.
Call City Hall to find out what is need for your particular business. In addition, Chamber of Commerce provide information on city, county and state licenses and permits.
STEP #13 SELECT BUSINESS CARDS, STATIONERY, BROCHURES
Spend time on the color, design and paper for these items. They make a definite impression - good or bad - on the people who receive them. If you are not certain what is most suitable and effective, consult a graphics designer or a creative printer whose work you like.
STEP #14 OPEN A BUSINESS CHECKING ACCOUNT
Call several banks to find out what services they offer, and what minimum balance, if any, must be maintained to avoid paying a service charge. Also ask about credit cards if you plan to offer this convenience to your customers. Bank fees can be significant, so shop around for the best deal.
If your personal checking account is with a credit union, see if it can also provide a separate business account. When you open your account, you may need to show the assumed name certificate and business license.
Finally, investigate obtaining a credit card in the business's name. If this is not possible, set aside a personal credit card to use for business expenses.
STEP #15 SET UP RECORD-KEEPING SYSTEMS
Put together a simple and effective bookkeeping system with an 8 1/2 x 11" three-ring binder, columnar pad sheets and twelve pocket dividers from the office supply store. For each month, set up columnar sheets for income and expenses. Use a pocket divider for each month's receipts, bank statement, deposit tickets, and canceled checks.
In addition, an automobile log for business mileage, and filing system for correspondence, invoices, supplier catalogs, client records, etc. are two other useful tools.
STEP #16 CHECK IRS REQUIREMENTS
If you comply with basic IRS guidelines, you can deduct a percentage of normal household expenses (mortgage, interest, taxes, insurance, utilities, repairs, etc.) as a business expense.
Also become familiar with these IRS forms: Schedule SE (compensation of Social Security Self-Employment Tax) and Schedule 1040 ES (estimated Tax for Individuals). Depending on circumstances, you may have to file them.
STEP #17 OUTFIT THE BUSINESS
Make a list of everything needed to start the business, but before you buy anything, look around the house for things you already own that are usable.
When you are ready to start purchasing, check the classified ads and garage sales. Both are good, inexpensive sources for office furniture, typewriters, computers, answering machines, etc. Buy only what is absolutely necessary for start-up, and wait until the business is off the ground to get the extras.
STEP #18 DECIDE ON TELEPHONE REQUIREMENTS
Call the telephone company to find out the cost of a business phone in your area. If you cannot afford a separate business line, investigate the telephone company's regulations on using your personal phone in a business. It may be possible to do this if you follow certain guidelines. Keep a record of long distance business calls as they are a deductible expense. Finally, consider the benefits of an answering machine to catch calls when you are out.
STEP #19 CHECK OUT THE POST OFFICE
Using a post office box as the business address down plays the fact you are home-based. It also prevents customers from dropping in at all hours.
While looking into box rental, ask for information on the various postal rates, particularly bulk rate, if you plan to do large or specialized mailings.
STEP #20 PURCHASE THE NECESSARY INSURANCE
Check with your homeowners insurance agent about a rider for your existing policy or the need for a separate business policy. Also make sure you have adequate personal and product liability coverage. Shop around, as each company has different rules regarding home businesses
To save money on medical insurance, join an association and participate in their group plan.
STEP #21 ORGANIZE THE HOUSE & YOURSELF
To have more time for business, organize and simplify household routines. Start by holding a garage sale to get rid of unnecessary possessions. Next, have a family conference and divide household duties, making sure each person does his or her part. Then, set up a planning notebook to keep track of appointments, things to do, calls to make, errands to run, shopping, etc. Finally, set up a work schedule so you won't get sidetracked by TV, neighbor's visits, snacking, and telephone calls.
Creating and operating a home based business is a wonderful and rewarding challenge. The satisfaction is not only in the money earned, but in doing what makes you happy.
People are living the new American dream of owning a home business, but avoiding the high overhead and start-up costs of a commercial location. If the idea of working from home is appealing, but you don't know where to begin, here is a step-by-step guide.
STEP #1 DECIDE WHAT PART OF THE HOUSE TO USE
Select an area away from family activity. The perfect space is a separate room (or perhaps the garage), but any area will do, if it can hold all the business supplies and equipment, and also provide enough work space for desks, tables, or counters.
