A home business promises many benefits: the freedom to become your own boss, to work from your home in a manner and style that pleases you, and to take control of your financial life. You may decide to quit your job and work at home to be with your newborn baby and take care of your growing family. Or you may simply be fed up with the daily grind of corporate life that you now want to work at your own pace.
But will you be successful in your home business?
Steven Strauss, in his book “The Unofficial Guide to Starting a Home-Based Business” offers six (6) secrets of successful home-based businesses:
1. Keep your overhead low.
Your home business may be small, but it enjoys one great advantage big conglomerates can only envy: very low overhead costs. You have no rent to pay, no payroll for an army of workers to disburse every month, and no office furniture and equipment for each one of your staffs to buy. Instead of paying for overhead costs, you can channel your limited resources to making your business grow and flourish. Your concentration should be to spend on items that will give you multiple returns for your money.
Strauss advises that you should never lose sight of this advantage as your business grows. If you play your cards right, you will reach a point when your house has become too small for your venture. Now that you can afford to get your business its own space, Strauss shares this lesson: “The main reason you were successful enough to move out was that your overhead was low. Keep it that way. Run a lean and mean, low overhead, entrepreneurial machine out there in the real world, and you can’t go wrong.”
2. Focus on niche marketing.
Strauss defines a niche as “your own unique specialty that distinguishes you from the competition and gives you a hook to remember you by.” He cites several examples: a baker focusing on special chocolate chip cookie recipe; writer doing stories about public affairs issues; and a web designer building sites for plastic surgeons.
Focusing on a small segment of a market allows you to easily carve a name for yourself in your community and build a solid reputation for your business. This strategy will allow you to package yourself as an expert in your field – an expert that people can trust and go to should they need your services or products.
The goal is for your business to be on top of your customers’ minds when they need your products or services. A plastic surgeon needing a web designer? You must be first on his list! A newspaper publisher needing stories on what is happening in the community? You as a writer specializing in public affairs issues should be at the top of the list.
The only drawback for this process is that creating a good business reputation doesn’t happen overnight. It will take consistent delivery of high-quality products or service through the years before people consider you an expert in your field. The process may be slow, but the rewards surely are great!
3. Continue to grow your business.
As much as we want it to be, a home business will not run on autopilot. Even though you have successfully started your business, you still have to constantly work hard to make it grow or at least sustain the level that you want it to be. As Strauss writes, ” Successful, long-term, home-based entrepreneurs continue to grow their business even after that business has established itself.”
You have to remain committed to your business, keep your passion for it burning and a desire to keep it growing. This becomes a challenge for an entrepreneur where running the business has become a routine and a daily grind. To keep your business alive, vibrant, growing and yet still home-based, Strauss offers these tips:
- Market your business to a different segment of population that you previously did not cover
- Introduce a new product or service that would bring new customers to your business.
- Branch out to a new profit center.
- Open a branch office in a new city.
4. Avoid the cash crunch.
Running out of funds when the bills arrive can diminish your enthusiasm for your business. You have bills to pay – from your apartment’s rent to a supplier’s invoice – yet your business is not generating the kind of sales that you’ve hoped for. Where will you get the money to pay all your bills?
A cash shortage is a challenge for every business owner. Particularly during the early days of the business, it will be hard to predict where and when the money will come and from where. As you continue to operate, you will become more aware as to the cash flow patterns – what time of the month your bills need to get paid; and what months are your peaks and lows in terms of sales. You must then begin to anticipate the cash requirements.
The key to avoiding any cash problems is to have cash in the bank reserved for the proverbial rainy days. To solve this problem, Strauss advises for businesses to “Plan appropriately, budget accordingly, pay your creditors and suppliers on time, build a good business credit rating, and you will avoid the cash crunch dilemma and build a solid home-based business.”
He also suggests the following options if you are always short of funds:
- Keep your receivables current. Make sure that your customers who pay you “net 30” really does pay 30 days after purchase. Better yet, keep your receivables at a minimum and require customers to pay immediately by cash or credit card.
- Get a loan or a credit line to provide you with a short-term infusion of cash and get things moving again.
- Start a new profit center. If your business is not giving you the financial results that you expected, it may be time to rethink your strategy and overhaul your business. Or you can add to your current operation and widen your sources of revenues.
- Increase the prices of your goods and services, if necessary.
5. Admit your mistakes, build on your successes.
As you are planning to start your business, you have the time to think of possible scenarios of what could go wrong and how. But if you are already in the midst of running the venture, it is so easy to get caught up with the day-to-day tasks that you no longer have time to evaluate where it is going. Strauss emphasizes that “For your business to survive and grow if you are now in business, take stock occasionally and (re) evaluate how your spend your day.” This exercise will help you look at your business objectively, identify what is wrong with it, and find out how to remedy and improve the situation.
Strauss suggests asking the following questions:
- Is what I am doing working?
- Are there any other ways to accomplish what I want more quickly and with more enjoyment?
- How can I spend my day more efficiently and have a better time?
- What would I need to change in order to do so?
- Are my competitors doing anything that I can copy?
- How can I make more money and have more fun in the process?
- What else can I do to grow and expand without breaking the bank?
- If I could give up any part of my business, what would it be?
- What area can I expand?
- Are my priorities in order?
- What can I do differently?
- What do I need to learn to be more successful?
- How can I give back?
6. Other mistakes to avoid.
There are a million and one things that can go wrong when you start a business. Some of these mistakes can nip your business in the bud, while others can make life tougher for you. Strauss provides the most common pitfalls that you need to avoid:
- Insufficient start-up capital
- Going first class from the start
- Failure to analyze the business objectively
- Litigation imbroglio
- Not giving the customer a reason to change
- Throwing good money after bad
- Risking everything without calculating the costs.
- Ignoring the obvious.
Recommended Books on a Successful Home-Based Business:
- Super Moms Inc.: Work From Home, Build A Profitable Home Business, And Find Time For Your Family When You Have Kids To Take Care Of!
- Business Success: Starting a Business from Home
- Home-Based Business For Dummies
- The Stay At Home Tycoon
- Work at Home Now: The No-nonsense Guide to Finding Your Perfect Home-based Job, Avoiding Scams, and Making a Great Living