There are a number of goals you can make when starting a home business or small business, but only a few actually make a difference. Follow these steps and revisit them every year, perhaps on your start-up anniversary.
Starting a home-based business involves planning, key financial decisions, and a series of legal steps. The 10 easy steps below can help you plan, prepare, and launch your business. Click on the links to learn more from the Small Business Administration (SBA).
Don’t forget to consider a business name and verify if the name is already in use. Chose a short, catchy, memorable name that sounds good and is easily marketed and branded. A tag line or catch-phrase for your business is important too. Do it once, do it right, never do it again.
Use these tools and resources to create a business plan. This written guide will help you map out how you will start and run your business successfully.
Take advantage of free training and counseling services, from preparing a business plan and securing financing, to expanding or relocating a business.
Get advice on how to select a customer-friendly location and comply with zoning laws. Home-based business owners are subject to many of the laws and regulations that apply to other business owners. These include: traffic, noise, changes in physical appearance, and nature of the business.
Find government backed loans, venture capital and research grants to help you get started. Other sources include using part of a retirement plan, crowd funding, personal savings, and friends and family.
Advice from The Accountinator
I’ve seen one or two deals that offer systems to get rich quick. Too many of these are on the web. It sounds enticing. Work two hours a week from home, and soon you’ll earn a few thousand dollars a month until you can quit your day job.
I’m all for getting rich quick. I’m also all for getting rich slowly. However, I don’t think anyone can build a business without first understanding it, not to mention putting in really hard work. To run a business, you must fundamentally understand how it makes money:
“I’ll tell you why I like the cigarette business. It costs a penny to make. Sell it for a dollar. It’s addictive. And there’s fantastic brand loyalty.” – Warren Buffett, Barbarians at the Gate.
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From previous posts, you’ve learned that starting a home business is not expensive, competition is easy to research, and help is available from many sources. But what about revenue? I need to make money too! In this post, we provide a simple way of roughly calculating what your income needs are and compare them to expenses. Thanks to Jeff Williams of bizstarters.com for providing the general calculation example.
1) As with any budget, the first step is to write down minimal personal income needs. Take this figure and multiply it by 1.5 to cover taxes, expense, and the unexpected. A great free source for budgeting and related tools is http://www.mint.com.
2) The next step is to figure out how much money is gained per sale of product or hourly fees from consulting. This exercise requires personal experience, market research, and contact with industry peers and colleagues in similar positions. Search engines such as Google and Bing are great resources for general wage or sales ranges.
3) Take the above amount per sale and divide it in half to account for taxes, benefits, and any other miscellaneous expenses related to receivables. The extra expenses might include travel costs, subcontractors or technology.
Compare #1 above to #s 2 and 3. This will provide a rough estimate of how many sales are required – or consulting hours worked – to determine if the business idea is practical.
A Simple Consulting Example:
Monthly Expenses: $2000 (personal and business)
Multiply by 1.5: $3000 (ongoing total monthly cost)
Consulting Fees: $100/hour (we will use 30 hours per week)
Total consulting: $3000/week
Divide by 2: $ 1500/week or $6000/month (income after taxes)
= $6000 (income) – $3000 (expenses) or $3000/month after taxes and expenses to live on. Is this doable for you? It certainly can be for many!
We assume many numbers here, expenses, income, number of hours worked, etc. Each situation, position, and individual is unique. Run your own set of numbers to determine if self-employment is feasible. This rough estimate is also useful for part-time work. If a “regular job” covers living expenses and a desire exists to supplement income, use only business expenses in step 1. You may determine that an extra $200 per week is adequate for a nice safety cushion or extra toward retirement income.
Remember too, that benefits – medical, dental, IRA – are not included in this basic calculation. You might consider a part-time job with benefits in addition to the business you are planning!
By Dion D. Shaw
Dion D. Shaw is the founder and owner of Homepreneurs
Homepreneurs. New Day. New Opportunity.
Homepreneurs does not represent itself as a professional finance or accounting entity. The numbers and examples provided above are for illustrative purposes only. Actual figures may vary significantly and research for each situation should be performed in all cases. Homepreneurs accepts no liability, assumed or otherwise, for statements made above.
Pop-up shops are temporary businesses that set up shop, sell their services and then ship out. From your summertime lemonade stand to a brick-and-mortar bakeshop, pop-up shops come in all shapes and sizes. Here is a guide to starting a pop-up shop — however big or small. A good resource for pop-up stores is popupinsider.
Plan your concept
Since pop-up shops only have a limited time to generate a customer base, you need an extra effort to help your store stand out. After all, a pop-up shop is an event, so you should make people excited for a one-of-a-kind shopping experience. This does not mean you have to turn your shop into an amusement park. Simply choose a central and unified concept, such as holiday crafts or environmental sustainability. This will keep you focused when planning decorations, inventory and marketing.
Melissa Gonzalez, the founder of Lion’esque Media, which specializes in helping clients open and market pop-up businesses, says when it comes to a concept, ask yourself what story you want to tell in the shop. “What is the lifestyle message of the brand?” asks Gonzalez.
