Don’t Risk Taking a Nosedive – Factors to Consider When Plunging Into the Home Based Business Market
So, you’re ready to join the ranks of the self-employed and start your own business. You’re tired of corporate instability and employment uncertainty, and you’re ready to control your own financial destiny. Terrific. But wait just a minute, have you really considered some of the critical factors before taking the plunge into the home based business market?
Many eager entrepreneurs, especially those unfortunate souls who have recently (or even not so recently) joined the unemployed, drive into the home based business industry without truly considering whether the decision to start up a new business is a wise decision.
As a result, much time, money and eventually heartache is spent trying to launch and build a business that, with a little preparation and research could have been avoided. So, let’s get started with some basic factors to consider when determining whether should start your own home based business.
First, determine whether the home based business you are considering is legitimate. Home based business scams abound and unfortunately in today’s climate, many individuals fall prey to unscrupulous operators looking to make a quick dollar on the unsuspecting potential business owner.
When evaluating work from home opportunities, try a quick Google search by entering the business type and the word “scam” in the search bar. Generally, reviews for that business or product will appear, which will provide you with a good indication of whether your business opportunity is legitimate. Additionally, perusing online forums are a great way to see what others are saying about various home based business offerings.
Second, make sure that you can truly afford any start-up costs associated with launching your new business. It’s important to understand the start up costs associated with launching and maintaining the business for the first year, and to ensure that you have the funding necessary to weather any slow cycles or seasons. Trying to scrimp and squeeze out the funding to launch, especially if you’re taking from other critical expenses such as your household budget, can place a strain on you both financially and emotionally.
And finally, ask yourself whether you have the basic experience, knowledge and passion necessary for that particular business. It’s oftentimes much more difficult to start a business in an area in which you have little or no experience, knowledge or expertise. And, while it can be done, the most successful home based businesses are those where the owner has some level of understanding about the business opportunity or product offering. Thus, it’s best to try and ensure that your skills match the prospective business.
Remember, regardless of the type of business you ultimately choose, any successful operation will require many hours of your time to manage and work the overall business. Initially, there will likely even be a period of hard work for very little results, as is the case with any new business venture. Therefore, the more passion you have for the business, the more willing you will be to put in the long hours required to build and maintain a successful home based business. For more information about home based businesses, visit…
One of the great freedoms of entrepreneurship is creating a job that fits perfectly with your personal work style. If you don’t account for your own preferences before you launch a business, you are likely to lose interest in the project and have difficulty keeping yourself motivated. The most successful entrepreneurs are very self-aware and build their business ideas around their own strengths.
Your first consideration is whether to launch your business full-time, part-time, or in your spare time. Each option means different things as far as what type of business to select, how much time it will take to plan and launch, and whether you can expect significant growth. Spare-time startups are the natural result of an existing hobby or interest. If this is the case, be careful. If you take repeated deductions of business losses over several years, the IRS may re-classify your business as a hobby, leaving you on the hook for underpaid taxes.
Part-time startups are typically intended to supplement income or reduce risk in the hopes of growing the venture to a full-time endeavor. If you are looking to supplement income, then your part-time startup will have to limit growth and be a fairly flexible endeavor. Planning to grow a startup from part-time to full-time can be more difficult. Businesses tend to grow in step-change spurts, when a combination of efforts seems to pay off overnight. In these cases, it is critical to prepare yourself and your business through solid planning.
Another work style factor to consider is where you are happiest working. For some, a home office is ideal. For others, the other distractions of home life make it difficult to be productive. Some entrepreneurs prefer to always be on the move, traveling the area or the country on a regular basis. Also consider the level of interaction with others you are most comfortable with. Do you want to be chatting up strangers much of the time or do you prefer to be behind the scenes?
Develop a vision of what you want your work life to be. Define a typical day — where will you be? What will you do? Once you have a clear idea of how you do your best work, selecting the right business will be much easier, and your ability to turn your idea into success is magnified.…
Whatever the business you plan to start, you will need to line up certain external resources to keep your venture protected and managed. The Big Five professionals every entrepreneur should have on speed dial are an accountant, insurance agent, banker, real estate agent, and lawyer. Of course, any good bootstrapper will handle as many business issues on their own as possible, especially during the early stages, in order to maintain knowledge and control over the venture. But at some point your successful company will require the services of each of these outside professionals.
It is in your best interest to begin building relationships with each of these professionals as early as possible in the life of your business. Whether or not you will use their services right away, you can set yourself up for an easier road when you do need them. Often, the times you realize you need these professionals is when something bad is happening — your business gets sued, you run into a serious cash crunch, or your landlord breaks your lease. These are not the times you want to be searching for the right professional to handle your problems.
Generally, we recommend that you select your Big Five professionals during your planning and startup stages. Don’t rely on your cousin’s girlfriend’s brother-in-law to be the right guy for the job. Take the time to meet and interview several different people in each profession and do your due diligence to ensure they are the best choice for your business and where you want your company to go.
