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14 Mistakes to Avoid When Starting your Own Home Based Business
1.Not planning . When the going get mad, you will need to know where you are going. So you must plan, plan, plan. This will keep you focused on the essential things you need to do.
2.Not knowing why you're in business. Having a home-based business is not solely about making money. It's about helping others and becoming successful by improving the world.
3.Overextending yourself. Do you have enough capital? Where will you get money from? Your life savings? Do you have a ready line of credit for surprises? If not, get all these ready.
4.Overestimating yourself – what abilities do you have? How much time can you realistically spend on your business? How much training do you have? Are you ready to learn? How do you deal with surprises? Do you have a burning passion? Are you proud enough about your business to speak about it? What sort of reputation do you have?
5.Not organizing yourself. Good time management is critical – you are now a project manager. Do you have the foresight to see where things may go wrong? Are you ready to take action where necessary?
6.No space management. Where is your office? Where will you keep the inventory? Can you access your inventory easily? How will you track them?
7.Over committing – can you afford the overheads (rent, gas, etc)? Do you need to maintain stocks? There are costs associated with this. Are your suppliers trustworthy? Network marketing has such a bad name because of the poor quality of products and/or poor management which results in the company shutting down. Or unfair practices.
8.Not paying attention to the numbers. Are you shying away from budgeting, accounting, cash flow, product pricing (including your own time), etc? Prioritize your expenses – e.g. don't bother with expensive letterheads and envelopes. Plain white envelops will work. Splurge on the ones with windows if you have to. Shop at bulk stationery shops. There are many online, and stick with the one with the best discounts.
9.Not having a strong budget which gives a high level summary of your costs so you can focus.
10.Not buying insurance. Don't leave your life in the hands of external forces/disasters. Buy enough insurance for your inventory, for customers, for anything you think may happen. Shop around for the best price – you'll be surprised at the variations. And always: Negotiate, negotiate, negotiate.
11.Not differentiating between sales and marketing. Don't sell to people who don't want your product! Know your customers. How? Do a product survey. Ask your current customers what they want, and give it to them. Also, don't commit to expensive advertising until you know it'll work. E.g. if a magazine offers to sell you half a page of advertising at $400 for 6 issues, a discount from the usual price of $1000 for 1 issue. Will you take it? Can you afford $2,400? Will it make money for you? Do you know what a conversion ratio is? If you don't, I suggest having a look at Marlon Sander's Amazing formula.
12.Not engaging the professionals: The lawyer - if you can't afford to get one to draft the contract, at least purchase a legal form book, draft it and get it reviewed by a lawyer; The accountant may actually save you money if you have to deal with import/export tax, GST/VAT and payroll. The longer you put off doing your accounts, the messier it gets, and the less you will want to do it and the longer it'll take. Set up an excel spreadsheet to track your expenses if you want to minimize the fees charged by your accountant.
13.Not having a team means you're doing everything yourself. Your team could be just one other person who'll complement you, i.e. someone who is good at the things you are not.
14.Inflexibility – be prepared to adjust to the work at home lifestyle and change your plans quickly, especially if a new competitor or competing product appears on the horizon.
No doubt we all make some mistakes when we start our businesses but hopefully these tips will help you minimize yours.
Used with permission. Copyright © 2006 Carolyn Seet
Carolyn Seet is an entrepreneur, career woman, accountant and mom. She started MindtheBump.co.uk while on her maternity leave and sold it when she moved her family to Singapore. She currently has several projects in the pipeline, one of them being www.loikam.com.
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