10 Jul Top 10 Things To Do To Start a Home-Based Business
TOP 10 THINGS TO DO TO START A HOME-BASES BUSINESS
Helene K. Liatsos
TABLE OF CONTENTS
1. Selecting a Business
2. Naming Your Business
3. Legalizing Your Business
4. Your Business Plan
6. Your Marketing Plan
8. Office Basics
9. The Image of Your Business
10. Balancing Your Life
I. SELECTING A HOMEBASED BUSINESS:
* the right business FOR YOU takes introspection and honesty
* it must take into account your personality and characteristics
* it must fit into your lifestyle because your business goals should be an integral part of your life goals…the business is the VEHICLE for your life’s goals.
Ask these questions:
* what do I want out of life and is this the road to it?
* am I prepared to work long hours and make sacrifices?
* is my family ready, willing and able to “support” me?
A. Determine on what LEVEL you want to operate:
Full Time Business…financial cushion for basic living expenses for at least
6 months to 1 year
Moonlighting…keep full time job and work a minimum of 8 hours a week at your home based business
Part Time Business…work part time on your own business or part time at a job
B. Home-based business options:
1. Work at home
…artists, writers, computer programmers, etc.
2. Work outside the home, but you run your business from home.
…contractors, plumbers, electricians, etc. etc. etc..
What do you want to do – work inside or outside?
Do you want to work with children, seniors, animals, the land, the disabled, etc?
Do you want to teach, train, fix, do, perform, etc?
C. How to choose a home based business:
Start thinking about your skills, experiences, hobbies, interests, etc. Think about your BACKGROUND and what you have done in the past that you really liked. Make an inventory list of all your work experiences – part time summer jobs, volunteer work, professional positions, etc. Ask these questions:
…what am I really good at doing?; what do you have a “feel” for?
…what do I enjoy doing?
…what do you know about that “industry?”
…what kind of work and how much work do I want to do each day?
…what do I want to be doing two, five, ten years from now?
…are you comfortable about your career change? In other words, do you care what other people think of my career change?
…can you do this every day for the rest of your life?
And most importantly: Can I make a living?
II. NAMING YOUR BUSINESS
A. Your business name SHOULD EXPLAIN EXACTLY what you do:
…Make your name more specific, therefore instantly recognizable.
B. Pick a name that is: EASY TO REMEMBER
EASY TO PRONOUNCE.
…Don’t confuse or make it difficult for your customers to call you!
C. Plumber’s Principle: Pick a name that starts with the 1st THIRD of the
D. Create an Image…how do you want to be remembered.
Pool Company: Muddy Waters – wrong!
Aqua Blue – right!
E. Do your research – don’t pick a name that someone else already has or that is similar to another business:
…leads to confusion in the business community
…they may have bad credit and they’ll come after you
…they can make your life miserable by taking you to court
Checking the availability of your business name is Your responsibility.
III. LEGALIZING YOUR BUSINESS
Registering your Business name is done at the County Level…so you need to contact the Recorder Registrar’s Office (aka County Clerk’s Office)
This is called filing a FICTITIOUS NAME STATEMENT
(aka DBA – DOING BUSINESS AS)
THIS IS A LEGAL REQUIREMENT.
THIS IS HOW YOU TELL THE GOVERNMENT YOU ARE OPERATING A BUSINESS UNDER ANOTHER NAME, OTHER THAN YOUR OWN FULL LEGAL NAME AND THA NO FRAUD IS INTENDED.
YOU DO NOT HAVE TO FILE A DBA IF YOUR BUSINESS NAME IS YOUR FULL LEGAL NAME.
COUNTY CLERKS OFFICE will register your business and send you back the original with their seal on it which also shows you the EXPIRATION DATE. Make a note of this date.
A. BEFORE YOUR FILE YOUR NAMES, you must check the name to ensure that no one else has the name you have selected for your business. This can be done through the county agency, on-line through the county’s website or by using a business service that provides this service to businesses.
B. AFTER YOU FILE, you must Publish your DBA in a RECOGNIZED PUBLICATION within the county
THIS IS A LEGAL REQUIREMENT.
THIS IS HOW YOU TELL THE PUBLIC YOU ARE OPERATING A BUSINESS UNDER ANOTHER NAME, OTHER THAN YOUR OWN FULL LEGAL NAME AND THA NO FRAUD IS INTENDED.
