The past few years have been quite turbulent, but if anything good has come out of all the economic and personal strife, it’s the fact that anyone can work from home and build a serious career. However, success doesn’t come easy and all the little mistakes a budding entrepreneur makes during the initial launch and first few months can add up.
There are no guarantees in business, but there are some tried and true approaches that can help give you a fighting chance and allow your business to pick up steam fairly quickly. It ultimately comes down to your hard work and good habits, of course, and we are just here to point you in the right direction.
1. Look beyond the basics when writing a business plan
A lot of people make the mistake of underestimating the budget they’ll need to launch their business, let alone keep it afloat. Your business plan should be more detailed than just “Buy X amount of tools and materials > Pay the bills > Work hard > Profit.”
There are many considerations here. Will you be doing several extra hours in the afternoon after your day job, or do you have enough saved up to quit and fully commit to the new career?
Will you need to come off as a true professional with a business address and phone answering service, or will you be more of a local mom-and-pop shop?
As the good people at Plaza Executive Suites, a virtual office provider in Arizona, say: “First impressions really count, but you don’t have to spend hundreds or thousands of dollars every month renting out office space to give off that trustworthy professional vibe.”
Whether it’s using virtual office space, finding good used office furniture or tools to cut costs, or investing more in software upfront to improve efficiency and save lots of time down the line – these decisions need to be made, and they need to make their way into your business plan.
2. Set up a pricing structure that is conducive to growth
The number one problem that ensures small businesses are dead on arrival or have severely limited growth beyond year one is the inability of the founders to understand the true value of their labor. You see it everywhere, from freelancers trying to land their first few jobs to creatives coming up with their first handcrafted clothing or jewelry.
People seem to be reluctant to charge a higher price because they feel that they aren’t that good yet or simply because they know that the raw materials don’t cost a lot.
Well, it’s not just about a simple little logo design or a pair of shoes you are selling – you have put sweat, blood and tears into learning the craft, invested in electronics, software, and tools, wasted resources, etc.
The basic pricing formula
A simple way to look at pricing is to set a realistic annual salary you would be satisfied with or at least be able to get by on relatively comfortably. You divide that by 12 months, then by the number of workdays you want to devote each month, and finally by the number of hours you will be working on each of these days.
That’s your hourly rate. You also need to factor in your household bills because you’re using a room as office space, so let’s say one-third of all monthly bills divided by the number of days and hours. And that’s just the costs of living, keeping you warm and fed – you also need to factor in a profit margin so that you can invest in your business.
This is usually anywhere between 10% and 30%. So you see that the final cost can easily be double or triple the raw material costs.
3. Keep improving all the secondary skills you need to market your business
In this day and age, every home business has to be on social media – this is the bare minimum you can do if you want to say that you are actually marketing your brand. You want to build a community and give them a sneak peek behind the curtains to show potential customers why they should part with their hard-earned money.
If you sell physical products, you will also want to develop a working knowledge of product photography and invest in a basic setup. Those offering services will want to showcase their knowledge and position themselves as thought leaders and creative problem solvers.
Some streaming and video editing software will be welcome here, perhaps a few YouTube tutorials or live Q&As each month.
Follow these steps and remember not to rush the process
We’ve only scratched the surface here with a few basic ideas on developing a home business, but these are crucial. The last thing we’ll leave you with is to not rush things. As you develop a following and more clients start messaging you, it’s easy to spread yourself thin, so you’ll need to define a proper balance between work and fun that works for you.
