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HOW TO START A LEGITIMATE HOME BASED BUSINESS
Starting An At Home Business The Right Way
Starting a successful home business is many people's ultimate dream.
Being your own boss gives you the kind of freedom most people never experience. And, research across many countries and cultures has shown that freedom and happiness go hand in hand.
But, and it's a big but, if you want to start a home business you must be prepared to accept some risk. The majority of new businesses fail, often because the owners failed to do their homework properly.
We have been operating various home businesses since 2003. Since then it has become harder and harder to achieve success in an increasingly competitive market. It is essential, today, that you approach a home-based business in a professional manner.
The industry is a minefield of scammers, get rich quick schemes and unscrupulous individuals. If something seems too good to be true, it almost always is.
Are you still interested in establishing a business from home? Then the information in this lens will equip you to approach the business the right way.
Home Business Ideas
Finding your ideal home business idea is a two step process.
First, you need to ask yourself a series of questions:
1. Your skills and expertise?
2. Your work experience?
3. Your interests and hobbies?
4. Your personality? Are you a "people person" or a "things person"? Extrovert or more of an introvert?
Then, generate a list of ideas that appeal to you. You can use the link below to consider over a hundred ideas.
Up to this point, the process has been mainly introspective - looking at you and your abilities and interests. Now it is important to shortlist the ideas from a market potential perspective.
So, the second step is to evaluate the ideas in terms of 3 criteria (R.E.D.):
- RELEVANCE: to your potential customers. It is pointless offering pregnancy fitness classes in an area populated mainly by empty nesters.
- EXPENSIVENESS: Can you be cost-competitive as a startup?
- DIFFERENTIATION: Is it possible to create a point of difference or are all angles covered?
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The Challenge of Starting A Home Business
What is your greatest challenge in establishing a home-based business?
"He who fails to plan is planning to fail"
Setting Up Your Home Office
Succeeding as an entrepreneur home based business owner requires you to maximise your personal productivity. Personal productivity is about being well organised.
The first step in getting well organised in a successful home business is setting up a well equipped home office.
Our experience in setting up several work from home offices is that there are six essential pieces of equipment:
- A comfortable, ergonomic desk chair. If you are going to spend long hours sitting in your home office chair, it is worth investing in a comfortable one that supports your back well.
- An all-in-one printer, copier, scanner, fax. We have an HP model similar to the one below. It is perfect for the home office because it saves space and covers 4 important needs.
- A Brother labeller. Labelling your files in a professional manner helps you take pride in maintaining your filing system and staying organised. And Brother has proven itself as the leader in labelling machines.
- A desk riser. Desk space in a home office is often much more limited than in a commercial office. Raising your screen off the desk surface will give you a lot of extra space. If you use a laptop, a desk riser can be used for your telephone and other loose items on your desk surface.
- A DECT portable phone system. When you work at home you need to be able to answer the phone from anywhere. The DECT system shown below integrates with your cellphone, so you can answer any phone from anywhere within range.
- A desktop organiser. Working in a clutter free environment reduces stress. Being able to find your scissors, stapler or stationery without hunting or digging around in drawers is a real time saver.
HP Officejet Pro 8600 e-All-in-On Wireless Color Printer with Scanner, Copier & FaxSEE REVIEWS
Brother PT-1280SR P-Touch Home and Office LabelerSEE REVIEWS
Panasonic KX-TG7622B DECT 6.0 Link-to-Cell via Bluetooth Cordless Phone, Black, 2 HandsetsSEE REVIEWS
Alera Fraze High-Back Swivel/Tilt Chair, Black LeatherSEE REVIEWS
Safco Products 42-Inch Desk RiserSEE REVIEWS
Victor Wood Midnight Black Collection, Tidy Tower Desktop OrganizerSEE REVIEWS
How To Start A Home-Based Business
Starting a home business involves two steps:
1. Fleshing out the details of the idea you have chosen.
2. Developing a practical, focussed, one page business plan.
The best way to expand on the idea you have chosen is to use a tool called the 5 W's. It involves answering 5 questions:
1. Why do they need my product or service?
2. What exactly do they need? What are the features that should be included?
3. Who is the potential customer. What are their characteristics - beliefs, attitudes, demographics and lifestage?
4. When do they need our product or service? During the day? After hours? Weekdays? Weekends?
5. Where do we need to make it available? In a retail store, online, via distributors or a mobile service?
The one page business plan needs to capture, on a single page, what the business aims to achieve and how. The plan should cover:
- Vision. A mental picture of what you want to achieve.
