President

By Okala Adaebo

How To Successfully Set-Up Your Home – Business

  1. Take A Home Business Seriously

Nowadays, many have chosen the option of working from home. For single parents and many women this is a welcomed development. For fathers, it leads to spending more time with their children. Working from home can provide the means for stretching a tight budget or finding a new career for those displaced by corporate downsizing. For the retired or the increasing number of people considering early retirement, it becomes a way of contributing; of staying alive and vibrant by not allowing their professional skills to atrophy. And for many with handicaps, it is the door to self sufficiency and a productive future.

  1. Choose Something You Enjoy And That People Will Pay

For Selecting an appropriate home-based business for your-self requires choosing what people will pay for. Simple market research will help you do that. Begin by asking prospective customers what they need. Go to trade shows and get feed-back on your potential product or service. Find out who is in that business now and what advantages you might be able to offer over your competitor. If you are having trouble finding the ideal business, here are four possibilities: 

Turn what you most enjoy into a home-based venture, such as favourite hobby or interest.  Utilize existing skills from your salaried job.  Solve problems that people are willing to pay someone else to do for them.  Use technology and resources you already have around the house, from your van to computer.

  1. Define Your Niche

It is easier to market yourself as a specialist serving a particular niche market. This help you stand out from the competition and also allow you to charge a decent fee because you are more than a general worker people can hire as an employee. There are four primary ways you can define your niche: 

Who you serve: – e.g., a computer consultant who works only with the youth; a public relations firm that specializes in assisting environmentally-conscious companies; a caterer who handles parties and weddings. 

What you provide: – e.g., a computer consultant who works only with Windows; a public relations firm that specializes in doing publicity book tours for authors; a caterer who prepares health food that looks and tastes decent. 

Where you work: – e.g., a computer consultant who focuses on the east side of town; a public relations firm that specializes in getting media coverage in foreign countries; a caterer who has attained renown popularity for serving a variety of outdoor events. 

When you are called upon: – e.g., a computer consultant who is available for weekend and after-hour calls; a public relations firm that specializes in crises communications for companies involved in scandals or tragedies; a caterer who can be counted on to handle even last minute dinner parties.

  1. Charge What You Are Worth

The truth is that no one automatically knows what to charge; people generally have to discover what is both appropriate and competitive. Begin by doing some basic research to determine the following: How much is your product or service worth in concrete terms? Value like beauty, is in the mind of the beholder to a certain extent. There are several ways to ascertain the value of what you offer to prospective customers. Can someone currently obtain this product or service elsewhere? If so, how much are they paying for it?

 What will people actually pay?

Perception can be as important as the actual value of the product or service being offered. If potential customers perceive your price as being too high, you will end up without a sale. By comparison, if buyers perceive something as being too cheap, they will worry that it may be inferior in quality.

Above all, be careful not to sell yourself short. Consider following this commonly-used pricing formula:

Direct Costs + Overhead + Profit = Your Price  Direct Costs: refer to costs you incur in doing your job: fuel, telephone calls, postage, printing and your time. Calculate your salary – including fringe benefits – into your rates. Remember to add enough to cover the hours of un-bill-able time you spend marketing and administering. 

Overhead: refers to the general costs of doing business: equipment, software, utilities, office supplies, advertising and marketing expenses, and administrative costs. Most home businesses multiply their hourly wage by two or three to cover overhead.  Profit: is an amount calculated over and above direct and indirect expenses; let‘s say 15% to 25% could be added as profit.

Operational and Marketing Considerations

  1. Find the Right Place for Your Office

Ideally, the space you select for your office will match your personal work style budget and fit in with your household environment. To work effectively at home, most people need these basic work areas:  Space for a desk, chair; where, you can use a computer, phone and other equipment.  Conversation spaces with chairs where you hold meetings. 

Storage space for filling cabinets, books and reference materials. 

Shelf space for supplies and infrequently-used equipment.

 Large work space for assembling materials and doing mailings or shipping.