Consider your shop’s purpose
Depending on the purpose of your pop-up shop, you may already have a concept in mind. If you want to start a pop-up shop to sell remaining inventory, you might even be able to design a concept around the items. Some businesses open pop-up shops to try out a new idea or test a neighborhood’s demand for a particular product. In this case, the concept may already have germinated inside the pop-up shop’s purpose. Inspiration can strike any number of ways, and the important part is having a strong, cohesive plan–much like a mini business plan.
You may already have inventory to sell, or you might need to start completely from scratch. Whatever your situation, gathering and organizing your stock will take a good deal of legwork. The amount of stock you will need depends on the size of your retail space and the length of time you will be in that pop-up shop. Remember that you might be in a small space for a short time, so anticipate moving inventory and supplies in and out of your space.
Rent a space
Pop-up shops generally appear in spaces that would otherwise be vacant, such as a store that is in between a lease. When considering a space to rent, make sure all of your business needs are met. For example, if you wish to open a pop-up bakery, you may need a refrigerator on the premises. As with any business, location is a central feature of a successful pop-up shop. Try choosing a place with a lot of foot traffic. Shopping centers often have transitioning shops that are temporarily empty, or you can seek out a store front on a main street. If you intend to start a private pop-up shop for exclusive customers, you should opt for a more discreet location.
Consider your neighborhood carefully, as you may find yourself deciding to stay for the long-run. “You have more leverage if you could become a potential long term tenant,” Gonzalez says.
Spread the word
Start marketing for your pop-up shop before it even opens. Drum up excitement for the store. Gonzalez recommends having a wine and snack sponsor, hosting a VIP blogger night or having a charity event.
You can also use social media to heighten the excitement by creating a Facebook event, starting a Twitter account or giving people discounts for signing in on Foursquare. Maybe use your local newspaper, fliers or a newsletter. When you do open, have business cards ready so happy customers know where to direct their friends.
Do you need a business plan for your home business? In a word: YES. Would you drive around with no directions hoping that somehow the destination would magically appear? No, you’d waste gas and time. Think of a business plan in the same way – it saves time and money, and gives direction.
The business plan may seem scary at first. Twenty pages, fifty pages, sections, subsections, executive summaries, breakeven point … YIKES. A simple business plan is a one page sheet, if the business is basic. In this post, we’re going to explore and list points needed for a simple business. If you need startup capital from a bank or other lender, one page won’t be enough. More detail is required for the money people.
One Page Business Plan Contents
1) Mission Statement or Statement of Purpose
Use one to three sentences to describe the what, why, and how of your business. Mission statements should be flexible if the market changes or the original concept isn’t doing well. Don’t paint yourself into a corner by rigidly following a mission statement. A mission statement is about basic purpose, not grand detail.
2) Define 3 to 5 S.M.A.R.T. goals. These goals are Specific, Measurable, Achievable, Realistic, and have a Time frame. Do not detail here. Just basic one line goals following SMART.
3) Describe 3 to 5 strategies to achieve the SMART goals in #2. These are basic descriptions, not pages-long fluff. Keep it simple.
4) Write down your expected annual income projection. One number: $10,000, $20,000, $50,000, etc.
5) Briefly describe your revenue sources. These numbers added together should equal the total in #4.
6) Add on future income projections. This is a longer-term bigger picture item because your business will be around in 5 to 10 years. What do you want in the long run?
7) Write down your annual budget. One number: $1000.00, $5000.00, $10,000.00, etc.
8) Briefly detail the annual projected expenses. $5000.00 (computers), $3000.00 (rent), $2000.00 (travel), etc. These numbers summed should equal #7.
These easily fit on one page and make a basic working business plan. Be realistic when setting goals and with revenue projections. Define how you will make $50,000.00 the first year. Writing down arbitrary numbers without a plan almost guarantees failure.
You can also break down the annual numbers to monthly or quarterly figures to track how closely reality fits the business plan. Adjust the plan as needed if revenue numbers are less than expected. Remember that many industries are cyclical or seasonal. February and March may be slow months, but May to September is huge. Consider too that this business is unknown and developing a client base takes time.
Feel better about the business plan now? Good. Time to sit down and start that business you’ve been dreaming of. Best wishes and good fortune!
By Dion D. Shaw
Dion D. Shaw is the founder and owner of Homepreneurs
Homepreneurs. New Day. New Opportunity.
Homepreneurs does not endorse nor have any relationships with any of the services listed. Homepreneurs receives no compensation or consideration for its suggestions. Homepreneurs strongly urges all interested parties to conduct research and accepts no responsibility for any losses incurred.
© Homepreneurs 2010 – 2012, All Rights Reserved
image credit: passivenicheincome.com
This is another wonderful article by our friends at Business Insurance Quotes . This focuses on the value of preparing a business plan or building your business on paper before it opens for business. Some argue that business plans are not needed for small and home business. Homepreneurs believes that mini business plans keep you on track toward a goal. A home business seldom requires an elaborate, 50 page document to open its doors. A few to several pages should be enough to get you started. We also suggest using a one-page marketing plan to start and expand as necessary.
