It doesn't have to be unpleasant or messy, but it does have to be done. You may be well on your way to building a full-time home-based business or may just be tossing the idea around right now, but having a clear understanding of your current and future financial commitments will play a MAJOR role in your strategic plan for business success.
Home-based business owners don't normally wake up one day and say, "Yep. I'm quitting my job today and starting a home-based business." There is usually a period of time for contemplation, exploration, making the decision, creating a plan, and then starting to execute steps within the plan to achieve the final goal.
The process can take anywhere from several months to several years before an employee is in a position to walk away from her job to begin life as a full-time entrepreneur.
Being financially responsible is critical to not only home-based business success, but to create the financial cushion required to transition from being an employee to a full-time entrepreneur.
Understanding your current financial position is mandatory and doesn't have to take more than an hour of your time if you follow the five basic steps below.
1. Calculate how much money you currently have sitting in bank accounts, investments, registered retirement savings plans, GIC's, real estate, etc. If you were to leave your job today, would there be any form of payout (ie. sick plan credit, pension plan contributions, unused holidays, anniversary pay, etc.)?
2. Determine how much you earn on a monthly basis either through employment, child support payments, rental properties, dividends, your existing home-based business, etc.
3. Record your monthly household expenses. Some examples to get you started are:
- mortgage/rent
- property tax/house and mortgage insurance
- utilities (heat/water/hydro)
- phone/cable/satellite/Internet
- yard maintenance/snow removal
- groceries and household supplies
- vehicle fuel, insurance and maintenance costs
- medical
- child care
- personal care (hair/nails/clothing)
- entertainment (movies/sports/books/plays)
- club memberships, publications, etc.
4. List your monthly business expenses, for example:
- Internet
- phone (separate business line)
- autoresponder
- shopping cart
- long distance
- bank fees
- office supplies
- tools
- web hosting
- marketing
- advertising
- part-time help
- coaching services
- shipping/postage, etc.
5. Identify your outstanding liabilities such as:
- credit card balances
- personal loans
- lines of credit, etc.
When you calculate your earnings and revenue on an annual basis and deduct your personal and business expenses. How much do you have remaining at the end of the year? Can a portion of this be put aside to build your financial cushion?
If your current business revenue isn't enough to cover your business and personal expenses and if you were to quit work today, how long would you be able to survive on your other revenue sources or savings and assets, taking into account your monthly expenses?
Have you considered all unexpected expenditures that could arise in the next year or two?
Is your car running on its last two cylinders?
Has your furnace almost reached its life expectancy?
Is your vacuum cleaner starting to growl at you?
Is your partner's job secure or do you foresee unstable times ahead?
This exercise is by no means intended to scare or discourage. Financial stability is an area that needs to be addressed so you can keep your feet firmly planted and plans realistic as you build your home-based business.
Understanding where you are and what potentially lies ahead will help you make sound financial decisions as you plan your future.
After completing these five steps, you may realize your dream to break free of your job might take a year longer than expected, or you may learn that in order to move forward at a quicker pace, you may have to bring in a partner or investor, or learn to leverage your time, money and effort more efficiently to expedite progress.
Perhaps seeking professional guidance on reducing debt and managing finances is in order?
No matter what results you generate, don't let them shake your spirit. Knowing exactly where you are financially will help you make informed, practical decisions so you can create your ideal future.
To increase your level of success at home-based business, make sure you have a financial advisor and accountant as part of your success team.
2006 © Laurie Hayes - The HBB Source
Showing posts with label work at home. Show all posts
Showing posts with label work at home. Show all posts
Monday, March 21, 2011
Tuesday, November 30, 2010
3 Essential Boundaries for Mom Entrepreneurs and Their Husbands
In the beginning, we thought it was going to be a breeze when our spouse, joined working full-time in our business. If anyone could do it, we could! We already had a healthy relationship built on trust and respect. We communicated well. We both strongly believed in what we were doing. We understood the need to help each other with the children, keeping the house, and with the business. We planned to allow for fluctuations in income to keep stresses over money to a minimum. Yet we still wasn’t prepared.