STEP #2 DETERMINE HOW MUCH TIME YOU CAN SPEND ON THE BUSINESS
Many people start a home business on a part-time basis while raising children or working outside the home. Others start full-time when family and finances allow. However you begin, figure out how may hours per week you can devote to the business.
Make a weekly chart of your activities, examine it, and determine where the business fits. Don't assume you have time and find out later you don't.
STEP #3 DECIDE ON THE TYPE OF BUSINESS
Make a list of things you like to do, your work and volunteer experience, and items you own that can be used in a business. Look over this line-up, and using ideas from it, list possible businesses to start. Eliminate any business that isn't appealing or doesn't fill a need people have.
STEP #4 CHOOSE A LEGAL FORM
The four basic legal forms are sole proprietorship, partnership, limited liability company and corporation. The most common is the sole proprietorship. As its name implies, a sole proprietorship is owned by one individual. It is the oldest form of business, the easiest to start, and the least complicated to dissolve. Here are some of the advantages of this business form:
1. You own all the profits.
2. Your business is easy and cheap to organize. You don't need any government approval, although you may be required to carry a city, state or county license. Your only other obligation is to notify the Internal revenue Service (IRS) for the purposes of sales tax.
3. You're the boss.
4. You enjoy certain tax savings. You must pay regular individual taxes on your income, property, and payroll, but these are not levied as special taxes, as with a corporation. You will also have to pay sales tax which you have received from your customers.
5. Greater personal incentive and satisfaction. Since you have your investment to lose if your business is not successful, you should be more willing to put time, thought, and energy into the business. And when your business is successful, you enjoy maximum sense of accomplishment since you know its success was dependent upon your decisions about your management ability alone.
For more information about this and other forms of business, contact the U.S. Small Business Administration (SBA).
STEP #5 DETERMINE WHERE THE MONEY WILL COME FROM
There are three ways to finance start-up costs: use your own money, obtain a loan, or find investors. If possible, it is better to start small, use your savings, and not worry about repaying a debt. Also keep in mind that since you are home-based, chances of qualifying for a loan or finding investors are slim until the success of your idea is proven.
STEP #6 GATHER INFORMATION
Spend a few weeks researching home-based businesses. A library, bookstore or the Internet can provide numerous books and articles on business basics, and on the specific type of business that interest you.
STEP #7 CHECK ON ZONING RESTRICTIONS
Find out how your property is zoned, the call City Hall and ask what regulations apply to home businesses in that zone. Also, if you rent or live in a condominium, check the lease or homeowner's association rules to be certain a home business is allowed.
Generally, if you do not annoy your neighbors with excess noise, odors, and traffic, you will not be deterred from running a business at home. The neighbors may not even be aware of the business, but it is necessary to know exactly what you can and can't do before you start. This is important should any problems or questions arise later.
STEP #8 PICK A BUSINESS NAME AND REGISTER IT
If the business you choose is different from your name, file an assumed (or fictitious) name certificate with the county or state. You are notified if another business already has that name, so you can select a new one.
Do this before investing in expensive stationery and brochures. It costs only a few dollars to file, and it protects the business name from being used by someone else in the county.
STEP #9 WRITE A BUSINESS PLAN
A good business plan clarifies your ideas and establishes a plan of action. A good business plan should include a description of what you are selling, your background and qualifications, who the prospective customers are and where they can be found, what is needed to build the business, how you plan to promote, and how much money is need for start-up costs.
STEP #10 GET AN IDENTIFYING NUMBER
If you are the sole proprietor of the business and have no employees, you may either use your Social Security number or an Employee Identification Number (EIN) as the business number on official forms. If you have employees, or the business is set up as a partnership or corporation, you must obtain an EIN. To do this, complete IRS Form SS-4 (Application for Employer Identification Number) and file it with the nearest IRS Center.
STEP #11 OBTAIN A SALES TAX PERMIT
If the product or service you sell is taxable, you need a state sales tax permit. Call the local tax agency, explain the type of business you have and what you sell, and ask if you need to collect sales tax. If you do, they will send you the necessary information and forms to complete. You also use this tax number when your purchase items for resale.
