Normally we look at people choosing a home based business as the answer to juggling a business and a personal life. Being able to set aside part of your home to conduct a business means that you don’t have to fight the commute every day.
It means that you don’t have to take your children to a day care and hope someone pays attention to them. It means that you can roll out of bed at 2 a.m., wrap your warm blanket around yourself, plop in front of the computer (or, in my case, the sewing machine) and get hours worth of work done before your family starts their day.
It also means that you’re taking space away from your family. It also means that you’re depriving your family of some of their privacy. The trade-offs, to most people, are minimal but they are there.
Like everything that seems beneficial there will be trade-offs. The biggest trade-off for someone deciding to start their own home-based business is benefits from a full-time job. If you’re only working part time now, that won’t be a big deal. But if you’re in a position that provides full heath benefits you want to think twice about giving that up.
What do you want to think twice about? Do you have a spouse of significant other that is a permanent part of the picture and would their health benefits apply to you.
Do you have children you have to protect.
Is the service that you would build your home based business around one that people will identify with and need or will they need to be educated to their need for your service.
In other words, can you be income producing in a short period of time and in a position to provide the benefits for yourself that you will be giving up by going out on your own and leaving the protection of the corporate world behind you?
Only you can answer that but it is a question to you want to explore and make a wise decision about. The rewards of developing a home-based business are many, but they will be short-lived if you haven’t factored in all of the relevant issues and designed your start-up to give yourself ample time to be successful.
When you’re determining your profitability factor for your home based business is when you need to develop your sample or working price list.
You’re going to make up a working Price List and make 10 copies. Then you can update the price part of the Price List each month for the first year until you have a stable Price List that you can post in your work place.
There are 24 hours in a day and you have 7 days a week. You need to first determine how much money you need to make from this venture in order for it to be worth your while to be doing it.
Let’s say you decide $200 a week. Or, $400. Or whatever you feel you need from it. Then you divide that number by 30. Why 30? Thirty is a good working number for the hours each week that you will be productive. What happened to 40.
Yes, 40 is a standard work week and the chances are that you’ll end up putting in closer to 60 or 70 but you will not be able to charge for each hour or for every piece of work you perform for people.
So, we’re going to use 30 for the purpose of this example. If my Price List contains items for me performing a service with no outlay for supplies I should be able to divide 30 into the amount of money I’ve determined I need to make in a week and come up with a high hourly wage – remember you’re only figuring with 30 hours, but you’ll work more than that.
The 30 into $200 means you’ll make about $9 an hour. That’s decent for working from home with no cash output for a basic service business. However, if you have to pay $50 or so for product you’re down to $5 an hour and that’s not such a good idea.
Say you’re a mechanic and you come up with a list of services that will generate about $40 an hour. That’s being realistic because in today’s marketplace you need state-of-the-art equipment in order to be competitive.
Say you choose something like catering or specialty cake baking. You’ll have a lot of competition in most markets so you need to check out the competition and compare what you will need to charge with what is standard in the marketplace.
Once you’ve done the numbers for your dsired home based business you’ll know whether or not you’re being realistic about what you want to do. Remember, your service has to have value before people are going to pay for it.
In the last post we went over the beginning steps to determine what types of service you could offer in your home based business. If you have a particular gift or skill that you feel is marketable, that is the perfect starting point.
Then review how many related services you can attach to your basic service – the more services and products you offer the more customers you will attract.
We explored the “dream” business. Your “dream” may not be very marketable. Compare that to a logical product or service that people use all the time and one that creates repeat customers. One of the best examples of that is auto repair and beauty/barber supplies and services. Be sure that what you decide to put your time and energy into has a reasonable chance of success.
Then you take it a step further and conceive of the products that go along with auto repair – oil, tires, batteries, alternators, belts, etc. I’m using the example of auto repair because it’s one almost everyone can relate to. Don’t lose sight of the fact that you need to apply this information to your chosen pursuit.
If your choice were to be barber and beauty services you’ve got products for extra profit, massage services, coloring, permanents, nails, pedicures, etc. The list goes on and on.
Any road you decide to travel should be profitable, have a variety of services you can offer, and offer your customers some additional products that you can make a profit on.
No product or service? If you have a computer and basic skills you can tag on as an affiliate to many successful Internet businesses and be more successful than you ever thought possible.
Log into http://www.LowdownReports.com and click into Affiliates and Links for an introduction to a business probability you may not have ever thought of.
