Jump at biz

Having a home based business can be a real dream come true: no boss telling you what to do and no boring meetings. You can also eliminate the hour drive to work and set your own hours. Need a two hour lunch break to take the kids to soccer practice, no problem! Staying on track with nobody but yourself to boss you around can be an issue though, so here are some tips to keeping your business running smoothly!

Structure your day
You are the only one who can make sure the work gets done. Nobody else will tell you to do it, and thus you need a healthy dose of self discipline to get everything done properly. You have to keep a clear list of issues that need to be addressed before starting your day; diving head first into that interesting project can benefit you in the short term, but will be detrimental in the long run if you ignore other tasks that need to be performed first.

Set your own hours, but also set a start time and a finish time. In between set time aside for different activities. It is too easy to get carried away on a project you are passionate about and forget your other duties. Send your emails and make your phone calls first thing in the morning so they get done and over with and you don’t have to remember doing it later.

Make a to do list, and live by it!

Stay connected
Use an organizer, and take it with you wherever you go.
If you’re still using a day planner or similar dinosaur, consider upgrading to a palm pilot or a blackberry. There is no need to shell out hundreds of dollars, but invest in something that will give you the features you need and allow you to access your records when you need them. Palms come in various price ranges, but personally I did not consider getting one on which I could not open word documents.

Plan family time
When you organize your business life you may want to consider also planning your personal life. It is easy to get lost in your work, but you need to plan some family time as well, otherwise you could run into the fallacy of always working and neglecting the people who love you. On the flip side; make sure you have time to do solid work without the kids taking up your time and attention. If you have small children consider day care or babysitting. If you have school-age kids, plan your working schedule around their class hours.

Set long term goals
Just getting your to do list crossed off is not good enough; plan longer term goals and review your progress frequently! Where do you want to be in a month, in six months and in a year? Perspective on your goals and frequent benchmarking will allow you to see how fast you are progressing and where you still need improvement!

Why do businesses fail? In many cases the reasons are tied strongly to not having a business plan. Without a business plan, which is a description of where your business is going in the future, there is not really a fixed goal for you to work towards. Yes, you may have goals without putting them down in a business plan, however without solidifying these goals on paper they are not as concrete and they cannot be used to form benchmarks. Without benchmarking and internal monitoring you cannot really see how your business is doing and properly determine if you are on track for reaching your goals.

Aside from internal monitoring business plans can also be used by entrepreneurs to show their vision to potential investors. Business plans are also used to attract top talent and prospect new business or get a bank loan.

So, how to write a business plan: Basically a business plan covers your business goals, the strategies you will use to reach your goals and your strengths and weaknesses or challenges you face in the market. Combined with your weaknesses and challenges you foresee you include possible solutions to overcome these problems.

A business plan also includes the organizational structure of your business and the financial resources you will need to start up your business and keep it alive until you become profitable.

Business plans dissected:

The first part of your business plan is the Business Concept. In this section you discuss the industry you are in, the structure of your business as well as your products and services.

The second section of the business plan is the marketplace section. Here you describe and analyze your potential clients. You discuss who they are and how you can reach them. You also analyze what will make them buy your product or service. The marketplace section also includes a discussion of your competition, and how you can stay on top of them.

The last section of the business plan discusses financials. You have to include your income and cash flow statements, balance sheets, etc. You may need some help from an accountant for these sections.

The sections above are the major sections of the business plan and can be subdivided even further into seven key components:

-         Executive summary

-         Business Description

-         Marketing strategies

-         Competitive analysis

-         Development and design plans

-         Operations and management plans

-         Financial factors

Needless to say you need to include a cover, title page and table of contents at the beginning of your business plan. Every business plan varies in length, depending on the size and type of the business. Generally a business plans runs anywhere between 15 to 20 pages, but for larger companies they can go up to 100!

When starting your own business you will need a certain amount of capital. Depending on the type of business you are starting, your capital needs will vary. Regardless if your money needs are large or small, you should invest the appropriate amount to jump start your business. The number one reason businesses fail within two years is a lack of funding. There is no point starting a store, having enough money for the lease and interior decoration but no money left for inventory or advertising! On a similar note, having inventory but no money for a store lease does not help you start your business either.

Here is a short run down of your capital options:

Start up financing

Financing your start up is generally done with money you have, and/or supplemented with money you earn by selling some assets or borrowing against your home. Putting your personal assets at risk is a hard decision to make, but if you are confident about your business it is a risk worth taking. Best scenario would be if you still have a small source of income that can cover the borrowing costs (can you rent out your basement? Take a weekend job? Can your spouse chip in?) so you don’t have to get into panic mode right from the start.

Friends and family can also be a source of start up financing, convince them on your business project and promise them a percentage of the profit if you are successful, and full repayment of the principal (plus some interest) if you are not. A little known option is to borrow against whole-life insurance policies. The terms are generally reasonable and as long as you can make the payments you are fine.

Community Development Financial Institutions (CDFIs)

CDFIs give loans in industries that need further development and to businesses that generally do not get a bank loan. They give loans to businesses who have credit issues, little collateral or need more than banks are willing to loan based on the above. There are many CDFIs available in small and rural towns. They are not well publicized though, so network with entrepreneurs in your area to find out about them!

Microloans

Microloans are given to businesses who have never had a bankloan before, making them perfect for start-ups. They are available from a variety of sources, including state and federal government. The average amount for microloans is $10.500, with a maturity of 42 months.