…must be published for 4 consecutive issues
…shop around as costs vary
…once published, they will send you Proof of Publication
Some newspapers publish AND file the DBA for you for a nominal service fee. When you call for publishing rates ask them about their filing service as well.
LICENSES AND PERMITS:
. A. BUSINESS TAX
The City Clerk of the Tax and Permit Division of the City of Los Angeles says:
“Persons engaging in business within the City of Los Angeles must pay an annual business tax as required under Section 21.03 L.A.M.C.”
“The sole purpose of the tax is to obtain revenue.”
Anyone running a business in the City of Los Angeles must to this. You go to the your city’s CITY CLERK’S OFFICE or CITY HALL and fill out an application.
At the end of each year, your business will receive a FORM. You will fill out this form and pay the tax. This tax is due January 1st and delinquent on March 1st.
The “City of Los Angeles Business Taxes” are based upon the calendar year!
This Business Tax registration is NOT a license or a permit! It is only a registration of your business and the revenue that you generate – the city wants a part of it!
When you file the form, they might ask you if you are home based or not…if you are and are listing your home address, they will simply tag it. This way they will not release the home address, as a way of protecting you.
THE POINT IS TO MAKE SURE WHAT YOUR CITY DEMANDS OF YOU!
B. ZONING BOARD
It is your responsibility to find out if you are properly zoned. If not, you may have to apply for a variance or change of zone.
The City of Los Angeles says: “Persons conducting business must abide by all city zoning laws.”
You should contact the Zoning Board in your city and find out what the zone you are in and what the regulations are for that zone.
It has been my experience that the Zoning Board will only come knocking on your door if there is a complaint against you. I would then strongly recommend that you “low-profile” your businesses
BE A GOOD NEIGHBOR. DON’T CHANGE THE CHARACTER OF YOUR NEIGHBORHOOD:
· no signs hanging out in front
· no store front windows
· no delivery trucks coming and going
· no people traffic in and out
C. STATE BOARD OF EQUALIZATION WWW.BOE.CA.GOV
The SBE is the government arm that authorizes you to sell tangible personal merchandise, RETAIL OR WHOLESALE, to an end user in the state of California.
For the privilege of selling your merchandise to an end user you are required to pay a SALES TAX on each item sold. You are allowed to reimburse yourself by collecting this sales tax from your customers. In order to do this, you must have a SELLER’S PERMIT.
It’s free; get in person or by mail – call ahead
They will send you a TAX RETURN FORM every three months (or otherwise). Fill out and send back with your check for the sales tax you collected for the previous quarter. You need to keep very accurate records of the revenue that you generated and sales tax that you collected.
It’s a good idea that, as you sell your merchandise, you “BANK” the money in a separate account, perhaps a small savings account with the credit union. Don’t put it in your business checking account; when it comes time to pay the taxes, it may not be there!
If you sell this bag for $10.00 and you sell 10 a day, you then should have collected approximately $8.00 in sales tax for the day.
$ 8.00 x 5 days = $ 40.00 a week
$ 40.00 x 4 weeks = $160.00 a month
$160.00 x 3 months = $480.00 a quarter
1. SBE offers a FREE, 4-hour class on The Seller’s Permit that covers the gray
areas such as painters, TV repairman and plumbers, etc.
2. SBE sends updates to you regarding changes in the laws.
3. If you abandon business, you must notify them in writing and they will confirm in writing also.
D. RESALE CERTIFICATE
When the SBE issues you a Seller’s Permit, you are eligible to purchase items that you need TO MAKE YOUR PRODUCT and not pay sales tax.
You do this by getting a RESALE CERTIFICATE.
IV. BUSINESS PLAN
A Business Plan is a ROAD MAP of your business. It shows where you are, where you are going and how you are going to get there.
Why do you need a business plan?
Identifies goals and objectives: A Business Plan should be written and reviewed periodically. By doing this, it forces you to stay focused, stay on target and work towards meeting your goals. This is a “How To” manual on how to operate your business.
Identifies problems: While writing your business plan, you will come up against issues that will require more work, more money, more whatever than you originally thought. This is where you begin to see your weaknesses and strengths. As you are confronted with these issues you will be forced to rethink, replan, refinance the solutions to your problems…this is how your business grows and you grow as an entrepreneur…by facing challenges and winning.
Funding your business aka “BORROWING MONEY”: Whether you borrow money from your Uncle Joe in Kansas City or the guy at the bank, they want to see your plans. They want to know how their money will be spent, when the profit will be made, how much interest to they get when do they get it.