You don’t necessarily need any of these professionals to have 25 years of work experience, but you do need one who is knowledgeable about and specializes in whatever it is your business does. First and foremost, they should understand the issues in small business. Beyond that, every industry has its own particulars that your Big Five professionals should be comfortable with.
In the case of your business attorney, it can be better to go with a full-service firm than an independent boutique lawyer simply because the larger firms have partners that specialize in all different types of issues. Your banker, insurance agent, accountant, and real estate agent should all deal primarily with businesses of similar size and trajectory of yours and have more than a passing familiarity with your specific industry.
One important advantage of securing your big five professionals early in the life of your venture is the additional networking opportunities they can provide. However, if their networking skills are not up to par, they won’t be much help to you. Look for professionals who are reliable and consistent about getting back to you right away, answering your questions honestly and clearly, and are excited about your business idea.
Some bigger law firms have partners who do all the selling but very little of the work. Not only is it difficult to build a strong networking relationship if you don’t even know the guy who actually does your work, but those partners are generally focused on finding new clients, not on keeping you happy. If the professionals you are considering can’t be bothered to meet your expectations in terms of networking with you while you are looking to become their client, don’t expect them to show up when you really need them.
Take the time to find your Big Five professionals, including your business attorney early. Keep them up-to-date about your progress and build the relationship over time. As your startup grows into a thriving company, you will have built-in allies who will be looking out for your venture’s best interests along the way.…
For new entrepreneurs, sometimes it can be difficult to decide what you want to charge for your services, and understand how to bring together your dreams and desires while still making the math work; you have the dream, but where does that break down into cold, hard cash? Here are 5 pitfalls that I see happen time and again with new entrepreneurs:
They don’t begin with the end in mind. New entrepreneurs are often so worried about making a living that they don’t consider being selective with their hours or clients. The set an hourly rate that forces them to reach their income goal through volumes of meetings and work! This is a perfect way to wear yourself out and begin to feel like you’re just punching a clock again.
They only use their gut to decide what they should be charging. Checking in with your internal body compass is a great way to assess if you’re on the right track, however, so many people tell themselves “stories” about their money that sometimes this isn’t the most effective method-most new entrepreneurs get a knot in their stomach just from thinking about charging someone, so you have to get past that story before you can objectively look at pricing.
They are starting part-time and defer the decision. Some new entrepreneurs tell themselves, “I’m transitioning from my existing job and doing this on the side, so I don’t need to start charging what I WANT to charge immediately.” This just defers the inevitable AND causes you to work at the job you want to leave for that much longer!
They don’t use the right math to figure out how to maintain their existing lifestyle. Most new entrepreneurs use their salary from their last job to determine what they need to maintain their life, but being an employee and being a self-employed business owner are so different financially that new entrepreneurs lose time and money because of miscalculated assumptions.
They under value the experience they have. Many new entrepreneurs are paralyzed by the thought that part of their rate is a reflection of experience and mistakenly think “small” when setting their rate. What new entrepreneurs need to realize is experience is subjective, and the actual game changer is the level of confidence they have in their direction! Each one of us was put here to offer something unique to others.
One of the reasons a person decides to become self employed is improving their bottom line, yet sometimes the thinking that caused them to originally be frustrated with their finances will also bring those same issues into their new business.
When new entrepreneurs only look at what they are comfortable charging, and they don’t figure out what they should be charging, there’s bound to be setbacks. Avoiding these pitfalls will ensure that the new entrepreneur does not waste time or money when launching their new venture!…
For some people starting a business in Australia, deciding whether to set up as a sole trader or establish a company can be pretty daunting. How do you really know which option is best for you? It can be confusing. Between the labyrinth of government websites, lawyer’s legalese and accountants Excel spreadsheets… deciding the best structure can be incredibly tough.
Making the right decisions when starting a business can be hard. Hopefully this simple layman’s guide to deciding whether to sole trade or start a company will help.
Business founders who decide to start up business as a Pty Ltd company are often on the right track. The benefits of a Pty Ltd company structure make setting one up the wisest option. This is especially the case if you are:
starting up with business partners, be they Directors or shareholders
seeking fast growth
plan to supply to major corporations
intend to hire staff
seeking to maximise the benefits of a tax effective business structure
considering equity investment
want ‘street cred’ as an Australian company
already considering exiting the business at some stage
If one or more apply to you, you should seriously consider forming a Pty Ltd company. That’s not to say setting up as a ‘sole trader’ is not a suitable option. However, people who set up to ‘sole trader’ usually fall into one of the following categories:
starting up a hobby business to supplement income
starting a part-time businesses
planning to work as a one man/woman band for the foreseeable future
testing the waters in business for the first time
looking to run a business that fits an existing lifestyle
generally not seeking significant growth.
Every person’s circumstance is different so exceptions to the guidelines above do occur. The decision is not always simple or clear cut. Age, industry sector, start up capital, family status, asset base and a range of variables should be taken into consideration.
For this reason, input from a professional, such as a lawyer, accountant or a specialist start up firm is very much worth considering.
What else determines the decision to choose between sole trader and Pty Ltd?