The business plan in essence outlines how the business what product of service the business offers and how it will make money. The plan is never fixed forever. It should evolve as the business expands or contracts, or if market conditions change. Don’t be concerned with changes in the plan; a wise business owner recognizes a need for change.
We are deeply appreciate to Business Insurance Quotes and suggest you take a look at their website for references, guides, and how-to’s. Business savvy and experience are available in their numerous articles.
A business plan outlines what a business intends to do and how the business owner or partners plan to go about putting the intentions into practice. The plan performs a number of different functions. It may be used to attract investors to the business or to bring in critical employees or to grow the business itself. Business plans should include the mission or goals of the business, how the business will fulfill its mission, and the structure of the business, including roles and responsibilities of employees. It should also outline any obstacles or problems the business may face and provide explanation of how the business will handle those issues. Financial data such as the amount of capital needed to get the business off the ground should also be included in the plan.
Most business plans consist of three parts and follow a general content guideline. The first part of a business plan explains the concept of the business. In the concept section, the industry is discussed, as is the structure of the new business, and its products or services. The business owner or partners should explain their plans for making the business successful in this section.
The second section of the business plan is the marketplace section. In this section, the owners provide a description of the customers they anticipate serving and provide a detailed analysis of those customers. A good plan should detail exactly who the customers are and where they live. It should also point out factors that contribute to the customers’ buying habits. The business plans should also explain any competition in the marketplace section and include a plan for beating the competition.
The financial section is the third portion of the plan. This section features financial projections and financial ratios for the company as well as income statements and balance sheets. Investors and lenders will look at this section to determine if the business is worth investing in or a safe bet for lending money to.
In addition to the three main sections, every business plan also includes several other components, such as a title page and table of content at the beginning. Most plans start off with an executive summary which sums up the data in the rest of the plan. Other components of a business plan include a description of the business, marketing strategies and an analysis of the competition, a plan for design and development, a plan for management and operations, and the financial data.
The Length of the Business Plan
Usually, a business plan is around 20 pages long. Some are considerably longer, though, up to 100 pages. The length of the plan depends in large part on how complex the business is. A business owner may need to spend pages and pages outlining and explaining an entirely new business concept or industry. Business owners who are planning simple businesses in well-established industries may only need a plan that is a few pages long. If a business intends to use the plan to attract investors, it may be in their best interests to make it very detailed and longer. Plans used to manage the day-to-day operations of the business need not be as detailed, as they do not need to convince anyone of the business’ value or worth.
Businesses That Need a Plan
Practically every business needs a business plan. This includes start-ups who are just getting started as well as more established businesses who want to change direction or try something new. A business plan is a useful tool at all stages of business for keeping the company on track or for bringing new investors on board.
Start-up companies commonly use business plans to bring in investors and raise money to get the business off of the ground. The plan can also be of use later on in the company’s future to bring in more investors, financing or for determining the best course of action for a company to take. Some established businesses create a plan detailing how a new direction for the business will benefit or increase the company’s customer base and in turn raise more money. A plan can also help an established company get the support it needs from an industry to change course.
Updating a Business Plan
There are several reasons why a business may wish to update or change its business plan. Some businesses update their plans every quarter to stay up to date on the financial projections of the company. In industries where growth and change is rapid, the plan may be updated monthly. Slower-paced businesses can update every year. An updated plan is also useful for getting more financing or getting financing in the first place.
Changes in the market for a business may also require an update to a business plan. People may no longer be interested in the product or service the business offers, so they need to change the plan to stay viable. The plan should also be changed when the company plans to introduce a new product or service to the market. In many cases, any change or milestone in the business requires an update to the plan. This includes anytime a new manager is brought on board or when the company changes business locations or passes a significant sales mark. Growth and change over a period of years may mean that an initial plan is no longer relevant to the business.
Types of Business Plans
Types and styles of business plans vary from industry to industry and from business to business, even though most plans share the same elements and purpose. Some plans focus on funding while others are meant for in-house use only. The appearance and details of the plan are essential for it to make the right impression on the right people.
There are four basic types of business plan. A mini-plan is a brief business plan, usually no longer than 10 pages. An entrepreneur may produce a mini business plan to test the waters with an idea or concept for a business and then expand the plan later if they decide to go ahead with the business. It is usually best to save mini-plans for in-house use only.
A working plan is a somewhat informal version of a business plan. It is considerably more comprehensive than a mini-plan but is intended for in-house use, not for attracting customers or investors to the business. The plan does not need to include images or resumes of key employees, as it is not meant to be seen by anyone outside of the business. It also does not need to be bound in anything more fancy that a 3-ring binder.
Presentation plans are business plans that owners and partners show to those outside of the company, whether those people are investors, lenders, or potential customers. The language of a presentation plan is more formal than a working plan. The plan itself usually looks a lot nicer too. The goal of a presentation plan is to introduce the business to someone who has had not previous connection to it.
Electronic plans may be working or presentation plans. They are simply a form of a business plan on a computer, such as a word processing document or PowerPoint slide show. A business owner may use an electronic business plan to make a showy presentation to investors. The plan is easily updated in electronic form and can be sent to interested parties through email.