There are various ways to write a business plan:
…library has many books on writing a business plan
…professional associations offer business plan guides (sample)
…computer software (sample)
…take a class
OUTLINE of Business Plan should include the following sections:
– What is the EXACT NATURE of your business?
– Who are you? What qualifies you to run this business?
…include resume, bio, all other experience
– Write a separate Marketing Plan and include in this section.
– How much MONEY do you need to start this business?
…What is your budget? Include: office supplies, equipment, inventory, permits & licenses, advertising, stationary, utilities, etc.
IF YOU DON”T HAVE A CUSTOMER, YOU ARE NOT IN BUSINESS!
NEGOTIATING TOWARDS A SALE
· Preparation: Know your objectives = what is the ideal sale vs. the minimum sale? Determine what your opening offer will be. Outline the steps you will take.
Identify what concessions you are prepared to make.
Fine-tune the approach you use to convince the customer to buy
Have a positive attitude. Ask for what you want, directly and confidently,
but in a non-threatening way.
Be realistic in your opening price; don’t be ridiculously too high so that nobody takes you seriously and don’t be foolishly too low so that you are giving away all your hard work.
Be non-committal and at the same time be approachable.
Explore the position of the buyer by asking questions.
The art of bargaining is to get the customer to move closer to the price
you could live with – the minimum sale.
Never be embarrassed to ask.
When you must give something up, give up something that gives nothing substantial away. i.e. “Well I could give it to you for only $ 27.50, but it would have to be the yellow one” (You’ve been trying to sell that since the day you made it!)Do something physical, such as taking the product off the shelf and putting it in the customer’s hands.
Sometimes it is not what is said that counts, but how it is said…a customer could be persuaded to buy simply by being firm with your price and delivering that message with charm!
Don’t try to “win” the battle; a customer is someone you want to develop over time; don’t back them into a corner…if they feel like they “lost”, they won’t come back and they will tell all their friends about how terrible they were made to feel.
Remember that the savvy customer will be applying these same strategies as you!
Remember that everything is negotiable!
Sales is an action item. It’s an activity. I sell a bar of soap for 50 cents.
Marketing is the mental thought; it is what I do to convince you to buy this bar of soap.
1. Who needs your product or service?
…individuals or company;
2. What competing products/services are out there?
…know your competition
…competition is good – it forces you to be better
3. How is your product unique?
…Study the competition
…what weaknesses and strengths does your competition have? …how are you better or worse; same or different?
4. How will you tell people about it? aka SALES STRATEGY
…mail order, direct mail; telemarketing; home parties; referrals; door to door; advertising
5. What will the pay for it?
…research competition’s price
…take a survey
6. How much will it cost to produce and deliver it?
…LEO: – what is your LABOR, EXPENSES, OVERHEAD
…retail price should be 2 1/2 times what your LEO is; higher in a better economy.
PUBLIC RELATIONS and ADVERTISING
– aka: “How to get your name in the public’s eye.”
A. PUBLIC RELATIONS – IT’S FREE!
Take advantage of public relations by writing your own NEWS RELEASE. You can learn how through books, classes or just by keeping at it and perfecting your skill.
Local newspapers are always interesting in what is happening in the community…but you still have to make your news release newsworthy…i.e.
“You are helping the elderly by doing their taxes in January for 1/2 the price “
NEWS RELEASE COVERS: WHO, WHAT, WHERE, WHEN and HOW
Research newspapers and magazine to determine where you should advertise. Send away for their MEDIA KIT to find out who reads them, how often, what is the shelf life (daily, weekly, monthly), what is the circulation, how much does it cost to advertise, etc?
If you will be advertising, remember that the key to successful advertising is REPETITION. People need to see your ad many times over and over again before it sinks in for them to call you. Mcdonald’s become MCDONALD’S by being in your face 1 million times a day!.
The best place to advertise is the upper right hand corner…because people tend to “skim” through like this – SHOW SAMPLE. This is how repetitive ads really become effective. It’s a lot better to get a smaller ad in this area for several times than to get a full page ad for one time.
Networking is UTILIZING RESOURCES. Resources can be found anywhere and everywhere – through your family and friends, neighbors, church, your children’s schools, local or national organizations, trade associations, etc.
“Never leave home without it” – means keeping your business cards on you at all times…you never know where or when you’ll meet your next customer!