If you do not have a separate room that can be designated for your office, choose a location where you will be disturbed the least. For example, partition off a section of your living, family or dining room. Alternatively, remodel a space such as your garage, basement or porch. 6. Organize Your Work Space for Success Keep the things you use frequently near your desk. Base this on a simple formula on a scale of one to seven. Rate the item you are storing or filling in terms of how frequently 33 you use it. Give items you use every day a one; those you use once a year, a seven. Place items in the following locations according to how you rate them: 

1: Place all these items within arm‘s reach of your desk area. 

2-3: Keep these items within your immediate range in files or cabinets, on countertops or on shelves. 

4-5: Store these items in nearby cabinets, closets or on shelves outside your office space. 

6-7: Store these items in remote locations such as basement or garage.

Storage space for filling cabinets, books and reference materials. 

Shelf space for supplies and infrequently-used equipment.

 Large work space for assembling materials and doing mailings or shipping.

  1. Make Your Business Official and Visible

Many home-based business fall by the wayside because they do not make their operations official and visible. Consider the following actions to avoid that pitfall:  Clarify your zoning restrictions on your running a business from home. Make sure you can operate your business from your residence and if there are problems in doing so, get a separate mailing address or apply for a use permit or variance to your zoning laws.  Open a business bank account. Keep your personal and business affairs distinct from one another.  Get a separate phone line for business calls. A separate line helps you manage your personal and business lives more easily and gives you a more professional image.  Maintain regular business hours. Nothing annoys customers more than not knowing when and if you are opened for business.  Select a memorable name that fits your business image. A dull, confusing or inappropriate name for your business can result in clients overlooking you or not specifically understanding and appreciating what you have to offer them.

  1. Create a Thoroughly Professional Image

A marginal business image leaves the impression that your home-based venture is not a truly professional one. So is setting up your enterprise, pay attention to key image components other than your business name that do not necessitate a big budget, but rather attention to detail. Here are some suggestions:  Communicate quality with a custom-design logo.  Apply this logo in a consistent way to give your company a professional image on business cards, stationery, invoices, faxes and any other visual communications elements.  Choose top quality paper for letterhead and business cards. Select professional locations for meetings with clients. If clients come to your home, avoid having them walk through personal or family areas or schedule meetings at outside sites such as restaurants or hotel hobbies.

  1. Utilize Word-of-Mouth Marketing

Word-of-mouth marketing refers to two highly effective practices: networking and referrals. Networking, the most popular way to start and build a home-based business, refers to using face-to-face contact to establish relationships that can generate leads. It is based on talking with people about what you do and listening carefully to find out how you might serve them. Consider joining a networking organization, often called a ―leads club,‖ which is set up specifically to generate business leads for members. One of such organizations is EDMARK Direct Marketing Ltd. Send me mail: kalasco33@gmail.com or call 08188029847, if you want to know how to benefit from The Edmark Business Opportunity. Once a business is established, use word-of-mouth marketing to get referrals from satisfied customers. Let your customers know you genuinely appreciate their referrals; by so doing, you multiply the number of mouths talking positively about what you have done or provided.

  1. Make Sure People Can Reach You

Research shows that people working from home spend more time talking on the telephone than any other single activity. As a result, you need to be sure clients can reach you so as not to jeopardize any business opportunities. Fortunately, a variety of sophisticated telephone handsets, equipment and services is available to ensure ongoing communication, as the following useful options demonstrate: 

Use voicemail to take messages when you are out of the office or unable to answer the telephone. Voicemail can be obtained from your service provider or you can purchase an answering machine or add a voicemail system to your computer.  Use call forwarding to receive calls when you are out of the office. You can purchase a cellular phone. The cell phone or GSM handset is your best choice.  To handle incoming calls while you are on the telephone, get call waiting or voicemail that picks them up so people never get a busy signal.  If you are running short of phone lines, get distinctive ringing that gives you two phone numbers on one line or double up on one line by purchasing a combination fax, phone or answering machine that automatically recognizes when a fax is coming through.  

