Successfully starting a home business requires two things: leap of faith and reasoned analysis. You must have the guts to launch a new business, but you must know what you are getting into.
Many entrepreneurs make the mistake of just jumping in their excitement without putting a strong foundation in place. If you get started without thinking through what you are going to do– how you are going to do it, how you will finance it, how you will make money doing it — your chances for success are quite slim.
There are a million and one details that you need to look into, and you can easily be overwhelmed by all that you need to know. A key point to remember is that you do not have to be an expert in all these areas just reasonably knowledgeable. Otherwise, being seriously deficient in one area could ruin your chances.
What are the things that you should know if you want to start a business? Below are the various aspects of a business that you need to know.
Technical Aspects of the Business
Know everything there is to know about the business that you are entering. The more you know about how things are done in the business, the better you can serve your clients and manage your business. Plus, the knowledge will protect you from scam artists out to fleece newbies like you.
For example, the technical aspects of a bed and breakfast business include such things as room management, food preparation, and serving. It would also include knowing about bed settings and guest management as well as potential suppliers for supplies, food and equipment.
A web business, on the other hand, includes the selection of the right domain name, creation and design of web sites, hosting considerations, and setting up of all the software needed (e.g. shopping cart, discussion forum, etc.). You also need to know the fine points of a site’s usability and understand the measurement of various web metrics. It also involves knowing the process of optimizing the site for search engines, and knowing the basics of banner advertising.
As a start-up entrepreneur, you may find yourself asking, “What are the things that I should know in my business?” Your first resource should be a profile book. There are a number of book publishers (e.g. Globe Pequot Press) and authors that write profiles of particular type of business from How to Start a Home-Based Travel Business, How to Start a Day Care Business from Home, or How to Start a Home-Based Carpentry Business, and more. These books will give you all the information that you need on starting a particular business. Borrow these books from your library or buy them from your nearest bookstore or online store.
There are also books that profile multiple types of ventures. Paul and Sara Edward’s The Best Home Businesses for the 21st Century provides step-by-step guidelines for more than 100 business ventures. From these types of books, you’ll glean essential information on start-up costs and requirements, self-evaluation, financial projections and management, marketing and contact listings to people in the trade.
Financial Management and Record Keeping
Whether you are comfortable with numbers or not, you must have the basic understanding of the financial aspects of running a business. Having a strong grasp of the financial requirements of your business can bring you a long way. These includes record keeping, cash flow management, account receivables management, debt collection, and tax management.
You must be familiar with the concepts of budgets, accounting and profit margins. You need to know the flow of money in your business, ways to improve your bottom line, tips to lessen your taxes, and stretch out your resources during a dry spell. You also need to have a good idea of how much money you actually need before you start looking for money.
If you need help in setting up your books, you can avail of the free programs and resources offered by Uncle Sam. Request a copy of its latest offering, Small Business Resource Guide-CD 2000 (publication 3207), by calling (800) 829-3676.
Legal and Regulatory Requirements
When you are decided on starting a business, your first stop should be the business information center of your city or county. A first-stop office can provide you with information packages about licensing, permits, zoning requirements, your particular business type and running a business in your state in general. The packages are usually free, and information very invaluable in terms of starting your business in the right foot. You do not want to start a home business, only to find out after you have bought so much equipment and supplies that your business is not allowed in your residential area.
You also need to determine the legal structure of your business, and how to set that up. Your business information center can provide you with the information on how to go about the steps in business registration and setting up of your business. If you will be working solo in your business, you can register your business as a sole proprietorship. Once you have your business registration, you can then set-up your business bank account. Setting up of partnerships, LLC or corporation may require that you seek the help of a lawyer.
If you are starting a business that uses an innovative technology or process and the success of your venture depends on you keeping that knowledge your first stop should be to a lawyer who can help protect your business idea. Imagine seeing your idea brought to life by a competitor, who now prohibits you from profiting on your very creation simply because your competitor was able to secure the patent for your product! Such horror stories abound, and you need to know how to protect your business interests. The draw side, of course, is that getting a lawyer costs money.
Operational Requirements of Running your Business
When your business is off the ground and ready to open, you are in an “operational mode.” You need to know and identify elements that can affect the smooth running of your business. Part of this process include knowing and getting the right insurance for your business.
You also need to look for the professionals who could provide you with support and advice (accountant, lawyer, etc.). If you cannot afford to pay for professional services, you can pick the brain of business veterans through free e-mail counseling offered by the Service Corps of Retired Executives (http://www.score.org) and through the SBA Answer Desk (http://www.sba.gov).
Take advantage of industry freebies. Before you dip into your piggybank, make sure you’re not about to pay for something you can get free. Take advantage of free computer access to databases and software at your local Business Information Center (http://www.sba.gov/BI/bics/index.html).
You also need to have your marketing and image arsenal, which includes business cards and stationery. There are a number of manufacturers that provide sample packages of office products, software working demos and stationery or paper samples direct from manufacturers. Avery Dennison offers labels you can sample for free.
Marketing the Business
You need to ensure that money continues to flow in your business by getting a steady stream of customers. Before anything else, research to make sure that a market for your business exists. If there are already 20 pet sitters in a community of 100 people, do you think your pet sitting business can still stand a chance in this overcrowded market?
Make sure you understand who your typical customers are, and how best to reach them. Does your market respond well to classified ads; or should you embark on a high profile direct marketing campaign? Can you simply show them your product and expect them to immediately buy them; or do they need know and trust you before giving their accounts to you? Are they impulse buyers; or are they the types who carefully evaluate the product or service before purchasing?
Once you’ve clearly identified them, take steps to ensure that your potential customers will know about your business. Map out a simple plan spelling out in writing the steps you need to take to get more clients or customers for your products or services.
Recommended Books on How to Prepare to be an Entrepreneur:
- Heart, Smarts, Guts, and Luck: What It Takes to Be an Entrepreneur and Build a Great Business
- So You Want To Be An Entrepreneur: How to decide if starting a business is really for you
- The Intelligent Entrepreneur: How Three Harvard Business School Graduates Learned the 10 Rules of Successful Entrepreneurship
- Entrepreneurial Finance: Finance and Business Strategies for the Serious Entrepreneur
- The Entrepreneur’s Starter Kit: 50 Things to Know Before Starting a Business
- Pros and Cons of Financing a Business
- Book: The Last Chance Millionaire
- Top 10 Ecommerce Mistakes
- 12-Step Template to Write an Effective Sales Letter
- How to Raise Money to Finance a Franchise