Start and Keep Operating a Successful Home Business

Contrary to popular opinion, a good functional web page is really only a small part of a successful online business.   I have several very basic rules that I apply to all my business ventures, either online or bricks and mortar.

If you are running an online business or researching how to start a home business, then your inbox is likely cluttered with junk (just like mine!) There are oodles of self proclaimed experts, but few have any real qualification or for that matter, much of anything unique to say. I’ve lost count of how many people want my money to get a “top secret” Google #1 web page ranking, or to optimise my web page to receive “millions of new and unique visitors,” I think you will agree it gets very tiresome and down right confusing. Most articles seem to concentrate almost entirely on tweaking a web page to increase the number of visitors you receive, and then the logic of statistics, a directly proportional increase to your sales. If only it was that easy! (if it was easy there would obviously be no need to continually write on the subject.)

Take a deep breath and let’s take a few giant steps backwards together. Not everybody has a web page, not everybody knows how to start a business and not everybody has anything to sell; so from this, it’s relatively easy to formulate a basic business plan. If you start a business without a plan, you are already behind the 8 ball. It’s the same as getting into you car without knowing where you are going, you’ll possibly get lost on the way, or worse still, have an accident and never reach a destination. So the most basic business plan for an online business is something like;

1. What do I want to achieve from my business and what do I expect from by business?

2. What skills do I have, and what skills do I need to gain or outsource?

3. What am I going to do, or what am I going to sell. What am I good at?

4. How will I convince people to buy from me?

5. Seek advice on legal, accounting and government regulations for your area

6. Get the ball rolling and get started. Check in with your business plan frequently, seek professional advice when necessary.

Like I said, it’s a very basic plan, but any plan is better than no plan. But from the simple points above, you will be surprised how much we can glean. I have several very basic rules that I apply to all my business ventures, either online or bricks and mortar. Although I currently operate nearly entirely online and from home, I have started, built and sold several very successful real world businesses. Not that the internet or working from home is not real world, but it requires different and probably better management skills, as ultimately, everything will be up to you. That word again “everything.” Who will run your business, who will manage your accounts, who will pay your taxes, who will answer your phones, who will respond to your emails? We haven’t even started yet, and there are lots of questions to address. Who will do all the above if you are sick? So let’s look at the above points in more detail;

1. What do I want to achieve from my business and what do I expect from by business?

If you are under an impression that you can simply open a web page and sell vitamins, or signup for a few affiliate programs and make “instant cash” I suggest you think again. Or better still, if you do this and actually make money, please contact me as I’d love to hear about it. As they say, “wonders never cease!” The likely hood of making any real income or salary from selling vitamins or joining an affiliate program (designed to make that person money, not you) is negligible. I just searched for “vitamins” on Google and received the results of “Results 1 - 100 of about 9,470,000 English pages for vitamins,” Good luck!

If we come down to Earth for a moment, you need to set your own expectation and be realistic about what you want to achieve. E.g. do you want a supplementary part time income or a full time full salary income or to be the next internet millionaire? You need to be sensible and investigate properly the potential for what you want to achieve. For example, if you want to sell Pet Toys or Pet Accessories online, some simple investigations can give you an idea of the size of this market, how many competitors you have both online and offline (e.g. Pet Shops.) Some countries also publish statistical information regarding customs imports and exports, so you may be able to obtain official government statistics regarding the quantity and value of your commodity item that is both sold and purchased through your city or port” or your country for that matter. If there is only $250 of imported or exported “Pet Toys” from your location, it’s a fairly good bet it isn’t a boom industry. This is obviously just an example, not real statistics. But if you find an industry or commodity in high demand with a relatively low number of competitors, you are 50% of the way there. Its best to be involved in something that you are passionate about, but this simply may not be possible.

Another very interesting way to research a market you are interested in, is take a quick look at any businesses within that market that are being offered for sale. An example of this are “fish & chip shops” they are always for sale and lots of them. Either its hard work, not profitable or they are a dime a dozen. But you can learn a lot from this research, e.g. what do these shops turn over, how profitable are they, which are successful, which are not and how long are they in business. I think you get my point.

2. What skills do I have, and what skills do I need to gain or outsource?

We have all seen the statistics that many small businesses fail in the first 6-12 months, then another chunk within 24 months, and even less are still in business in 3 years time. Typically 3 years is the “decision point” for most investments, either cut your losses or keep on going. Most businesses fail solely through lack or planning and mismanagement. No control over cash flow, bad debts, and poor record keeping. If you can’t collect payment from your customers, then you can’t pay your suppliers and then you just can’t operate your business. Much like a credit card, a “credit account” from suppliers can be valuable, or if could mean your downfall. There is little point buying stock on 30 days credit if you can’t sell the stock within this time. So you need to test the waters before making any large commitments on purchases. Remember, it’s better to start off small, with minimal or few outlays and reduce your initial risk as much as possible. From experience, I’ve dealt with suppliers who advertise “minimum initial purchase of 1000 or 5000 units” just say “I’ll pay you another 2% and take a smaller manageable quantity,” has never been refused in my experience. Sometimes a good supplier may want to work with you as a new customer and offer you smaller quantities or better terms, you don’t know if you don’t ask, so don’t take anything on face value.

Do you have a grasp on proper book keeping, proper accounting practices, reconciling bank accounts, a full understanding of your local tax laws and other government statutory requirements? Ignorance is never an excuse; you don’t want to get to the end of your financial period to find you owe more taxes than you have cash in the bank. Trust me, most small businesses go broke actually owing money to the government! If you don’t understand any of this, speak with a professional such as an accountant or business advisor. Also, speak with several until you find one who is on your wave length.