Library Chamber of Commerce:
Trade Associations California Women Business Owners National Association of the Self-Employed
Small Business Administration
SCORE – Service Corps of Retired Executives
RULES OF NETWORKING
1. Identify Yourself: Wear a nametag with your name and profession written clearly.
2. Set Goals: What kinds of people do you need to meet?
How many contacts do you need to make?
3. Start Talking: Socialize – move towards people – pick out an individual or a group of people and introduce yourself – initiate the conversation – be outgoing!
4. Make Friends: Try to meet 5 to 10 new people – learn what you have in common – be attentive to each person – tune into them – make eye contact!
5. Trade Information: Exchange ideas, experiences, leads and contacts; tell them who you are, and listen to who they are!
6. Don’t Hustle: Discuss topics of mutual interest…arrange to meet at another time (breakfast, lunch, coffee) and do business then.
7. Be A Resource: “I know where you can get that information…” etc. Offer referrals, share opportunities, introduce them to your contacts.
8. Give and Get: Give as much as you can – be supportive! Your own rewards come from helping others!
9. Ask for what you want: Find the person who can provide it – then ASK FOR IT! Remember, if you don’t ask, you don’t get!
10. Keep At It: Broaden your base – make as many contacts as you can – you can never know too many people – you never know where your next opportunity will come from!
Some people do not think they need a BUSINESS CHECKING ACCOUNT, but the IRS says you do. When you operate a business, home based or otherwise, you must keep a separate accounting for it. According to their rules, you CANNOT CO-MINGLE funds between personal and business.
You need the pink copy of your DBA form to open a business checking account. Before you start running around looking for bank, sit down by the telephone with the yellow pages and call around; ask them these questions:
FOR A BUSINESS CHECKING ACCOUNT:
1. What is the minimum deposit? $50.00 or $1000.00?
2. What is their service charge and what is it based on?
…average daily balance, flat rate or monthly activity
3. What business services do they offer?
…free cashier’s checks, safety deposit box, merchant line, etc.
4. What are their extra charges?
…too many deposits, ATM activity, over draft fees, etc.
5. Automated Telephone Services with real, live person to assist you 24 hours a day, 7 days a week.
When you start making money from your business DEPOSIT IT IN YOUR BUSINESS CHECKING ACCOUNT. Determine how much money you need to live on and PAY YOURSELF a monthly salary or draw from this account. If you can link your personal account to the business account, then all you have to do is a transfer of monies.
In this way, you will not be co-mingling funds and you will have an accurate record of how much money your business is making and how much you need each month to live on.
Poor money management is one of the top reasons why most businesses fail, so keep tabs on how much money you are making, where it all goes and, most importantly, how much you get to keep!
B. RECORD KEEPING
…Keep track of your expenses and your income
…Know and understand CASH FLOW
…Use Computer Accounting Program, such as Quickbooks
…Keep expense receipts in an organized file
…Use Customer Datebase Program for clients
…Keep paper copy of all invoices when paid
…Hire a bookkeeper when you are in over your head!
When you operate a Homebased Business there are business deductions you can take…the key is to know what they are and to document everything.
1. Keep business expense separate from home expense:
…Multiple shopping at Target
2. Home business “office” must be in one (1) place; don’t keep your computer in your kid’s room, the filing cabinet in the den and your
supplies & inventory in the garage.
3. All items used for business must be for business; you must identify what percentage you use your computer for businesses vs home/personal use.
2. Automobile repair and maintenance – %
Utilities – %
Uniforms, tools, equipment, etc.
Computers, software, upgrades, repair, etc.
Printing of letterhead, brochures, flyers
A good accountant will be able to advise you as to what deductions apply to your business.
Go to: WWW.IRS.GOV to get more information.
ESTIMATED QUARTERLY TAXES:
Annual Calendar of Quarterly Estimated Taxes:
April 15th – 1st quarterly estimated payment is due June 15th – 2nd quarterly estimated payment is due
September 15th – 3rd quarterly estimated payment is due
January 15th – 4th quarterly estimated payment is due
VIII. BUSINESS OFFICE BASICS:
A. Select your WORK AREA:
…clearly defined work space, with a door that could be closed when you’re working AND when you’re not; ok to use “Do Not Disturb” sign.
…away from central portion of the house where others do not have to run past you to get to the phone, refrigerator, bathroom, etc.