STEP #12 OBTAIN LICENSES & PERMITS
It's very important not to overlook any necessary license or permit. For example, some cities and counties require a general business license, and most have special laws regarding the preparation and sale of food.
Call City Hall to find out what is need for your particular business. In addition, Chamber of Commerce provide information on city, county and state licenses and permits.
STEP #13 SELECT BUSINESS CARDS, STATIONERY, BROCHURES
Spend time on the color, design and paper for these items. They make a definite impression - good or bad - on the people who receive them. If you are not certain what is most suitable and effective, consult a graphics designer or a creative printer whose work you like.
STEP #14 OPEN A BUSINESS CHECKING ACCOUNT
Call several banks to find out what services they offer, and what minimum balance, if any, must be maintained to avoid paying a service charge. Also ask about credit cards if you plan to offer this convenience to your customers. Bank fees can be significant, so shop around for the best deal.
If your personal checking account is with a credit union, see if it can also provide a separate business account. When you open your account, you may need to show the assumed name certificate and business license.
Finally, investigate obtaining a credit card in the business's name. If this is not possible, set aside a personal credit card to use for business expenses.
STEP #15 SET UP RECORD-KEEPING SYSTEMS
Put together a simple and effective bookkeeping system with an 8 1/2 x 11" three-ring binder, columnar pad sheets and twelve pocket dividers from the office supply store. For each month, set up columnar sheets for income and expenses. Use a pocket divider for each month's receipts, bank statement, deposit tickets, and canceled checks.
In addition, an automobile log for business mileage, and filing system for correspondence, invoices, supplier catalogs, client records, etc. are two other useful tools.
STEP #16 CHECK IRS REQUIREMENTS
If you comply with basic IRS guidelines, you can deduct a percentage of normal household expenses (mortgage, interest, taxes, insurance, utilities, repairs, etc.) as a business expense.
Also become familiar with these IRS forms: Schedule SE (compensation of Social Security Self-Employment Tax) and Schedule 1040 ES (estimated Tax for Individuals). Depending on circumstances, you may have to file them.
STEP #17 OUTFIT THE BUSINESS
Make a list of everything needed to start the business, but before you buy anything, look around the house for things you already own that are usable.
When you are ready to start purchasing, check the classified ads and garage sales. Both are good, inexpensive sources for office furniture, typewriters, computers, answering machines, etc. Buy only what is absolutely necessary for start-up, and wait until the business is off the ground to get the extras.
STEP #18 DECIDE ON TELEPHONE REQUIREMENTS
Call the telephone company to find out the cost of a business phone in your area. If you cannot afford a separate business line, investigate the telephone company's regulations on using your personal phone in a business. It may be possible to do this if you follow certain guidelines. Keep a record of long distance business calls as they are a deductible expense. Finally, consider the benefits of an answering machine to catch calls when you are out.
STEP #19 CHECK OUT THE POST OFFICE
Using a post office box as the business address down plays the fact you are home-based. It also prevents customers from dropping in at all hours.
While looking into box rental, ask for information on the various postal rates, particularly bulk rate, if you plan to do large or specialized mailings.
STEP #20 PURCHASE THE NECESSARY INSURANCE
Check with your homeowners insurance agent about a rider for your existing policy or the need for a separate business policy. Also make sure you have adequate personal and product liability coverage. Shop around, as each company has different rules regarding home businesses
To save money on medical insurance, join an association and participate in their group plan.
STEP #21 ORGANIZE THE HOUSE & YOURSELF
To have more time for business, organize and simplify household routines. Start by holding a garage sale to get rid of unnecessary possessions. Next, have a family conference and divide household duties, making sure each person does his or her part. Then, set up a planning notebook to keep track of appointments, things to do, calls to make, errands to run, shopping, etc. Finally, set up a work schedule so you won't get sidetracked by TV, neighbor's visits, snacking, and telephone calls.
Creating and operating a home based business is a wonderful and rewarding challenge. The satisfaction is not only in the money earned, but in doing what makes you happy.
Monday, December 18, 2006
How To Start A Profitable Home-Based Business
In these days, it's becoming increasingly difficult to make ends meet with just one source of income. Thus, more and more people are investigating the possibilities of starting their own extra-income business. Most of these part-time ventures are started and operated from the comfort and privacy of the home.