For anyone considering working with your spouse, here are 3 Essential Boundaries for Entrepreneurial Couples to help to ease your transition:
1. Clarify expectations for work/home.
Nothing can prepare you for the blurring of boundaries and turf that occur as you transition into working together. When you join together with your spouse, most likely, both of you have experienced success throughout your careers, and have developed your own working style. Suddenly you have a whole new dynamic in your relationship with your spouse you must learn to work through. We always knew that we had different gifts and talents: Sometime our spouse is very techie and he/she loves to write, and we are a people person who is an administrative whiz. Even though we should have probably seen it coming, I was still surprised at the difference in our work styles. I multi-task all day long, and our spouse prefers to work on one project at a time. Just like being newlyweds all over again, we had to put some effort into getting to know each other on a whole new level to be able to work well together.
2. Schedule time for love.
Most entrepreneurial couples complain they have less time together than before. It is possible to work beside your spouse in the same office all day long and barely speak on a personal level. How difficult is it to turn off your cell phone and talk a walk with your love? It is imperative to make it a point to schedule time for your relationship so that the business does not overtake it. W should plan ahead to sneak away for lunch or to take a break at a Cafe or any favorite's place. We have found if we don’t take the time to schedule in these lunch or coffee dates, then they are less likely to happen as we work to meet deadlines or get a project done. We haven’t yet been able to master scheduling “regular dates”, but its next on our list of priorities in order to help keep our close relationship.
3. Schedule time for yourself.
It can be a shock when you suddenly have so much time with your spouse. In your previous life, they left at 7 AM and came home at 6 PM, and then you discussed your day during dinner. Now you spend most (if not all) of the day with them, and during dinner, there is nothing new to discuss. Where is the time for you?
We certainly have a long way to go as an Entrepreneurial Couple, but we have made it through our entrepreneurial “honeymoon” period. Each day, we work together to reach our goals and dreams. We understand when we help each other we will reach our dreams sooner, so we help each other wherever its needed! That how it should be......don't we?.
For anyone considering working with your spouse, here are 3 Essential Boundaries for Entrepreneurial Couples to help to ease your transition:
1. Clarify expectations for work/home.
Nothing can prepare you for the blurring of boundaries and turf that occur as you transition into working together. When you join together with your spouse, most likely, both of you have experienced success throughout your careers, and have developed your own working style. Suddenly you have a whole new dynamic in your relationship with your spouse you must learn to work through. We always knew that we had different gifts and talents: Sometime our spouse is very techie and he/she loves to write, and we are a people person who is an administrative whiz. Even though we should have probably seen it coming, I was still surprised at the difference in our work styles. I multi-task all day long, and our spouse prefers to work on one project at a time. Just like being newlyweds all over again, we had to put some effort into getting to know each other on a whole new level to be able to work well together.
2. Schedule time for love.
Most entrepreneurial couples complain they have less time together than before. It is possible to work beside your spouse in the same office all day long and barely speak on a personal level. How difficult is it to turn off your cell phone and talk a walk with your love? It is imperative to make it a point to schedule time for your relationship so that the business does not overtake it. W should plan ahead to sneak away for lunch or to take a break at a Cafe or any favorite's place. We have found if we don’t take the time to schedule in these lunch or coffee dates, then they are less likely to happen as we work to meet deadlines or get a project done. We haven’t yet been able to master scheduling “regular dates”, but its next on our list of priorities in order to help keep our close relationship.
3. Schedule time for yourself.
It can be a shock when you suddenly have so much time with your spouse. In your previous life, they left at 7 AM and came home at 6 PM, and then you discussed your day during dinner. Now you spend most (if not all) of the day with them, and during dinner, there is nothing new to discuss. Where is the time for you?
We certainly have a long way to go as an Entrepreneurial Couple, but we have made it through our entrepreneurial “honeymoon” period. Each day, we work together to reach our goals and dreams. We understand when we help each other we will reach our dreams sooner, so we help each other wherever its needed! That how it should be......don't we?.
Thursday, March 25, 2010
Small Home-Based Businesses -- Five Simple Steps to Success
Did you know that, in Australia, 60% of small businesses fail in the first twelve months? For those of us who would like to start a small business -- maybe even work from home -- that’s a very discouraging statistic.