…brightly lit and cheery environment
…large enough to fit all items that you need to operate your business.
B. A DESK large enough to work comfortably. Not too high, not too low and with drawers for storage of essentials.
C. A comfortable CHAIR that stays at the desk at all times; not one you drag in from the kitchen or dining room on your way to work!
D. VISITOR SPACE: based on whether or not you need to meet with clients;
is your office large enough or do you need to use other room? If so, then determine what room is the best for this purpose.
E. TELEPHONE: DESIGNATED BUSINESS TELEPHONE LINE
1. Operator/Information will not give out your company name
2. Your business will not get a free listing in the telephone directory
3. You cannot deduct monthly service unit charges on your home phone
4. If you share home phone, what will you use if they are already talking.
5. If you share home phone, who will answer phone?
6. Answering machine message should be professional
7. Don’t publish your home phone for privacy sake.
F. MAILING ADDRESS
1. Don’t use a Post Office Box
2. Use mail service address as your own, use box # only
3. Mail service location accepts packages from Fedex & UPS
4. You can call to see what mail has come in
5. Make copies, send/receive faxes, buy stamps, notary, etc.
6. Do not publish your home address
F. Business Stationary, Invoices, etc. These announce to the world that you are serious about your business…never leave home without them!
G. Office Supplies: Buy supplies as you need them. Spend money on the things that will bring in the customers, not to decorate your office.
H. Ego Wall: this can include any college degree, certificate of completion, accreditation certificate, pictures with noted celebrity, pictures of your kids, your dog, your garden or anything else that makes you feel successful and businesslike!
I. Insurance: …medical, dental, life, disability, liability — as needed
…homeowners “business” insurance for your computer and other equipment
…business insurance that covers theft, loss, damage of client files, etc.
J. Retirement Plan:
It’s important to save for the future. 10% off the top is the minimum you should start with but you will need to see a financial planner for better information on how to plan for the future.
THE IMAGE OU PROJECT CAN MAKE OR BREAK YOUR BUSINESS!
The home-based businesses that succeed and flourish are the ones that project a positive and confident attitude. We say to the world that we are just as professional, capable, reliable, efficient and successful as the guys who have an office on Ventura Boulevard.
What is the image of your business? Decide what you want the public to think about your business and make sure your image projects it.
It’s not where you do the work, its the quality and service level of what you have to offer.
This means the way you dress, the way you talk, your message on the answering machine, your business card and stationary.
The paperwork you hand a potential client or leave behind on a desk of networking table is WHAT PEOPLE WILL REMEMBER YOU BY. It should remind them of you and your business with a clearly defined image.
Some key things to remember:
…minimum info: Business Name, Your Name, Address & Telephone Number
…use SHORT, EASY TO REMEMBER PHRASES & CLEAN LINES.
…pick colors, logo, typeset that is easy on the eye and easy to read.
…use a “hook”: I.E. “specializing in overnight transcription”
It takes 2 seconds to recognize a business card
It takes 5 seconds to recognize a business flyer
Be consistent in your image….repetition, repetition, repetition!
Most people leave our 9 to 5 jobs in search of a better way, an alternate lifestyle. We want to spend more time with our family, we want to be our own boss, we want to make more money – so what happens is that we end up working 9 to 9…but that’s okay since we operate our own business.
What you need to look out for is turning into an workaholic…it is important to lead a balanced life.
And most of all DON’T NEGLECT YOUR PERSONAL LIFE…maintain close relationships, get physical exercise, pursue outside interests.
If you have loved ones at home, incorporate them in your business: ask their advice, invite them into your office and show them what you do; kids can sharpen pencils and stuff envelopes. No one, on their death bed said, “Gee I should have spent more time in the office!”
Relationships should never be sacrificed. Family and friends can never be replaced. Time can never be replaced. Make the time to spend with them and make the time to be by yourself.
Reward yourself; give yourself an incentive such as ice cream or an afternoon in the park, award yourself with flowers, a new outfit, go to the movie all by yourself at 1:00pm.
This is not brain surgery – it’s only a business! It’s not the facts that we learn from, its the EXPERIENCE that we remember and grow from. No one can be motivated working sixteen hours a day! Take your business seriously, but have fun with it!!!
* * * * * * * * * * * * * * * * * * * *
What my personal goal is, for each of you to carry out of this class, is the motivation, the deep desire to take control of your life and start your own home based business!