Most of these people are making the extra money they need. Some have wisely and carefully built these extra income efforts into full-time, very profitable businesses. Others are just keeping busy, having fun, and enjoying life as never before. The important thing is that they are doing something other than waiting for the government to give them a handout; they are improving their lot in life, and you can do it, too!
The fields of mail order selling, multi-level marketing, and in-home party sales have never been more popular. If any of these kinds of extra income producing ideas appeal to you, then you owe it to yourself to check them out. But these aren't the only businesses you can start and operate from home, with little or no investment, and learn as you go.
If you type, you can start a home-based typing service; if you have a truck or have access to a trailer, you can start a clean-up/hauling service. Simply collecting old newspapers from your neighbors can get you started in the paper recycling business. More than a few enterprising stay at home moms have found success and fortune by starting home and/or apartment cleaning services. If you have a yard full of flowers, you can make good extra money by supplying fresh cut flowers to restaurants and offices in your area on a regular basis. You might turn a ceramics hobby into a lucrative personalized coffee mug business. What I'm saying is that in reality, there's literally no end to the ways you can start and operate a profitable extra income business from your home.
The first thing you must do, however, is some basic market research. Find out for yourself, first-hand, just how many people there are in your area who are interested in your proposed product or service, and would be "willing to stand in line and pay money for it". This is known as defining your market and pinpointing your customers. If after checking around, talking about your idea with a whole lot of people over a period of one to three months, you get the idea that these people would be paying customers, your next effort should be directed toward the "detailing" of your business plan. The more precise and detailed your plan - covering all the bases relating to how you'll do everything that needs to be done - the easier it's going to be for you to attain success. Such a plan should show you start-up investment needs, your advertising plan, your production costs and procedure, your sales program, and how your time will be allocated. Too often, enthusiastic and ambitious entrepreneurs jump in on an extra income project and suddenly find that the costs are beyond their abilities, and the time requirements are more than they can meet. It pays to lay it all out on paper before you get involved, and the clearer you can "see" everything before you start, the better your chances for success.
Now, assuming you've got your market targeted, you know who your customers are going to be and how you're going to reach them with your product or service. And you have all your costs as well as time requirements itemized. The next step is to set your plan in motion and start making money.
Here is the most important "secret" of all, relating to starting and building a profitable home-based business, so read very carefully. Regardless of what kind of business you start, you must have the capital and the available time to sustain your business through the first six months of operation. Specifically, you must not count on receiving or spending any money coming in from your business on yourself or for your bills during those first six months. All the income from your business during those first six months should be reinvested in your business in order for it to grow and reach your planned first year potential.
Once you've passed that first six months milestone, you can set up a small monthly salary for yourself, and begin enjoying the fruits of your labor. But the first six months of operation for any business are critical, so do not plan to use any of the money your business generates for yourself during that period.
If you've got your business plan properly organized, and have implemented the plan, you should at the end of your first year be able to begin thinking about hiring other people to alleviate some of your workload. Remember this: Starting a successful business is not a means towards either a job for yourself or away to keep busy. It should be regarded as the beginning of an enterprise that will grow and prosper, with you as the top dog. Eventually, you'll have other people doing all the work for you, even running the entire operation, while you vacation in theBahamas or Hawaii and collect or receive regular income from your initial efforts.
Most of these people are making the extra money they need. Some have wisely and carefully built these extra income efforts into full-time, very profitable businesses. Others are just keeping busy, having fun, and enjoying life as never before. The important thing is that they are doing something other than waiting for the government to give them a handout; they are improving their lot in life, and you can do it, too!
The fields of mail order selling, multi-level marketing, and in-home party sales have never been more popular. If any of these kinds of extra income producing ideas appeal to you, then you owe it to yourself to check them out. But these aren't the only businesses you can start and operate from home, with little or no investment, and learn as you go.