Contrary to popular opinion, a good functional web page is really only a small part of a successful online business. You may have the best web page on the internet, but if you can’t process and send an order to your customers, or you can’t manage your accounts well enough to stay in business, then your flash and fancy we page is worthless. One of my main online businesses is www.veryownweb.com we specialise in complete turn key web solutions, including online shops and we page optimisation and marketing – without the hype and expensive price tags. Our small businesses packages allow you to basically forget about the internet side of your business, and concentrate on the parts that really do matter – MANAGING & GROWING your business effectively.

3. What am I going to do, or what am I going to sell. What am I good at?

I have spoken briefly about market research, but there is a little more to it than that. It’s a form of science deciding on what to sell. For example, you need a sufficient margin to make a product even worth selling. There is little point having a product that you want to sell at $25 that costs you $23. If you do the maths, after all your expenses, how many would you need to sell to actually make money? Are you physically even able to process that quantity of orders each day? There is what I call a “saturation” point for a home business, which is basically your ability, productivity or potential capacity. Are you looking for cheap products, that you can sell quantities of, or are you looking for more expensive items, expecting fewer sales, but a higher profit value in each sale? You need to understand what you want to sell, and if it is worth selling in the first place. Typically, for a successful distribution type business, you need to look for a product that you can sell for 5x more than it costs. So if you want to sell something at $25, if should cost you no more than $5. This gives you sufficient margin to typically cover costs and make a profit too. Obviously quantity rules apply, it’s just an example. Something you sell at $950 may cost you $500, but there is sufficient dollar margin to make it worth while, you would also typically expect to sell less high ticket items. Remember, look for alternative, you may not be able to get your first choice of product, but there may be something very similar or something from another supplier etc.

Many of the franchised and retail type shops operate on an average profit margin of 30% (commonly referred to as the “typical retail margin”,) when after expenses often gives a net profit yield of an amazing 3%. Wow. So even though they may turn over millions, the owner actually doesn’t have much to show for it at all. DO YOUR MATHS.

Obviously most people dream about a home business being involved in their specialty or what they are skilled at. However, this may not be the most logical choice or it may not give you the best chance of success. I have an extremely strong computer networking background, but it’s not the easiest thing to sell, support or manage from home. Plus there is lots of very well established competition and my market would be extremely localised. You need to make a decision for the long term survival for your business, which may not necessarily be your first choice, but make an informed choice that has a future.

4. How will I convince people to buy from me?

Its all very good having the latest wiz-bang state-of-the-art gadget or gizmo, but if everybody else on the block has it, is better establish and presents themselves to be more professional, how are you going to compete? You need to differentiate yourself, and you need to make it blatantly obvious how you do this. You need to create an entire brand and image for yourself and your business. A few tricks of the obvious trick of the trade include;

• Unconditional money back guarantees

• Customer satisfaction guarantees

• Team up with a credit provider to provide interest free terms

• Solicit customer testimonials from existing satisfied customers

• Make it painfully obvious that you go out of your way to help your customers

• Offer package deals that add value to a customer’s purchase, but cost you little, e.g. buy widget A + B and get $25 discount etc

• Offer free home delivery services, or include freight in the price*

Some of these concepts are heavily applied to my favourite online business at www.beatpsoriasis.com where I supply medical quality home UV phtotherapy equipment – for conditions such as psoriasis, vitiligo, acne and dermatitis. We supply worldwide, at the same price our competitors charge, but we offer completely free express international delivery – making us by far the cheapest supplier.

* So often I’ve been put off buying from some web pages that want to charge me “freight & handling” for the privilege of buying from them. What dimension are these people living in? That being the case, I’d prefer to make my way to my local shopping mall and buy the item myself without having to pay delivery – sometimes at the same or better price too – even excluding the added delivery charge. I may not necessarily make an individual trip; I might just do it next time I go shopping. I can’t see the point charging delivery on internet orders. It’s not your customer’s fault they can’t come to you. If you look at it this way, you aren’t paying rent, you probably aren’t paying many of the other expenses a typical retail shop has, so I accept providing free freight with all my internet businesses, an unavoidable cost of operating online. Or, you could be doubly clever and factor the cost of delivery into your “advertised price” giving the perception of “free delivery” but you are still recouping the expense and your customers don’t think they are paying a premium to purchase from you. I depends on your situation and market.

5. Seek advice on legal, accounting and government regulations for your area

Repeating earlier advice as it is so unbelievably important, thoroughly understand the legal requirements and expectations of operating a business in your area. You may be personally liable for debts of your business. Keep accurate and legible records or all purchases, all sales, all invoices and all customers. Sloppy record keeping = sloppy business practices = no long term prospects.

6. Get the ball rolling and get started. Check in with your business plan frequently, seek professional advice when necessary.

It’s all very well to have a business plan before you get started, but you need to keep in touch with it. It can grow and expand as you do and as situations change. Fine tune and add to it as you go along. Use a diary to keep notes of marketing, advertising, promotions, customer contact, ideas that pop into your head. Have short term goals, middle term and long term. Write down where you want to be in 1 month, 6 months and 12 months and beyond. Put systems and processors in place to ensure you get there. With proper book keeping and reporting you will know at any time if you are on track to achieve your target and goals. Without proper planning, you may not know you financial situation until it’s too late.

I wish you all the best for your online or home based business!

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