How To Start A Successful Home Based Business
How To Start A Successful Home Based Business
by Tom Egelhoff
About once a week I receive questions about how to start a home based business. So I thought it was about time to explore some of the basic things you will need to know and do to start a successful home based business.
First and foremost you need to sit down with your family and discuss the pros and cons of taking on this venture. When I began writing my book my wife and I sat down and talked about the amount of time I was going to have to spend writing and to work out family time and how we would restructure household duties and responsibilities. You are going to need the support of your spouse and/or children. If you don't have that your chances of success are severely limited.
You need to discuss money. In order to start the business a portion of the household money will have to be diverted to the business for a period of time until you start selling your products or services. You should set a date that household money should no longer be needed or at least a date to reevaluate the date based on how the business is performing. Make sure you set up a budget that includes this new payment and what hardships or sacrifices, if any, it will make on the family.
Here is the most important thing to remember. Absolutely NO MONEY goes back to the house. All business money stays in the business. It will be very tempting to pay that past due credit card bill with company funds but you are setting yourself up for failure when you do that. Plus any money diverted to the house could be considered salary by the IRS which would make it subject to withholding and other taxes. Check with an accountant in your state to see how this money is treated.
The
next question, is your business feasible?
Are there enough customers in your area to support
your business? How do you find out? Here are a
couple. Check the census site for how much is
spent in your area on your product or service
each year. Then divide that by the number of competitors
you can find in your area. I would add two or
three more just in case there are some you don't
know about. This will give you an idea of how
many dollars there are for each business. For
more detail on this see: How
To Know If Your New Small Town Business Idea Is
Feasible.
Next,
consider how much product you will need to sell
to break even. Break even means that the business
produces enough to pay the bills and stay in business.
Anything more is pure profit. So your first goal
is to break even. See my two articles:
How To Grow Your Business To The Break Even Level
and How
to Do A Break Even Analysis.
Target
market: Who are your customers going
to be? Who are the people most likely to buy your
products or services? How do you identify them
and reach them. Two ways are to call people in
similar businesses in other states. Search online
for similar businesses and contact them and ask
them if they would be willing to "share ideas."
Ask them what works and what doesn't. Ask them
to send you their brochures or flyers. How did
they identify their target markets.Also see:
Target Marketing: Who They Are, How To Find Them
Positioning
your business. Positioning is probably
the single most important part of a successful
business. Positioning is how the customer perceives
your product or service. If I were to ask you
to name a soup company chances are you would say
Campbell. They are the number one soup company
in the US. If I were to ask the same question
in England however, the answer would be Heinz.
Heinz is the number one selling soup in England.
In the US Heinz is ketchup. That's how positioning
works. For more detail on positioning. see:
How To Develop Your Position Strategy
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