If you decide that a home based business is the answer for you, make sure you decide on a business that will be profitable. There is nothing to be gained from putting the time and effort into a project where there is no customer base.
How to develop your customers for a home based business? You have to find the people who will need your product or service – How do you do it? Evaluate your product or service and decide a beginning marketplace. Determine low-cost ways of letting that marketplace know you’re available and ready for their business.
How to charge for services? You only have so many hours in a day and you need to earn a certain amount to accomplish your goals. You will only be able to produce a certain number of hours each day. Other hours will be taken up with “stuff.”
How to decide how many services you need to offer? A single service business is very limiting. You need to develop as many related services as you can conceive so that you will have appeal to a broader customer base.
How to determine the success potential of your business? This one is tough. You may have a passion for something – let’s say butterflies. Butterflies don’t need training. They don’t wear clothes. They don’t take trips you can charge for. The best thing you could do with butterflies is mount them or paint them. If you’re artistic, that could be a possibility. Otherwise, stay with the day job.
On the other hand, let’s say you’re an amateur mechanic. You live in a house with a big garage. You’ve been tinkering with cars as long as you can remember and you can fix just about anything. You can average $35 to $50 an hour for your time six hours a day. That’s $300 a day times five days a week – $1500 a week, $6,000 a month, $70,000 a year. Think about that $70,000 a year with no commute, deducting part of your living expenses as business expenses and being your own boss.
Then you take it a step further and conceive of the products that go along with auto repair – oil, tires, batteries, alternators, belts, etc. I’m using the example of auto repair because it’s one almost everyone can relate to. Don’t lose sight of the fact that you need to apply this information to your chosen pursuit.
Any road you decide to travel should be profitable, have a variety of services you can offer, and offer your customers some additional products that you can make a profit on.
No product or service? If you have a computer and basic skills you can tag on as an affiliate to many successful Internet businesses and be more successful than you ever thought possible.
Log into http://www.LowdownReports.com and click into Affiliates and Links for an introduction to a business probability you may not have ever thought of.
If you decide that a home based business is the answer for you, make sure you decide on a business that will be profitable. There is nothing to be gained from putting the time and effort into a project where there is no customer base.
A home-based business has many hidden advantages. If you’ve decided to capitalize on a gift or a skill you possess you will already have items in your possession that will help to keep down your start-up costs.
My first business was a home based sewing business. The machine I had was okay but the new ones were really slick. so I bought a new one and wrote off the expense over the next few years. The caveat there would have been using that sewing machine for personal use. By that time the business was going so well I didn’t have time to sew for myself so it wasn’t an issue.
We had basic phone service already, but I upgraded it to voice mail, call waiting, call forwarding, etc., because of the help I perceived those additions would be in my trying to reach customers and in my customers finding me. At the end of the year I checked with the phone company to make sure what the basic phone fee would be each month and that was considered personal expense – everything else was deductible. The huge advantage to that in today’s market is the cell phone. As long as it is not your only form of telephone service, the entire amount is deductible.
We had one car which created some real challenges. We bought a second one when the children started school and I made sure that when I drove them to school it was on my way to the fabric store, the company I bought window blinds or drapes from or on my way to do a measurement and job quote at a Client’s house.
You get the idea – those were all expenses we would have incurred anyway. However, but taking advantage of the favorable laws I was able to handle things more easily and much more professionally.
The tax laws definitely encourage entrepreneurship. Once you begin the quest for a home based business take stock of what you now possess that will help you advance your quest. Establish a value for those items and work with your accountant on a depreciation schedule.
The point at which the tax issues begin to be a pain in the neck is when you start hiring people to help you in your home based business. More on that in the next post.
For more detailed information on my home based sewing business and how it evolved go to Http://www.LowdownReports.com. You can take advantage of that information and apply it to any home based business you choose to pursue.
Developing a home based business could have many unexpected advantages. You aleady have living expenses – why incur business location expenses if it’s not necessary.
Some home based businesses are service businesses where you go to the Client’s home to perform the service – some are service businesses where the Client comes to you for the service.
both can offer you unexpected benefits to your yearly bottom line. You owe it to yourself to be aware of possible deductions to which you are entitled when you choose to operate a business out or your home. And, being aware of those possible deductions might help you make the decision about starting your small business from a home base or renting space and incurring that additional expense.