Federal Government Venture Capital

Like microloans this option is offered by Small Business Investment Companies (SBICs) and are available for start up businesses. Similar to microloans they are available for businesses who show they can repay their loans. They are easiest to obtain if the funds are used to create profits in a relatively short amount of time because of the short maturity times of the loan. So basically these funding options are perfect if you need to jump start your business and can see yourself turn a profit almost right away. The good news is that these SBICs are hungry for new business, so generally it is not too hard to obtain a loan if you have reasonable credit history. The time it takes to be approved is also relatively short.

Personal Loans

Personal loans are unsecured and because of that have higher interest rates. If you have a good banking history with your bank you can very easily get a reasonable loan, but expect to pay a premium in interest rates. The rates are better though than credit card rates, so avoid borrowing against your credit at all times! An unsecured personal loan is your best option if you cannot get a secured loan (i.e. borrow against your home).

What are you good at? What turns your crank? These are questions you need to ask yourself when starting a (home) business. If you are good at something and you love to do it, and you can spin off a business idea from it, well… then you are in business!

Most businesses fail because there is a lack of planning, capital and expertise! There are going to be rough patches, and you are very lucky if your business does not go through any difficulty at all. However, if you are having fun while working, then it doesn’t matter so much that you don’t make a lot of money for a few weeks. You will be less likely to quit if you just love what you are doing!

Sometimes we don’t know exactly what we want, or what we really love. It may even not be so hard to figure out what you love to do, but it is almost always a challenge to figure out how you can turn what you love to do into money!

The second thing you need to look at is your capital requirements: if you have deep pockets, you can start your business in grand style by getting first class equipment, employees and starting a marketing campaign.

If you do not have the money to start a business in the way you are envisioning it now, then you need to look for a ‘cheaper’ alternative. For example, if you are dreaming of starting a women’s boutique with expert style advice for customers, then you are looking at lease costs, inventory, etc. If you do not manage to raise the capital for it, or do not want to take that big a risk, then you can try starting the online equivalent: where women can send in a picture, and receive personalized advice in return.

Always try to be as unique as you can: Why would customers or clients choose you? Very few people come up with such unique concepts that they have virtually no competition, most of us rely on making our businesses work in a competitive market place. So whether you are starting a gift shop, or are an accountant, can you think of a unique spin you can give to your products or services? Some people believe that it is safer to start a “proven” business, such as a restaurant, gift shop or grocery store. These exist all around us and are generally profitable right? Right, but if you live in a small town there may not be enough market to share between two gift shops. You may not be able to compete with a cheaper retailer in town, and unless you offer something unique or tailor your products and services to a specific niche, you are decreasing your chances of success.

Before starting anything, it would be a good idea to check if the business you are interested in starting has a high fail rate. Dun and Bradstreet publishes a yearly Business Failure Record report that represents total numbers of business failures.

It’s also recommended to lean towards businesses that yields the best return on your investment. The less costs you have, the more profitable you can become. Also, the higher your margin the higher your payoff, even if your overhead is high.

Choosing the right business for you can be challenging, but if you know what you love to do you are getting one step closer to your goals. Next step is turning that love into a viable business idea. If you are looking for ideas, ask your friends and family what they think you are good at! They may mention things you never even thought about!

So you are starting your own business, congratulations!

Now you will need to create a place where you can be productive and let your success flourish. You will probably start out in a home office, so it is important to create a clear boundary between your business and your home life. Creating the feeling that you are never ‘leaving the office’ will drain your energy and make you feel like you are always working, even if you are not. Family time is still important, and you-time is important as well! To really create a boundary between business and personal life in your home, you will need to create a workspace to which you can ‘close the door’ at the end of the day. Every person needs to mentally and physically end the day by ‘leaving’ the office. Once you blur the lines or work on your kitchen table with tows sprawled around you are on a fast track to burn out, not something your new business can use!

Setting up your home office goes beyond just finding the right space. You need plenty of light and a good organization system. Clients also need to be able to reach you, so a phone and Internet connection are a must. If you are cramped for space and your office is in your bedroom, at least set up a screen to really divide your work space from your sleeping space. It will help take away the feeling of sleeping in an office! On a similar note; make sure your family understands your office, or workspace, is off limits. It’s not that they cannot come ‘visit’, but it is not a playground for the kids and it should not double as your wife’s sewing room or your husband’s hockey gear storage.

Consider how you would like to organize your data and client files. Depending on the type of business you will be running you may or may not have a lot of paperwork. Always budget for more than you foresee now though, it allows you to grow into your office, instead of out of it! If you are a filing cabinet type person, get enough to cover double your needs now. If you are more a binder person make sure you have enough shelf space!

Make smart choices about your office equipment: if you are just starting out you are probably trying to be economical, but a dial up connection or an old computer will likely just undermine your productivity and make business less profitable than it can be. However, if you don’t need a full service photocopy machine yet, keep that money in your pocket until you can’t do without one anymore! Instead, purchase a middle of the line laser printer with copying abilities. They run cheaper than ink-jets and give you fast and cheap copies. Unless color is absolutely imperative for your business you can get a lot of use for relatively little money out of a black and white laser printer.

Your business will determine how you set up your office, and what you will need in your office. However, keeping these guidelines in mind will help you design a work space that is productive, economical and functional.