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What Do You Need to Launch a Home Based Business?

With a wide variety of home business opportunities available – both to those who are looking into taking on a second job in order to bring in a little bit of an extra income and to those who are ready to branch off on their own and to go into business for themselves – it is extremely important for those who are planning to launch a home based business to know that they are getting into.

Now that’s not to say that launching a home based business is a bad idea; in fact, when done correctly, launching a home based business leads to tremendous success. However, when you are getting ready to take advantage of the home business ideas and opportunities that you have been exploring, you are going to want to be sure that you’re going about it the right way.

The first thing that you need, therefore, when you are going to be launching a home based business is an idea. Whether your plan is to launch a home based business that involved distributing items that you have purchased at a wholesale price or you are thinking about launching a business as a virtual assistant and intend to offer services as the foundation of your business, without an idea it is going to be difficult to get up and running.

The most difficult part, for many, who are planning to launch a home based business is taking the idea that they have and moving forward with it. On one hand, the challenge is fear: there are a number of people who want to launch a home based business but find that they are nervous about getting started and that they have concerns about a lot of the “what ifs” of moving forward and allow those concerns to stop them in their tracks. On the other, the challenge comes from a lack of planning.

Therefore, one of the most essential things to do for anyone who is planning to launch a home base business is to create a business plan. If you have the funding that you need to launch your home based business, you will find that it’s possible to create a more informal business plan that identifies your goals and your strategy for reaching them. You are going to want to be sure that you’re looking at the money you invest and how you will earn it back. You’re going to want to consider the amount of time that you have to commit to your home based business and to identify how you will use that time well – which hours you will work, what you will be doing each day and how you will market your business.

On the other hand, if you are launching a home based business that will require funding, you are going to find that it’s important to develop a more thorough business plan. You will find the resources that you need to develop a solid business plan – a plan that creates a clear statement of what you will be doing, the experience that you have that will enable you to be successful and your projections for the future – available at your local small business association.

Your local small business association will be able to assist you in launching a home based business in a number of other ways as well. First, when you consult with your local small business association you will find that it’s possible to find a mentor, someone who can help you to streamline the process of launching your business and who can help you to avoid making mistakes that many people make when they are acting on home business opportunities.

Similarly, when you are working with a mentor from your local small business association while launching your home based business you will be able to learn more about permits that may be required in your area – both zoning permits for your home that will enable you to operate a business as well as sellers’ permits that allow you to sell physical goods and to pay the state sales taxes on those items – and about whether or not you will need a business license, a tax identification number and about filing a DBA if you will be doing business under a name aside from your own.

In other words, when you are launching a home based business, you will find that it is essential to know which home business opportunities to act on and to develop an understanding of what it takes to get into business. Having a mentor will enable you to learn more about the process of launching – and growing – a home based business and, as a result, can help to ensure the success of your new business. When you start with a great home business idea and then get the guidance that you need to develop your business, you will find that you are well on your way to reaching your goals.

How to Learn About Any Business and Find Out Which One Suits You Best

One of the biggest mistakes the no-cash buyer can make is to be caught up in the excitement of having found what looks like the ideal business. This can result in taking short cuts in evaluating the business’ worth in order to get the deal sealed-unless the seller gets impatient and sells it to someone else. Make sure to evaluate and thoroughly research the reasons why the business is being sold. You are probably doing the seller a favor by taking the business out of his hands; he’ll accept any strategic maneuvers you offer him.

You might think at that point that all your business deals will be successful. Well, an easy purchase can bring suspicion; be discreet while conducting your research. Don’t make it too obvious. Remember that you will not offend a serious seller if you exhibit the professionalism of a serious buyer. So do not compromise any essential acquisition standards. Once you do the deal, that “baby” is yours…and you want to make sure it’s a healthy one before you sign any ownership papers.

Question: Is there any checklist I should follow while evaluating the business I am interested in?

Answer: Developing an acquisition strategy is a business planning exercise that defines the specific criteria to be applied in searching for and screening acquisition candidates (these candidates are businesses, not individuals). There are many reasons for this planning exercise: it gives you a frame of reference to evaluate acquisition candidates, it keeps you from wasting time on acquisitions that cannot be completed, and it helps you avoid acquisitions you will later regret. A defined acquisition strategy demonstrates that you know what you want to do, making it easier to retain qualified outside advisors as part of your acquisition team. These advisors don’t like wasting time on unsuccessful transactions, and you don’t want to waste advisory fees on poorly thought-out transactions. There are important issues to tackle and information to seek. A firm looking to acquire another company needs to focus on its current operations and identify current strengths and weaknesses. There should an analysis of future industry growth potential and trends within the existing business sectors, and an analysis of the competition.