Does that mean that your business idea is doomed to failure? Far from it! There are steps you can take that greatly increase your chances of success. With a little time and some serious research you can hit the ground running. Let’s start from the beginning…
The bright idea
First, of course, you need to come up with an idea. Typically, business opportunities can be divided into four groups:
1. Offering an existing product/service in an existing market.
2. Introducing an existing product/service to a new market.
3. Offering a new product/service in an existing market
4. Introducing a new product/service to a new market.
At this stage of the game the only limit is your imagination. Inspiration can come from anywhere -- maybe you have a hobby that you’d like to turn into a full-time job; you may be on the receiving end of bad service one day and decide to try doing it better yourself; or you may have a talent that you’d like to capitalise on.
Once you’ve come across something that you’d like to do, it’s time to take a look at the market and see what’s on offer.
Passing the test
So you’ve had a great idea and you’re keen to roll with it; now it’s time to put it through its paces. For the purpose of the exercise, let’s say that you have a passion for healthy living, and that you want to distribute a range of lifestyle accessories that promote healthy living with a do-it-yourself approach.
Ask around: Is there a market for products that promote healthy living? What sorts of products are available? Who would you be competing with and what do your competitors offer? Do you have the necessary skills to run such a business and -- more to the point -- what would those skills be? Where would your business be located?
Once you’ve answered those questions you should have a fairly clear picture of what your business will look like.
You source some products and decide to do some further research into the range of lifestyle products offered by a company called Vitality 4 Life. Your own life experience plus some work you’ve done as a dietician has given you the necessary skill sets, and you think that you’ll be able to work from home, giving you more time for family. There is an existing market, but there’s room for expansion. Now it’s time to take a closer look.
To be or not to be?
It’s time to get down to the nuts and bolts. You don’t want to jump into something feet first and find out the hard way that the budget just doesn’t work.
To get started, sit down and work out if you need to hire staff, which means paying wages.
If you lease a premises you’ll need to be able to pay the rent, and your location will have to be suitable for your business and target market (which also means that you’ll have to think carefully about just what that target market is). You’ll also need to work out the likely demand for your product/service.
Ok… you’ve worked out that there is enough demand for good quality juicers, sprouters, water filters and other high end accessories to take a shot at a distributorship as a home-based business opportunity. Now you need to make some marketing decisions.
Look at me! Look at me!
Advertising can be costly so you’ll want to be sure that your advertising budget is spent wisely. That means more market research, this time one-on-one. Profile your customer groups so you can aim your marketing at the right group/s of people.
Draw up a questionnaire (a short questionnaire -- people run out patience if you ramble for too long) and hang around outside a few of the local gyms (for our particular example). Come up with a mixture of open questions (What do you think of……..?) and closed questions (Do you have a gym membership? Yes/No.); sliding scales can be useful too.
For our health accessories business, a good question might be ‘How did you hear about this gym? Radio, tv, newspaper, word of mouth etc…’ Such a question would then give you an indication of the types of media that your target group responds best to.
Choose a business name, print up some business cards, buy some stock and get ready to trade!
Measure it, manage it!
A teacher of mine made the point that, in business, if you can’t measure it you can’t manage it.
You need to be able to plan ahead, and to do that you need to know -- or to be able to accurately predict -- your total sales. The equation is simple: number of customers x average sale x frequency of visits per customer per year = total sales. Remember it, revise it often, measure your business and you’ll be able to manage it!
Keep an eye on your bottom line and, most importantly, always be aware of your cash flow -- the cold, hard cash that you have in the bank. Allow for invoice periods (14 days, 30 days etc) when you’re planning your budget.
The market place has a life of its own, and no one can prepare for every contingency. Put some thought into your idea; make sure that there’s a market for what you’re offering; research, research, research; promote your business effectively; always know what’s going on in your bank account and don’t forget about cash flow!
It’s not perfect but, if you follow these few simple steps, you’ll be miles ahead of many new small business ventures. If you’ve heard of a great home-based business opportunity, or have a product or service of your own to market, you’re off to a great start!
