Information about what you need to do and know before your attempt to start a home business. Arming yourself with this information will greatly improve your chances for business success.
Laying the Groundwork to Start Your Home Business
starting a business is an everyday dream that not many are fortunate enough to realize in their lifetime. Unfortunately, not everyone is cut out to run their own business. By laying the groundwork you'll avoid wasting your time and pave the way for your future success.
10 Steps Before You Start a Home Business
This step-by-step exercise is intended to get you thinking about what you have to offer and whether your idea will result in a successful home business. Those who complete these steps may decide to go ahead with their idea, choose a different home business or abandon the idea completely.
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1. Inability to reach desired sales goals.
If you are not making the kind of sales that you need, your losses multiply as you find it difficult to meet your fixed costs requirements, such as payment for your inventory and overhead..
What to do: While you may not have sold anything before, now is the time to get your chin up and learn those selling techniques. You simply have no choice: don’t sell and you may be forced to close the business.
One strategy you can also use when sales (and profits) are low is to cut prices. This could attract customers, helps cover your costs, and buys time until your business rebounds. A price cut can also boost sales quickly, especially when there is no money for advertising or other promotions.
However, the downside of this strategy is that you may find it difficult to increase your prices back to its original level. Consumers may even peg you into the “cheap” category, thus putting your hard-earned image at risk.
2. Wallet is not big enough.
You gather all the resources you can to start a business you withdrew all your life savings, borrowed money from your parents, even “maxed-out” your credit cards. When you open for business, alas, you find that customers and sales can be pretty elusive. You wait, and wait, and wait, but cash is running out. Without money coming in, you decide to cut your losses and close down the business.
What to do: The first step to addressing the problem is to review how you performed against your business plan. Did you spend beyond your planned expenditures? More often than not, your problem lies in a genuine misguided and unrealistic expectation of finance.
Try to explore other avenues of financing your business, even opening yourself to accept equity financing where you will be required to sell an ownership interest in the business in exchange for capital. Your choices may be to build the business yourself and push it to success, then later sell your interests for a fair profit; or be repeatedly frustrated in attempts at financing a business that cannot achieve its potential because of insufficient capital.
3. Product has no sizzle.
Your success depends on whether you provide products or services with value to your customers. Many small business entrepreneurs fail to effectively communicate to their customers the benefits of their products or services. This is particularly true of many home-based Internet entrepreneurs, who have been misled to believe the myth that “if you build it, they will come.”
What to do: The acceptance of your products will depend on how well you are able to represent your business in the minds of your customers. If you know that you offer good quality products or services with value, the next step should be to get that information across your target market. Generate customer interest in the product through advertising and promotions.
4. Marketing and advertising fails to elicit response
You must develop effective strategies to market your business. But is your marketing plan working, or are they just a waste of time and resources?
Many business owners, in an attempt to save on costs, develop their own marketing campaigns only to fail in their intended purpose of bringing in more business or achieving "top-of-mind-awareness" in the mind of the customer. Their campaigns become ineffective, in the sense that it suffered from unbelievability, an irrelevant message, market saturation, and/or improper niche marketing. They spend time and resources on wrong advertising medium.
What to do: To achieve your marketing and advertising goals, you need to have an effective message, market position, and adequate funding. An advertising message that is "believable and relevant" is the key to promotional success. When you have the right thing to say in your promotion, you will drive sales. And when the right message is also unique, it becomes even more effective.
5. Failure to adapt to changing market conditions
Changing market conditions may include downturn or upswings in the economy, heightened competition, or even common business risks such as Web site business interruption or calamities. It may mean changing neighborhood profiles, where once thriving areas full of walk-in customers are now deserted. When these changes strike, you may find your business ill-prepared to cope and survive.
What to do: Stay abreast of the rapidly changing business environment by reviewing your company’s business strategy. If you determine that your current strategy will not work, overhaul your business focus, if necessary. It is important that you study your customers thoroughly so you can track customer preferences and buying trends. This will help release your company from the economic ups and downs.
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