If you type, you can start a home-based typing service; if you have a truck or have access to a trailer, you can start a clean-up/hauling service. Simply collecting old newspapers from your neighbors can get you started in the paper recycling business. More than a few enterprising stay at home moms have found success and fortune by starting home and/or apartment cleaning services. If you have a yard full of flowers, you can make good extra money by supplying fresh cut flowers to restaurants and offices in your area on a regular basis. You might turn a ceramics hobby into a lucrative personalized coffee mug business. What I'm saying is that in reality, there's literally no end to the ways you can start and operate a profitable extra income business from your home.
The first thing you must do, however, is some basic market research. Find out for yourself, first-hand, just how many people there are in your area who are interested in your proposed product or service, and would be "willing to stand in line and pay money for it". This is known as defining your market and pinpointing your customers. If after checking around, talking about your idea with a whole lot of people over a period of one to three months, you get the idea that these people would be paying customers, your next effort should be directed toward the "detailing" of your business plan. The more precise and detailed your plan - covering all the bases relating to how you'll do everything that needs to be done - the easier it's going to be for you to attain success. Such a plan should show you start-up investment needs, your advertising plan, your production costs and procedure, your sales program, and how your time will be allocated. Too often, enthusiastic and ambitious entrepreneurs jump in on an extra income project and suddenly find that the costs are beyond their abilities, and the time requirements are more than they can meet. It pays to lay it all out on paper before you get involved, and the clearer you can "see" everything before you start, the better your chances for success.
Now, assuming you've got your market targeted, you know who your customers are going to be and how you're going to reach them with your product or service. And you have all your costs as well as time requirements itemized. The next step is to set your plan in motion and start making money.
Here is the most important "secret" of all, relating to starting and building a profitable home-based business, so read very carefully. Regardless of what kind of business you start, you must have the capital and the available time to sustain your business through the first six months of operation. Specifically, you must not count on receiving or spending any money coming in from your business on yourself or for your bills during those first six months. All the income from your business during those first six months should be reinvested in your business in order for it to grow and reach your planned first year potential.
Once you've passed that first six months milestone, you can set up a small monthly salary for yourself, and begin enjoying the fruits of your labor. But the first six months of operation for any business are critical, so do not plan to use any of the money your business generates for yourself during that period.
If you've got your business plan properly organized, and have implemented the plan, you should at the end of your first year be able to begin thinking about hiring other people to alleviate some of your workload. Remember this: Starting a successful business is not a means towards either a job for yourself or away to keep busy. It should be regarded as the beginning of an enterprise that will grow and prosper, with you as the top dog. Eventually, you'll have other people doing all the work for you, even running the entire operation, while you vacation in theBahamas or Hawaii and collect or receive regular income from your initial efforts.
Friday, December 01, 2006
Running a Home Based Business With Your Spouse
I'm sure you've heard this statistic before: the failure rate of all start-up businesses is around the 90% mark. Add to that the unpleasant fact that roughly 50% of all marriages end in divorce and you can see that the odds of your new small business succeeding, already slim, become even slimmer if you run your business in partnership with your spouse.
Here are some of the challenges faced by entrepreneurial couples and what can be done to reduce the chances of becoming a statistic.
Relationship
A structure is only as strong as the foundation upon which it is built. If you're in business with your spouse, the foundation of your building is the relationship. Make sure you honestly assess your commitment to the business and to each other up front. Do you share the same family values? Are you both committed to sharing family and business responsibilities?
In the early days of the business, your relationship will need to thrive on a lack of quality "couple" time or possibly any time at all. It's not unusual for new business owners to work 16 hours a day, 7 days a week to get their businesses off the ground. That's one reason why your relationship needs to be in good shape before you start a business together. You don't want to be adding additional pressure and stress to a relationship that is already troubled.
To help relieve the pressure and stress of your new business together, plan to spend quality time together. Go on a dinner date where you don't discuss business. Take a romantic walk together. The thing to remember is that the relationship with your spouse is important and needs to be nurtured.
Division of Responsibility
Each of you must have your own clearly defined areas of sole responsibility. Any business needs one and only one person to make a final decision. This doesn't mean that one person makes all the decisions. It means that one person can make the decisions for their areas of responsibility.
The business is not the only area where responsibility needs to be divided. Don't forget to allocate responsibility for household chores and parenting responsibilities. Who will do the grocery shopping, the laundry, the cleaning and bill paying?
