This article shows you how to build a successful home business from scratch. By following these instructions, you should get a business that is suitable for both you and your customers. This business plan covers the essential steps. However, the success or failure of this endeavor is your responsibility.
This business plan consists of three stages, which contain the 16 individual steps. Follow these stages and steps in sequence. Then you will minimize your effort, resources, and risk.
Stage 1: Selecting a suitable business idea
Purpose of this stage is to satisfy your requirements and the apparent needs and desires of prospective customers.
Defining your requirements — Make a list of the things you want from your home business. This might include how much of your time the business will take, how much cash profit it should produce, and how much it will cost to get started. I recommend a low-cost, low-risk business idea for people just starting out.
Include in this list the skills and other resources you already possess. It is best to start a home business that does not require much more than your existing abilities and assets.
Finding a potential idea — The business idea should allow you to satisfy your above requirements. You might look in the classified advertisements in the local newspaper or yellow pages of the telephone directory for possible business ideas. You might want to review the hobbies and other activities that you enjoy doing.
Reviewing the market — Your business idea should have a ready market of customers willing and able to pay for the product. By product, I mean goods, information, or services. The best way to verify the demand for your proposed product is to see if this product is currently being advertised. This review of current advertisements should also give you ideas on how to promote your own product.
Stage 2: Preparing the groundwork
Purpose of this stage is to perform a suitable amount of planning and advance preparations. This planning should include ways to limit cash expenditures.
Refining the product design — This means making the product more desirable without incurring excessive costs. The best low-cost products would be information you have acquired and services that you provide personally. It is difficult for the average person to make a good home business from selling goods.
Developing the sales program — At this point, you have reviewed the advertisements for comparable products and refined the product design. Now you are ready for developing the sales program. Your advertisements should emphasize the best features of your product. You should consider providing a satisfaction guaranteed policy.
It can be risky to offer a low sales price to get customers. People may think the product is inferior and not even worth the low price. A way around this would be to have a good reason for the low price. Thus, you may have a contest where winners (there should be several) can get a reduced price for your product. Another way would be to have a TGIF (thank god it’s Friday) sale, or some other type of sale.
Designing business operations — As the owner you will be the main boss of the business. However, your spouse might answer telephone calls, keep the books, remind you about appointments or other promises you made, and so on. If you have a large family, you may choose to assign certain duties to the older kids.
Listing the startup requirements — You need to determine and list all the requirements before you start business operations. The most important of these would be any governmental and insurance requirements that apply to your home business. You also need to know what equipment and supplies will be needed to set up your home office and provide your product.
A good way to determine these needs would be to talk to an accountant or bookkeeper, professional friend, or retired businessperson. You can also go online and research the home business rules for your city, county, state, and the federal government.
Planning costs and expenses — it is vitally important to keep your startup costs and expenses as low as possible. You want to resist splurging on a fancy home office, new computer, or other unnecessary items.
The best kind of cost or expense is one that will rapidly pay for itself in increased sales. An example is low-cost advertising, such as using the craigslist.org website.
Stage 3: Achieving the desired results
At this point, you should know whether you have a viable business idea. If so, it is time to get serious about your home business. First, you will complete all startup requirements. Next, you will start business operations, fine tune the business, and start increasing sales and cash profit.
Being able to produce the product — Before proceeding with the startup, you must be able to produce a quality product. This is a product that can satisfy the needs and desires of likely customers at a price they can afford. I recommend that you select a business idea that uses mostly your existing abilities and resources. However, you might have to go through a training period to acquire any missing skills.
Gathering the needed resources — These resources include the equipment and supplies shown on your list of startup requirements, and the cash needed for other startup costs and expenses. You also need a personal commitment to complete the remaining steps in this business plan.
Setting up a home office — Your first home office should include only the bare essentials to do business. You might use a kitchen table and chairs for a desk. Your file system could consist of boxes filled with large envelopes for the various categories of paperwork. At some point, you will want a separate business phone for your business.
Setting up an accounting system — If you have a computer, you might want to download a free program to keep your books. Otherwise, you could use manual ledgers and journals. To maintain control of your business you might want a daily cash report, a weekly report of new customers, and monthly financial statements (balance sheet and income statement).
Completing the startup requirements — During this step, you will satisfy all remaining items on your list of startup requirements. It is especially important that you satisfy all governmental and insurance requirements. However, you may wish to delay purchasing certain equipment and supplies that won’t be needed until your business really gets going.
Starting business operations — At last, you can start business operations. This means to advertise your product, get customers, provide your product, and be paid. You will also have to pay your bills, keep track of your business transactions, and file any required reports with the government.
During this time, you may want to test various advertising messages is to see which one gets the best results. You also want to correct any operational problems that appear.
Improving customer satisfaction — Now that your business is operating smoothly, you need to concentrate on improving customer satisfaction. Satisfied customers will give you good word of mouth advertising and may refer you to other potential customers. Keep in mind that customers probably have different needs, desires, and viewpoints than you have. So be on the lookout for any indications that customers are dissatisfied with your business operations or product. Above all, keep any promises you make to customers. Also, be sure that the product you supply to customers is what they really want.
Increasing sales and cash profit — Now that you are operating successfully, you probably want to increase sales and cash profit to reach the goals for your home business. You notice I say “cash profit” rather than “net profit.” Cash is the lifeblood of a small business. If the cash runs out and you can’t get a loan, you are out of business. This is so even if your business shows a “net profit.” Net profit is an accounting concept that is mainly important for a large business. For a small business, cash profit is what matters. You want more cash coming in (sales) than is going out (costs and expenses).