10 Steps to Home Based Business Success5:11 PM
Starting a business, given its share of rewards and risks, is a serious endeavor and requires consid...
Starting a business, given its share of rewards and risks, is a serious endeavor and requires considerable preparation. If you are going to accept the challenge, then you must do everything you can to improve your chances for success. This process involves the mastery of ten steps.
Each step by itself is merely a tool, but collectively they provide an entrepreneurial blueprint for starting a successful new venture. No matter what your business, conquering these ten steps will increase your odds for success. However, these steps are not easy nor simple. Each level involves a tremendous amount of effort and a lot of street smarts to work effectively. Similar to playing a video game, you should master each level before moving on to the next one.
1. Develop your personal and company goals.New business success requires a combination of knowing what you are doing and capitalizing on a good opportunity. Develop and clearly state your goals in a written plan, which will then serve as your road map. They give you a sense of direction and help you get to your destination, a successful business of your own, with a minimum of time, effort, and expense.
2. Define a viable market segment for your product or service.The next step in starting a new venture begins with listening to the marketplace. Define an unmet consumer need first, before you develop a product to satisfy that need. Regardless of how astute you may be in business, if the market isn’t there to support you, then you cannot expect to go very far. However, the majority of entrepreneurs first come up with a product they think is “hot” before determining the existence of sufficient demand for the product. You may have the most exciting product in the world, and people might think that it’s the most interesting thing they’ve seen in a decade, but if you can sell only a handful (to your immediate family and in-laws), you are probably doomed to failure. In order to verify that there is a need for your product, you must test the market by conducting a variety of market research.
3. Develop your marketing plan.The purpose of the marketing plan is to describe how you will attempt to create and maintain customers for a profit. It needs to state whom you are going to sell to, how you are going to penetrate the market, why you will be successful with your sales campaigns, and finally, how much you will sell annually over the next five years. The marketing plan will ultimately become an integral part of your overall business plan, but it must be completed first.
4. Determine your financing needs.Once you have developed a rough business plan, you can begin to determine your financing needs, which will be incorporated into your formal business plan. Your marketing analysis leads to sales forecasts, which determine your staffing level, which defines your operating budget, from which you can generate pro formas (financial projections) and determine your projected cash flow.
5. Learn essential home office managmentTo set up a productive home office and operational systems, it is important to gain knowledge of the essentials.
If you are new to entrepreneurship, you can enroll in business start-up classes offered at area schools, colleges, or government SBDCs, Women’s
Business Centers, and local SCORE offices. Consult with a professional organizer, a time management specialist, and/or a computer consultant to set up an efficient workspace, schedule, and an operational system with the best technology and communications for your type of business. For more information on this subject, read the article titled Manage for Success: Set Up Systems to Improve Your New Business’s Operations on page 90 of this issue.
“Crunch” the Numbers
You cannot have a profitable home business without keeping accurate records of your business’s finances and taxes. Books like Minding Her Own Business: The Self-Employed Woman’s Essential Guide to Taxes and Financial Records by Jan Zobel, EA, can give you some basics.
Ask your accountant and/or local IRS agents about filing tax forms, tax payment schedules, obtaining an EIN number, and allowable deductions. Have
your financial advisors setup an organized business record keeping system with software that enables you to monitor your cash flow. For more information on managing cash flow, read Cash Flow — The Lifejacket of Your Business on page 80 of this issue.
Set up a business bank account and a merchant account if you will be accepting credit cards for payments.
Bartering or work trade arrangements are options to obtain items or services you cannot afford. You can join a barter exchange, or make your own arrangements with other entrepreneurs. It is best to have a contract between both bartering parties. Keep accurate records, because the IRS considers bartering of business goods or services as taxable sales or income.
6. Form your key teams: founders, management, and directors.Before developing your formal business plan, you must make sure you have put together a solid management team. If there are any holes in your team at this point, they should be filled. The rough business plan you developed in Level IV should help you to attract top talent to your company. In addition, it will help you to build a strong board of directors or board of advisers.
7. Finalize your financing needs and create your formal business plan.Starting with the rough business plan, put together a full-fledged formal business plan. A business plan should convincingly demonstrate that your business can sell enough of its product or service to make a satisfactory profit and be attractive to potential backers. This is the document you will use to secure the financing you need to get your business off the ground. It will also serve as an operating manual for your business once it’s been funded.
8. Develop a marketing strategy to obtain financing for your company.I’m not talking here about the marketing strategy to sell your product or service, but a strategy to sell yourself and your company to financiers in order to raise the capital that your business needs.
9. Market your plan successfully, attracting capital on your terms.Once you’ve developed a strategy for approaching financing sources, you must make use of the negotiating tools that will give you an inside edge on the competition and enable you to attract capital on your terms rather than just on your investors’.
10. Market your product/service and manage your business to achieve your goals.The last step in the process involves the ongoing management and marketing of your business. Getting a company started is only half the battle. Once you’re in business, you will need strong management tools and marketing skills in order to make sure you stay in business.
Each step, executed in order, builds a solid foundation for the steps that follow. By progressing in this manner, rather than using the typical haphazard approach, you begin to gain the needed experience.