Communication
Each of you should treat the other just as you would a respected colleague outside the business. Show each other the same respect, courtesy, appreciation and gratitude that you would show any valued co-worker.
No matter how well people get along, disagreements about certain aspects of the business are inevitable. And just as in any other business, what is important is how those disagreements are resolved.
A good way of communicating about business issues is to hold regular business meetings together. The meetings don't have to be formal, just discuss any issues that may have come up since the last meeting and figure out an approach to deal with each one of the issues. This way you both will stay informed on where the business is headed and what each of you is working on and planning for the business.
Set Business Hours
Set regular business hours and stick to them. Except in an emergency, what doesn't get done in business hours doesn't get done until the next day.
Outside Interests
To keep your relationship fresh and interesting, you should both pursue interests that are independent of the business and each other.
Separate Space
You live and work together. That's a lot of togetherness. Everyone needs personal space. If possible, have separate work areas so you're not under each other's feet all the time.
The prospect of running a successful business with our mate is the dream of many of us. It is natural to want to share as much as possible with our spouse. But it is not for the faint-hearted and there are many issues to take into account. Don't make your decision based on visions of romantic togetherness. The reality will be altogether very different. But if, with your eyes wide open and having taken all of the factors into account, you believe you can be successful in business together, than by all means go for it.
Here are some of the challenges faced by entrepreneurial couples and what can be done to reduce the chances of becoming a statistic.
Relationship
A structure is only as strong as the foundation upon which it is built. If you're in business with your spouse, the foundation of your building is the relationship. Make sure you honestly assess your commitment to the business and to each other up front. Do you share the same family values? Are you both committed to sharing family and business responsibilities?
In the early days of the business, your relationship will need to thrive on a lack of quality "couple" time or possibly any time at all. It's not unusual for new business owners to work 16 hours a day, 7 days a week to get their businesses off the ground. That's one reason why your relationship needs to be in good shape before you start a business together. You don't want to be adding additional pressure and stress to a relationship that is already troubled.
To help relieve the pressure and stress of your new business together, plan to spend quality time together. Go on a dinner date where you don't discuss business. Take a romantic walk together. The thing to remember is that the relationship with your spouse is important and needs to be nurtured.
Division of Responsibility
Each of you must have your own clearly defined areas of sole responsibility. Any business needs one and only one person to make a final decision. This doesn't mean that one person makes all the decisions. It means that one person can make the decisions for their areas of responsibility.
The business is not the only area where responsibility needs to be divided. Don't forget to allocate responsibility for household chores and parenting responsibilities. Who will do the grocery shopping, the laundry, the cleaning and bill paying?
Communication
Each of you should treat the other just as you would a respected colleague outside the business. Show each other the same respect, courtesy, appreciation and gratitude that you would show any valued co-worker.
No matter how well people get along, disagreements about certain aspects of the business are inevitable. And just as in any other business, what is important is how those disagreements are resolved.
A good way of communicating about business issues is to hold regular business meetings together. The meetings don't have to be formal, just discuss any issues that may have come up since the last meeting and figure out an approach to deal with each one of the issues. This way you both will stay informed on where the business is headed and what each of you is working on and planning for the business.
Set Business Hours
Set regular business hours and stick to them. Except in an emergency, what doesn't get done in business hours doesn't get done until the next day.
Outside Interests
To keep your relationship fresh and interesting, you should both pursue interests that are independent of the business and each other.
Separate Space
You live and work together. That's a lot of togetherness. Everyone needs personal space. If possible, have separate work areas so you're not under each other's feet all the time.
The prospect of running a successful business with our mate is the dream of many of us. It is natural to want to share as much as possible with our spouse. But it is not for the faint-hearted and there are many issues to take into account. Don't make your decision based on visions of romantic togetherness. The reality will be altogether very different. But if, with your eyes wide open and having taken all of the factors into account, you believe you can be successful in business together, than by all means go for it.
Thursday, November 23, 2006
Start A Home Based Business
One advantage of being a home based business owner is being able to start and grow your business at your own pace. If you want to jump in and devote all of your spare time to the rapid development of your business, you can. Or, if you want to take things slow and ease into your business, you can work part-time. Taking the part-time route might the best choice for the first time home based business owner because it will allow you to maintain a steady income while testing the waters of self employment.