Business Technicalities

  1. Make Your Business Legal

Operating a home business on a full- time or part-time basis may require taking certain legal steps to protect yourself and venture, including the following:  Get an employer‘s ID number if you have employees or incorporated or in a partnership.  Obtain a federal, state or local government license as applicable. Obtain the trademarks, copyrights or patents needed to protect any product or services you have created.  Incorporate or form a limited-liability company or a partnership if you are not a sole proprietor and are working with other people.  Find out if you are required to collect sales tax or VAT (Value Added Tax) for your product or service. If so, register with the appropriate agency or Inland Revenue service responsible for collecting taxes. 

Register your business name if you are using a name other than your own name or a variation thereof. Consult a lawyer or the appropriate government agencies in your city and state if you are not sure of these requirements apply to your local chamber of commerce or ministry of trade and commerce.

  1. Claim Your Deductions

Whether you live in a house, apartment or bungalow, you can deduct the cost of operating and maintaining that part of your residence used for business if you meet the basic criteria established by the Inland Revenue Service for a home office. Accounting to the Inland Revenue Service, the portion of your home you wish to claim as a tax write-off must be used regularly and exclusively for business.

The portion of your house use must be either your principal place of business or a location where you meet with customers or clients in the normal course of business activities. As a self-employed individual, you can also deduct numerous ordinary business expenses, from the cost of operating your car to dues you pay to professional and trade associations. However, make sure the Inland Revenue Service considers you a self employed individual or independent contractor rather than an employee.

  1. Get Needed Insurance

Depending on the nature of your business and the level of risk you want to assume, you may also wish to purchase any of the following: 36  Malpractice or errors or omissions (E & O) insurance to cover you against claims that your product or service harmed someone or caused a business harm.  Disability insurance to cover you against loss of income should you become disabled.  Partnership insurance to cover you against suits arising from the actions of any partners you have.

 Financial Issues

  1. Have an Entry Plan

Depending on the nature of your business, it can also take six months to a year to get underway, one to three years to turn a profit and three to five years to become selfsustaining. This means you must have enough money to cover your cost of living and doing business during this start-up period. Consider these five entry plans as options:  T

he Moonlighting Plan.

Keep your full-time job and develop your business as a sideline until it takes off and you can rely on it entirely for your livelihood. 

The Part-time Plan.

Work a part-time job to provide a base income while you are building up the operation. 

The Spin-off Plan.

Turn your previous employer into your first major customer or if ethically possible, take a major client from your previous job to help launch your fledgling venture.

  The Piggyback Plan.

If you have a working spouse or partner, reduce expenses so you can live on one salary until your business gets underway. 

The Have-Your-Clients-Finance-you Plan.

If you have sufficient expertise in your field, obtain retainer contracts with a few clients for one year so you will have an assured source of revenue.

  1. Arrange for Start-up Funds

Don‘t let lack of money to stop you. Fortunately, most home businesses do not involve extensive start-up costs. As a result, most people can bootstrap their fledgling operation using money from the following sources: 

Personal loans. If you or your spouse has existing job, banks will usually give you a personal loan more readily than business loan. 

Home equity loan. If you own your home, you can use it as collateral to facilitate bank loan. 

Character-based loan. These are loans from Microfinance banks. These loans are not based on a person‘s assets but rather on good character and proven management ability.

  1. Get Written Agreement

When you work from home, contracts are your most important safeguard against problems, with customers and clients, and help ensure that you are taken seriously as a business. Whatever your endeavor, create a standard contract to use, spelling out specifics such as what you will provide, when you will provide it, what it will cost and when customers or client are obliged to pay you. While contract can be verbal or written, written ones are certainly preferable.

The best way to develop contract agreements that are customized to your specific needs is to consult an attorney. You can also talk with colleagues about the contracts they use, ask your professional or trade association for information or attend a workshop on contracting. Many pro forma contracts are also available on the web.

Okala Adaebo

President/CEO

Kalascofec


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