The 3 Critical Components of Building a Small or Home-Based Business – Part 1
Now-a-days, there is a ton of information available online and off about small and home-based businesses. But, the truth is building a successful business can really be boiled down to three critical elements.
Step One – Planning & Budgeting
Okay, I know that sounds boring and probably isn’t what you’re interested in hearing. The problem is, while there’s plenty of info about “making money online” that’s really not the same as building a sustainable business. The bottom line is that without actual planning for the key elements of your business, it’s unlikely you’ll ever have a business and certainly not a successful one.
Now, don’t get me wrong, I’m not necessarily saying you have to create a traditional full blown business plan unless you are going to need to go after traditional funding sources for your home business. However, you do need to have a plan of action to help you stay focused and on track in building your business.
So the rest of this post will tell you what it is you need to figure out before you launch your business and why it’s important for you to do it.
The very first question you need to ask yourself is, is there a market for the kind of business you want to start; and related, do you actually have an interest in the kind of business you want to start?
These two elements are crucial – look, let’s be honest . . . starting an online, home-based, or even a small business is a LOT different than starting a traditional business. One of the key differences is that you can start a many of these types of businesses part-time, often with minimal financial and other resources and still be successful. However, this is only true – if you are working within restraints that let that happen.
What this means is you need to use proven budget friendly strategies that let you have the greatest chance at starting a successful business. If you decide to sell a product that doesn’t have a proven market, you then need to find or create a market to buy it and that costs money and after all that, you may actually still find out that there really is no market for your product. Finding a market first then discovering what their needs are . . . where their pain is and finally creating or finding a product or service that addresses that need or stops that pain is the best, most cost-effective way to start a new business and have a chance at actual success.
That’s the first part of the question. The second part is do you have an interest in the business you’re getting ready to start. So why is that important?
Despite all the hype offered on and offline about starting a new business and especially, so-called business opportunities and how easy it is . . . starting a business, any business and building it to success takes time and effort. It will not happen overnight and certainly not without serious effort on your part. If you don’t have any real interest in the type of business you’re working in it’s going to be very difficult for you to last over the long haul of building your business. Even online, despite the constant barrage of “you could be making money tomorrow” type hype, it takes at least a year to really build a solid business and often it takes a lot longer.
Look we’re all interested in the idea of a 4-hour work week, of making tens of thousands of dollars with a click of a button or by sending an email to our list, to getting dozens of PayPal and Clickbank notifications that “You’ve got money” in our email inbox on a daily basis while we relax on the beach with our families. But, we also need to understand that getting to that point takes time, effort and planning to put the structures, systems and procedures in place that allow that to happen.
Once you’ve determined your market place, what their needs are and a product that resolves it – how will you promote the product to your audience? How will you distinguish yourself from your competitors? How will you deliver it? How much will it cost you to buy or create it, market and deliver the product? How much will you sell it for? What is your profit margin? How much will you reinvest in your business?
These are critical issues. Without this information you have no real idea whether you are even breaking even let alone making a profit with your business.
And there are still the issues of where you’ll be getting your start-up and operating capital from, how you will use those funds, and how you will manage your business and personal cash flow.
Lastly, you’ll want to deal with your business structure because it determines a number of tax and asset protection issues.
Answering the questions above will give you a basic overview for your business that will give you a good head start toward building a successful business.
The next level of planning, one that will put you head and shoulders above most start-ups is to strategically lay out your goals and objectives for the year and a quarterly action plan that lays out in detail the steps you need to take to get there. Don’t worry this is not written in stone, but in will go a really long way to ensuring a successful home-based business.
Here’s why it’ll make a difference . . .
For many people first thinking about starting a business their online business experiences are very similar. You do a Google search about starting an online or home-based business or join a list of some “guru” that sends you an email about some “wonderfully magical” business model that will let you make thousands of dollars overnight with your PayPal account and little or no effort on your part. Okay, probably not that blatantly . . . but they certainly make it seem like it’ll be quick and easy and like anybody can do it. So you buy into the program so you can start making money online and hop right in. Forward thirty days later, maybe you’ve made a little money, more likely you haven’t.
But the “guru” sends you another program that’s even better or a tool that’s going to do all the hard stuff for you and that you simply can’t live without . . . so you buy that program or tool too – now rinse and repeat again and again. Eventually, you’re broke, disillusioned and you still haven’t achieved that dream of making money online, or at home and certainly haven’t built a business.
Others, dig deeper, buy and read some books, maybe even take a class, everything but figure out a plan, because somewhere along the way they get told it’s not really necessary. Take my word for it, it’s necessary. It helps you really focus in and figure out the details of starting and growing your business. AND, it saves you from making as many costly mistakes as you will make without a plan.
Deciding to build a business from the beginning and creating a plan for how to do that and then sticking to it will help you stay focused, save money by limiting purchases to the tools and resources that you actually need and you’ll have a much better chance at really building a business.
At Small Business Legal Services, P.C. we’d love to talk with you about getting your business started on the right foot. In fact, we can help you with every aspect of starting and growing your business.
In the next post we will discuss the two additional components that are critical to your business. So be sure to come back soon. Or better yet subscribe to my feed : )