Starting Home Business Part 1 of 3
Thousands of Americans every year follow their dreams
and start a home business. You can too, and you won't believe
just how easy it can be.
By Jon
Deragon, Visca Consulting
Thursday, July 10, 2003; 1:20pm EST
Starting a home business is easier than you may think. Although there
are a number of steps involved, most of them are more easily
obtainable than you may think and require little up-front investment.
In particular, businesses based on revenue from a web business
requires some of the least amount of capital expenditures and setup.
Resulting in the highest potential for a return on your investment and
efforts.
Having an entrepreneurial mindset is the key to unlocking the
creativity, determination and willingness to get through such a
checklist and produce a profit generating business. However, even if
you are unfamiliar with the world of business, and have had little
exposure to the elements of business, it is still absolutely possible,
with strong willingness to learn, research and work, to achieve
excellent results. Starting a home business is not limited to people
who have had years of background and experience. It is something that
is available to each and every person that has the will power and
desire to succeed.
This three part article will take you through a checklist of important
items you should consider when starting your own home business. If
starting a business seems like a daunting task to you, the checklist
will help simplify the process by breaking it down into more
manageable components and describing them in detail. Tips and pointers
will also be given throughout the article to get you on the right
track.
1. Mission Statement / Business Objectives
The most important thing you can do is be completely clear in your
mind from day one what your business objectives and goals are and how
you are going to achieve them. Set milestones, revenue goals and have
a feeling of where you want the business to go.
Determine who
your competitors are; the benefits of your offerings over the
competitions; the target audience of your product; how your products
and services will cover costs and create profit; and the lifespan of
your product cycles. All of which should be captured on paper in the
form of a mission statement and a business plan. Both of which,
however, may not always remain concrete throughout the life of your
business. As your business grows and matures, you may make
modifications to your original business plan to adapt to current
market conditions, expectations and other factors. When these changes
come into play, it is important to evaluate them against your original
mission statement to be sure you are not losing focus on the
fundamentals of what your business is all about. If it is inline with
the basis of your business, revise or append the plan to meet your
current needs while always retaining the original. There have been
many cases throughout history where companies small and large have
wandered away from their mission statement with disastrous
consequences. This is because they became unfocused and became
unaligned with their goals. Keeping focused and up to date with your
written business plan, and always keeping your mission statement in
mind is always advisable. Actually envisioning your company say 3, 5
and 10 years down the road - so that you have a mental picture of
where you want things can help as well. Just as a runner in a race
envisioning being number one through the finish line has a greater
chance of accomplishing that goal.
2. Branding, Logo, Marketing
The critical importance of having the right branding, logo and
marketed image cannot be stressed enough. Time and time again you will
discover how much people will use your logo or your brand name as a
basis of whether or not they can identify with your company, products
or services. Therefore careful attention must be paid to developing a
brand and image that is highly consistent with the expectations of
your potential client base. Branding such as your logo in an
advertisement is sometimes the very first impression a person will get
of your company - therefore, like the old adage says, make that first
impression the right impression. Every piece of marketing material you
send out should shout the values that are important to your customers.
Professional development of your branding, logo, and related materials
is recommended.
3. Stationary, Branded Materials
Once your branding and logos have been established, use them!
Everything from your business cards, outgoing faxes, envelopes,
letterheads, right down to the coffee mug you hold - should all be
leveraged to promote brand awareness. Think of it this way, if all of
these things will be used anyway, such as envelopes, utilizing them as
an advertising medium is a cost effective way in building mindshare.
Since advertising in newspapers, television and billboards is
expensive - it is important to be creative in your efforts to get the
word out about your business. Creating mind share (peoples ability to
recall your businesses name when thinking of the products or services
that your company offer, example when thinking "I want a cold
beverage", and recalling "Coca-Cola") has a lot to do with repetition
in marketing (sometimes to the point of saturation), experiences with
the brand, and many other factors. You can start this process by
increasing the number of potential times a customer or potential
customer will see your branding and associate it with a positive
experience.
4. Incorporating
Yet another important initial step is the incorporation of your
company. Depending on the country you will be based in there is
typically two ways of starting your company (in the eyes of the
government). One way is to register a 'business name', the other is to
'incorporate'.
Business Name
By registering a business name, what you are essentially doing is
attaching a company name to yourself. You become the company.
Revenue generated through this business name is typically taxed at
your personal income rate, and the amount of things you can
'write-off' as a business expense and other tax advantages are
somewhat limited. A negative aspect of this approach is your
liability in the event the company fails or is subject to
litigation. Since your company and you are one, you stand the
possibility of losing personal possessions and the damage of credit
ratings - rather than isolating the liability of the company to the
company its self.
Incorporation
Incorporating is literally like creating a new entity in the eyes of
the government. And this entity acts as a company. This company
functions completely independently from yourself, and you become the
company's 'sole proprietor', meaning you have been designated as the
person which overlooks the operation of the company. You also become
an actual employee of your own company as well, for such things as
management of payroll. This way money the company generates and
retains within the company will be taxed at a corporate rate, while
money which is paid to you or others that are part of your company
are taxed at the individuals personal tax rate. Corporations require
their own bank accounts, checking, and other financial details -
they cannot share your personal accounts as with using a business
name. However, in the event of such things as bankruptcy or
litigation - it is isolated to the company entity its self. This has
the stronger likelihood of preventing such things as personal
bankruptcy, personal liability, credit damage, liquidation of
personal assets (house, furniture). Of course keep in mind that your
own actions may cause you to incur personal bankruptcy, decrease in
your credit rating or be subject to litigation.
Incorporating also
offers some excellent opportunities for tax savings and ability to
claim expenses, capitol costs and other things. Items such as your
car, office space etc can all be expenses which will fall under your
business as tax write-offs. This is the area where registering a
business name is much weaker at achieving. You can then take
advantage of this by using a company car versus a personal car,
write off part of your home mortgage by claiming square feet of your
property as office space. All of which has the potential to save you
money both in the short and long term. Therefore it is very
important to have an accountant that is very familiar with corporate
accounting and how to maximize your tax savings. Be sure to set up
an appointment with a reputable corporate tax specialist to help
advise you on the best ways to conduct your purchases and route
revenues generated. Although a corporate accountant can be
expensive, they will also save you a lot in recuperated tax. For
example, leasing a company car will typically allow for a much
better tax savings than purchasing the car and allowing it to
depreciate - accountants are great at this sort of thing, and as a
business owner starting your business, you don't have time to
research all of this yourself - let the people that know it best,
advise you.
Go Directly to
Part << [ 1 ] [ 2 ] [
3 ]
>>
In the next part of
this article, we will examine the following:
About The Author
Jon Deragon is president and founder of Visca Consulting, a firm
specializing in web site design, development and usability for
businesses of all sizes. He welcomes any questions or comments you may
have regarding this article or interest in the services available from
Visca Consulting.
info@viscaconsulting.com
http://www.viscaconsulting.com/
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