- Mission. What you are going to do to achieve the vision.
- Objectives. Targets for the first 3 months. Number of customers, enquiries, quotes or sales.
- Competition. What are their strengths and weaknesses and how are you going to use your strengths to outperform them?
- Marketing Plan . Work out a mix of activities to position and promote your business.
- Revenue Plan. Estimate your income and costs if you achieve your 3 month goals.
- Cashflow. Estimate collections and disbursements each month so that you will be able to work out how much funding you will need.
- Action Plan . We have found that weekly action plans work the best because they are sufficiently detailed to be useful without being too much work to keep updated.
- To Do List. The one plan business plan is a great place to keep your to do list because it keeps you focussed on the complete plan.
"Half the money I spend on advertising is wasted. The trouble is I don't know which half."
John Wanamaker, marketing pioneer, 1879
Marketing And Growing Your Small Business
E. Jerome McCarthy conceived the idea of the "marketing mix" in the 1960's. It consisted of a mix of 4 elements that a marketing strategy should cover:
3. Promotion (such as advertising, public relations, promotions or direct mail).
4. Place (where a product or service will be distributed).
Modern marketing has been redefined to consist of 7 elements, the 7 P's of marketing. It consists of the McCarthy 4 P's with "product" redefined as "positioning" and "process", "people" and "physical environment" added.
Positioning is about presenting the benefits of the product rather than its features.
Process refers to the way you will meet customer needs (everything from packaging and delivery to handling of returns).
The "physical environment" is important because it influences perceptions of your product or service. A retail outlet with upmarket decor creates expectations of better quality at a higher price.
To develop a marketing plan for your home based business you need to work through the 7 elements of the marketing mix and ask yourself questions.
"What are the features, advantages and benefits of the product I am planning to sell?"
"Am I going to position it as a value for money brand or a premium brand?"
"Where am I going to sell it?"
"How am I going to promote it?"
"Who am I going to partner with or use as a supplier?"
"What facilities and processes do I need to order stock, store it and deliver it to customers?"
Running The Business
There is considerably more to running a proper business from home than most people realise. Because most work from home businesses are run by solopreneurs, they need to be multi-skilled and very well organised.
To get well organised you need to set up a home office with the necessary equipment and a support system for dealing with administrative tasks such as accounting, filing taxes and dealing with paper.
These are the things that a home businessperson needs to cover in getting organised as a business:
- Computer Hardware. The two most important items are a good laptop computer and an all in one printer-copier-fax-scanner.
Because you will be using it for your business, it is important to invest in a good known brand laptop that is well supported.
All in one printers are ideal because they are space saving and cover your printing, copying, scanning and faxing needs.
- Software. The three most important home business software programs are:
a. An Office suite such as MS Office or an open source alternative like OpenOffice or LibraOffice.
b. An accounting package such as Quicken.
c. A paper-handling service such as Shoeboxed. Even a small home based business will generate a lot of paperwork that will eat into your productivity. Shoeboxed is a service that will handle it for you.
- Tax. You will either have to file your own taxes or use an enrolled agent. If you decide to file your own, there are several home business tax software programs you can use.
- Accounting. If you have accounting or bookkeeping experience, you can prepare your own accounts using software such as Quicken. However, if you do not, it is advisable to use an accounting service.
We have used an accounting firm for more than 10 years. We prepare a spreadsheet of our income and expenses and collect supporting documents such as bank statements. The accounting firm handles the rest.
If you prepare the inputs thoroughly, the accounting costs should not be very high.
- Profitability. To make money from your home based business you need to do 3 things - measure revenue and costs, grow revenue and reduce wastage. This may sound simple, but the practical reality is that it is always more complex than you expect.
Measuring revenue and costs can be tricky because the timing of the two is often different.
Growing revenue is often like filling a leaky bucket - you lose some customers and gain others. Ultimately you need to aim to build a loyal customer base by offering great service.
In our recent experience, reducing wastage sometimes involves changing the business process. We changed from packing our product ourselves to shipping in bulk and saved a fortune.
- Personal Productivity. There are two aspects of an at home business that potentially undermine productivity - email handling and paper handling. Productivity requires a simple system for getting your inbox to empty - whether it is an email inbox or a paper in tray. Consider each item, email or paper, and either action it or move it into a pending file or folder (for actioning when time permits). Then either file or dispose of each actioned item.
Great Books About Running A Business From Home
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