In a word, liability. And it is so important a point it deserves a section of its own. As a sole trader your liability is unlimited. That means if you are sued your personal assets (house, car, money in bank, valuables etc.) are 100% exposed. A Pty Ltd company structure offers a better level of asset protection, as the business is its own legal entity (and therefore separate from you).
Regardless, for all new businesses we highly recommend business insurance. It’s like going out for a walk on a cold Winter’s night with a really warm jacket on. However, for sole traders with 100% liability risk, insurance cover is doubly important.
What about the cost?
Setting up a Pty Ltd company in Australia is a little more expensive that setting up as a sole trader. However, for the sheer value it delivers, we believe that in many cases it is worth the extra few dollars.…Read more
It has always been the American dream to start a business and have it become extremely profitable with little work. The fact is, it’s not only an American dream, but actually a world wide dream. Nearly everyone wants to find some way of making money without having to deal with bosses, schedules, or having to commute to work. People want to stay in the comfort of their own home and work as little as possible to be able to live life to the fullest.
In this article, I will let you know 3 simple facts to starting a business. If you play your cards right, it is very simple to start making a lot of money with minimal work and minimal costs.
The first step is finding or making a plan. You will have a very small chance of success if you jump into starting a business without a plan. One needs to know where they are going and how to get there. The best thing to have when starting a business plan is a coach. Someone who has been down that road before and that has become successful doing it.
It may be hard to find a coach or mentor that is willing to put their time and energy into helping you. If you follow the link below you will find that I have found someone that was willing to put his time and effort into helping you out. He has spent years upon years perfecting his plan. All you need to do is carbon copy what he is doing and you are sure to succeed.
The second step is to make sure you follow through with the plan. Do not make a plan and decide to quit. A lot of people get bummed out after the initial planning and give up. A lot of those people probably could have made a lot of money, but instead they quit. It can be a variety of different reasons. Maybe a friend or family member telling you that you will not succeed or maybe you think it will cost too much money. Whatever the case may be, you need to stick to the plan and execute it.
Step three is simply keeping the ball rolling. Lot’s of people start out with a great plan, continue to follow through with it, but somewhere down the line decide that they don’t wish to continue. A large percentage of these people are either impatient or they want the money to fall into their lap without any work whatsoever. I’m sorry to break it to you folks, but there is no “get rich quick” scheme. There is no way of making money without any work whatsoever. BUT there is a way to make a very decent living with minimal work so that you can enjoy life instead of working through it.…
Bootstrapping a startup means looking for every opportunity to cut expenses. Thus, it is common for first-time business owners to skip over registering their business, assuming that running it as a sole proprietor will be sufficient. While it’s true that sole proprietor status is the least complicated to manage — less paperwork, fewer filing requirements, the most flexibility — the reality is that the benefits of organizing as an LLC far outweigh the complications.
LLCs Provide Protection
The structure of an LLC or corporation exists for one primary purpose — to separate business and personal liability. With sole proprietorships, all of your personal assets, including your house, cars, and savings, are potential targets for any lawsuit or judgment against the business. Don’t assume that none of your dedicated customers would ever sue — if you make an error that costs them dearly, their attorney will turn to you for reparations.
In addition, businesses can struggle for all sorts of other reasons, such as a lagging economy, that are out of control of the owner. With the protections of limited liability, the business can take the fall without significantly impacting the owners. Sole proprietorships and partnerships can leave the owners holding the bag, and paying off the business’s debts (or worse, filing personal bankruptcy)…outcomes that will affect you for years.
LLCs Provide Opportunities for Your Business
Particularly in the case of independent contractors, securing an LLC can open doors not available to sole proprietor independent contractors. The reason for this is that many large companies secure independent contractors for months or years at a time, and hiring a individual, sole proprietor, into those positions can put the larger company at serious risk. If you have LLC or corporate status, there is no doubt that the hiring does not meet the standards of being an employee, because the presumption of independence is evident in the entity status, thus the company is more likely to hire your company over a sole proprietor.
LLCs Open the Doors to Growth
Operatinga business as a sole proprietorship not only limits your options, but also can limit your thinking. As a solo owner, there is no easy way to bring in investors for growth and expansion. With an LLC or corporations, your options are wide open for including partners as you see fit. You can build the business’s credit separately from your own, enter into contracts, and own property in the name of the business, presenting a more professional image. And, your own ideas of how far the business can go can be influenced by the formality of organizing as a limited liability entity. Something about formalizing your operations inspires a lot of folks to think bigger than just working for yourself.
Sure, there are valid arguments for selecting sole proprietorship status. Whether you organize as an LLC or corporation, there are some fees and paperwork required, usually once or twice per year. And, new business owners are often required to provide personal guarantees for bank or vendor debts even with formal organization, meaning the protection features are not always comprehensive.
But if you are starting a business with any plans for growth, organizing as a limited liability at the start will protect you from devastation down the road. Of course, not every business gets sued, but why risk all you have in exchange for a few hundred bucks and a couple of filings per year? Owning your own business is the commitment of a lifetime, so it just makes sense to protect it, and yourself, as much as possible.…