Next, review past acquisitions and internal growth of the company, noting success and failures, and identify the reasons for those successes and failures. Based on the analysis, you should now outline your reasons for embarking on an acquisition program, determine financial resources available and define the characteristic of the desired acquisition, and finally define your company’s policy regarding financial intermediaries.

Question: How can I locate the right business?

Answer: There is a few ways to locate the business that you are interested in.
Print Advertising:

o Business opportunity classified ads are a viable way to advertise a business for sale. Many ads are placed by intermediaries (business brokers or merger and acquisition specialists), but some are placed directly by business owners. The larger local newspapers are the best source of such ads for smaller, privately-held businesses. Sundays are generally the most popular days for these ads. Business opportunity ads, whether for small or large businesses, usually describe the business in several short phrases, keeping its identity anonymous, and list a phone number to call or post office box for reply. The ad should be worded to demonstrate the business’s best qualities, (both financial and non-financial) and many include a qualifying statement describing the kind of cash investment or experience required. A telephone number in the ad will draw more responses than a post office box number, but may not permit the anonymity of a post office box.
Trade Sources:

o Trade sources can be a viable source of information on businesses for sale. Key people within an industry or in companies on the periphery of the industry, such as suppliers, often know when businesses come up for sale and may be aware of potential buyers. Every industry has a trade association and trade association publications can do a good job of communicating the sale of a business in their industry.
Intermediaries:

o Business opportunity intermediaries generally can be divided into two groups:

1) business brokers

2) merger and acquisition specialists

The differences between these two groups are subtle, but in general, business brokers primarily handle the smaller businesses, and merger and acquisition specialists handle the larger middle-market companies. Both groups usually ask for a contract with a 180 day period or a more exclusive right to sell the business.

Question: Are there other ways to find the right business?

Answer: Definitely. Another good way to increase your chances in locating the right business for you is to advertise your interest in buying. You’ll often read or notice that most advertising is undertaken by sellers, so it can be even more effective for you to advertise your desire to buy a business. Advertising will allow you to reach many prospects that other avenues cannot present.

Keep Business and Personal Lives Apart

When it comes to owning a business, newbies often make the mistake of combining their business and personal affairs. As a business owner, it’s healthy to separate yourself from your business and treat your business as a separate entity.

A little investment of energy early on can bring huge dividends later in the life of your business. For example, set up a business bank account, rather than mixing your business and personal expenses – your accountant and bookkeeper will both be thankful. You will also enjoy the benefits: less confusion and lower accounting and bookkeeping costs, particularly when your friendly neighbourhood tax auditor comes knocking.

New owners have a tendency to dovetail their personal and business lives, usually in an effort to save a few dollars. I have done this in the past and it only leads to difficulty. Any savings quickly evaporated when it came to sorting out the mess later.

Think of your new business as a separate entity, like having a baby, building a house, or hatching an egg.

Here are some ways to separate your business from your personal life.

  1. Separate your personal time from your business time.
  2. Coach your customers to contact you during your business hours.
  3. Train your friends to contact you during personal hours.
  4. Consider yourself to be an employee of your business and pay yourself a wage.
  5. Open a business bank account, pay business expenses from that account and pay your personal expenses with your wages.
  6. Establish separate telephone and fax numbers for the business.
  7. Create a separate Internet and email presence for the business.
  8. If you’re home-based, create a separate space for the business and if possible, have a separate entrance for customers.
  9. Even if your business is a proprietorship for which the tax authorities view you and your business as the same entity, set-up your business with its own bookkeeping and accounting systems.

There are some great payoffs for separating your personal and business affairs. You will:

  • Know your personal and business expenses
  • Be more effective at calculating costs and setting prices
  • Find it easier to deal with auditors
  • Lower your bookkeeping and accounting costs
  • Be better prepared if you decide to sell the business or bring in a partner
  • Have more peace of mind

With much to gain and little to lose, I urge you to consider your business to be a separate entity from yourself.