Don't let a lack of financing deter you from starting or expanding your home business. You have many option for raising the funds you need to reach your goals. Sources can include: loans from family or friends, bank loans, your personal savings, Small Business Adminstration loans, short-term credit card financing, and borrowing against home equity.
A good business plan will clearly outline your business objectives and how you plan to reach them. Although a business plan is helpful when you are trying to obtain financing from investors, it primarily serves as a personal roadmap for launching and operating your home business.
In today's competitive market, it's mandatory for home businesses to have a web presence. Failing to create a web presence says that you are not willing to accommodate those who prefer to conduct business online. It can also imply that your company is not well established. Build a web site that informs customers what your business is all about, and give them the opportunity to make secure purchases online. Make it easy for customers to get ahold of you.
Starting a home based business appears to be a monumental task, but when you break it down to small pieces it's not so overwhelming.
Don't let a lack of financing deter you from starting or expanding your home business. You have many option for raising the funds you need to reach your goals. Sources can include: loans from family or friends, bank loans, your personal savings, Small Business Adminstration loans, short-term credit card financing, and borrowing against home equity.
A good business plan will clearly outline your business objectives and how you plan to reach them. Although a business plan is helpful when you are trying to obtain financing from investors, it primarily serves as a personal roadmap for launching and operating your home business.
In today's competitive market, it's mandatory for home businesses to have a web presence. Failing to create a web presence says that you are not willing to accommodate those who prefer to conduct business online. It can also imply that your company is not well established. Build a web site that informs customers what your business is all about, and give them the opportunity to make secure purchases online. Make it easy for customers to get ahold of you.
Starting a home based business appears to be a monumental task, but when you break it down to small pieces it's not so overwhelming.
Sunday, November 12, 2006
Automated Marketing
With the introduction of automated marketing, starting an Internet business has never been easier.
Marketing an Internet business can be extremely time consuming. Once the home based business owner has developed business and marketing goals, automating the process to reach those goals is the wave of the future. With the proper training and support, part of the marketing aspect of the home based business can be automated.
The Predator Marketing System is the automated marketing tool of the 21st Century. This system gives the home based business owner the tools and training needed to succeed on the Internet. The Predator automated marketing tool can be used for any type of business. The system teaches how to use forums, blogs and traffic exchanges, to promote and build a home based Internet business.
The Predator system separates the customers that are serious about purchasing a product or service from the tire kickers. This alone can save the home based business owner many hours of time as well as money. Using an automated marketing system allows individuals who have decided to work at home the ability to generate an income without being chained to a desk, telephone or the computer.
The whole point of working from home and being your own boss is to free up your time for the things you want to do and also to bring in an additional income. With an automated marketing system, these business goals can be accomplished. Home business owners are looking for freedom, and the use of automated marketing systems can provide that freedom and a lucrative income as well.
News Releases:
Automated Marketing
Earn Income on the Internet
Home Based Part Time Internet Business
Start A Home Business
Marketing an Internet business can be extremely time consuming. Once the home based business owner has developed business and marketing goals, automating the process to reach those goals is the wave of the future. With the proper training and support, part of the marketing aspect of the home based business can be automated.
The Predator Marketing System is the automated marketing tool of the 21st Century. This system gives the home based business owner the tools and training needed to succeed on the Internet. The Predator automated marketing tool can be used for any type of business. The system teaches how to use forums, blogs and traffic exchanges, to promote and build a home based Internet business.
The Predator system separates the customers that are serious about purchasing a product or service from the tire kickers. This alone can save the home based business owner many hours of time as well as money. Using an automated marketing system allows individuals who have decided to work at home the ability to generate an income without being chained to a desk, telephone or the computer.
The whole point of working from home and being your own boss is to free up your time for the things you want to do and also to bring in an additional income. With an automated marketing system, these business goals can be accomplished. Home business owners are looking for freedom, and the use of automated marketing systems can provide that freedom and a lucrative income as well.
News Releases:
Automated Marketing
Earn Income on the Internet
Home Based Part Time Internet Business
Start A Home Business
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