Does that mean that your business idea is doomed to failure? Far from it! There are steps you can take that greatly increase your chances of success. With a little time and some serious research you can hit the ground running. Let’s start from the beginning…
The bright idea
First, of course, you need to come up with an idea. Typically, business opportunities can be divided into four groups:
1. Offering an existing product/service in an existing market.
2. Introducing an existing product/service to a new market.
3. Offering a new product/service in an existing market
4. Introducing a new product/service to a new market.
At this stage of the game the only limit is your imagination. Inspiration can come from anywhere -- maybe you have a hobby that you’d like to turn into a full-time job; you may be on the receiving end of bad service one day and decide to try doing it better yourself; or you may have a talent that you’d like to capitalise on.
Once you’ve come across something that you’d like to do, it’s time to take a look at the market and see what’s on offer.
Passing the test
So you’ve had a great idea and you’re keen to roll with it; now it’s time to put it through its paces. For the purpose of the exercise, let’s say that you have a passion for healthy living, and that you want to distribute a range of lifestyle accessories that promote healthy living with a do-it-yourself approach.
Ask around: Is there a market for products that promote healthy living? What sorts of products are available? Who would you be competing with and what do your competitors offer? Do you have the necessary skills to run such a business and -- more to the point -- what would those skills be? Where would your business be located?
Once you’ve answered those questions you should have a fairly clear picture of what your business will look like.
You source some products and decide to do some further research into the range of lifestyle products offered by a company called Vitality 4 Life. Your own life experience plus some work you’ve done as a dietician has given you the necessary skill sets, and you think that you’ll be able to work from home, giving you more time for family. There is an existing market, but there’s room for expansion. Now it’s time to take a closer look.
To be or not to be?
It’s time to get down to the nuts and bolts. You don’t want to jump into something feet first and find out the hard way that the budget just doesn’t work.
To get started, sit down and work out if you need to hire staff, which means paying wages.
If you lease a premises you’ll need to be able to pay the rent, and your location will have to be suitable for your business and target market (which also means that you’ll have to think carefully about just what that target market is). You’ll also need to work out the likely demand for your product/service.
Ok… you’ve worked out that there is enough demand for good quality juicers, sprouters, water filters and other high end accessories to take a shot at a distributorship as a home-based business opportunity. Now you need to make some marketing decisions.
Look at me! Look at me!
Advertising can be costly so you’ll want to be sure that your advertising budget is spent wisely. That means more market research, this time one-on-one. Profile your customer groups so you can aim your marketing at the right group/s of people.
Draw up a questionnaire (a short questionnaire -- people run out patience if you ramble for too long) and hang around outside a few of the local gyms (for our particular example). Come up with a mixture of open questions (What do you think of……..?) and closed questions (Do you have a gym membership? Yes/No.); sliding scales can be useful too.
For our health accessories business, a good question might be ‘How did you hear about this gym? Radio, tv, newspaper, word of mouth etc…’ Such a question would then give you an indication of the types of media that your target group responds best to.
Choose a business name, print up some business cards, buy some stock and get ready to trade!
Measure it, manage it!
A teacher of mine made the point that, in business, if you can’t measure it you can’t manage it.
You need to be able to plan ahead, and to do that you need to know -- or to be able to accurately predict -- your total sales. The equation is simple: number of customers x average sale x frequency of visits per customer per year = total sales. Remember it, revise it often, measure your business and you’ll be able to manage it!
Keep an eye on your bottom line and, most importantly, always be aware of your cash flow -- the cold, hard cash that you have in the bank. Allow for invoice periods (14 days, 30 days etc) when you’re planning your budget.
The market place has a life of its own, and no one can prepare for every contingency. Put some thought into your idea; make sure that there’s a market for what you’re offering; research, research, research; promote your business effectively; always know what’s going on in your bank account and don’t forget about cash flow!
It’s not perfect but, if you follow these few simple steps, you’ll be miles ahead of many new small business ventures. If you’ve heard of a great home-based business opportunity, or have a product or service of your own to market, you’re off to a great start!
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