The big ones are home loan interest and automobile mileage. You need to be able to set aside a room in your home devoted just to business. In my case it’s three rooms – but I only get to deduct for one. Granted, if you rent space that amount is totally deductible. However, if you can do the same job or perform the same service from a designated space in your home that you have to pay to live in anyway and enjoy a 12% income tax deduction instead of committing to a monthly out lay for rent – which would be the smarter thing to do?
Then you want to keep very careful track of your mileage and plan your travel outings. If you’re not good about multi-tasking now is the time to start. If you need stamps to mail business letters do several other things at the same time. If you work it right you can still take care of your household responsibilities while you’re making predominantly business outings. The key is that word predominantly. The IRS has a guideline as to what is deductible and what is not. You want to get to undertstand that and take advantage of those deductions. Make sure you’re doing things in such a way that they are deductible – and do an occasional errand of your own. Track the milesage for the business ventures and note what in that was personal only.
My first business was a home based sewing business. The machine I had was okay but the new ones were really slick. so I bought a new one and wrote off the expense over the next few years. The caveat there would have been using that sewing machine for personal use. By that time the business was going so well I didn’t have time to sew for myself so it wasn’t an issue.
We had basic phone service already, but I upgraded it to voice mail, call waiting, call forwarding, etc., because of the help I perceived those additions would be in my trying to reach customers and in my customers finding me.
We had one car which created some real challenges. We bought a second one when the children started school and I made sure that when I drove them to school it was on my way to the fabric store, the company I bought window blinds or drapes from or on my way to do a measurement and job quote at a Client’s house.
You get the idea – those were all expenses we would have incurred anyway. However, but taking advantage of the favorable laws I was able to handle things more easily and much more professionally.
The tax laws definitely encourage entrepreneurship. Once you begin the quest for a home based business take stock of what you now possess that will help you advance your quest. Establish a value for those items and work with your accountant on a depreciation schedule.
The point the tax issues begin to be a pain in the neck are when you start hiring people to help you in your home based business. More on that in the next post.
To survive the critical first years of your home-based business you want to be sure to avoid unnecessary expenses. Developing a home based business could have many unexpected advantages. You aleady have living expenses – why incur business location expenses if it’s not necessary.
Some home based businesses are service businesses where you go to the Client’s home to perform the service – some are service businesses where the Client comes to you for the service.
both can offer you unexpected benefits to your yearly bottom line. You owe it to yourself to be aware of possible deductions to which you are entitled when you choose to operate a business out or your home. And, being aware of those possible deductions might help you make the decision about starting your small business from a home base or renting space and incurring that additional expense.
The big ones are home loan interest and automobile mileage. You need to be able to set aside a room in your home devoted just to business. In my case it’s three rooms – but I only get to deduct for one. Granted, if you rent space that amount is totally deductible. However, if you can do the same job or perform the same service from a designated space in your home that you have to pay to live in anyway and enjoy a 12% income tax deduction instead of committing to a monthly out lay for rent – which would be the smarter thing to do?
Then you want to keep very careful track of your mileage and plan your travel outings. If you’re not good about multi-tasking now is the time to start. If you need stamps to mail business letters do several other things at the same time. If you work it right you can still take care of your household responsibilities while you’re making predominantly business outings. The key is that word predominantly. The IRS has a guideline as to what is deductible and what is not. You want to get to undertstand that and take advantage of those deductions. Make sure you’re doing things in such a way that they are deductible – and do an occasional errand of your own. Track the milesage for the business ventures and note what in that was personal only.
My first business was a home based sewing business. The machine I had was okay but the new ones were really slick. so I bought a new one and wrote off the expense over the next few years. The caveat there would have been using that sewing machine for personal use. By that time the business was going so well I didn’t have time to sew for myself so it wasn’t an issue.
We had basic phone service already, but I upgraded it to voice mail, call waiting, call forwarding, etc., because of the help I perceived those additions would be in my trying to reach customers and in my customers finding me.
We had one car which created some real challenges. We bought a second one when the children started school and I made sure that when I drove them to school it was on my way to the fabric store, the company I bought window blinds or drapes from or on my way to do a measurement and job quote at a Client’s house.
You get the idea – those were all expenses we would have incurred anyway. However, but taking advantage of the favorable laws I was able to handle things more easily and much more professionally.
The tax laws definitely encourage entrepreneurship. Once you begin the quest for a home based business take stock of what you now possess that will help you advance your quest. Establish a value for those items and work with your accountant on a depreciation schedule.
The point the tax issues begin to be a pain in the neck are when you start hiring people to help you in your home based business. More on that in the next post.