TOP
TEN HOME BUSINESS MISTAKES
by
Isabel Isidro
Power
HomeBiz Guides
You have dreamt of owning
a business, no matter how small it may be (well, at least initially).
Many people like you are pursuing self-employment opportunities
today for various reasons. You may want your own business for the
self-satisfaction that it provides, desire for independence, limited
job opportunities, downsizing and restructuring of corporations,
downsizing of work forces, and threats of lay-offs.
However, majority still
fails to translate their entrepreneurial dreams into reality. The
number one culprit? You, the would-be entrepreneur, is usually immobilized
by your fear of failure. It is true that starting a business is
one big risk – and companies do go out of business! To improve
the chances of the success of your home business, here are some
common causes of business failures that you need to know (and hopefully,
avoid).
1. Failure
to do market research.
Many businesses, whether home-based or a large corporation, fail because
there is not an adequate market for their products or services. A
comprehensive analysis of the business is especially important for
home businesses, since some businesses lend themselves well to a home-based
environment, while some do not. If your business requires you to see
clients, you must first check how your family (and neighbors) will
react to the comings and goings of people in your house. If you have
employees, check the zoning and parking laws in your area. Before
starting any business, it is necessary that you conduct a thorough
market examination and market analysis. 2.
Passivity. If
you are passive, your best bet is to work for someone else. Unless
you can immediately afford to hire employees, you may start out
as a solo operator. As a one-man team, expect to do everything –
from writing your business plan, manufacturing your product, marketing
and selling your products and services, doing bookkeeping chores,
and a million other tasks! Remember, you have only yourself to rely
on! While you may not be an outgoing person, you need to show aggressiveness
in getting the word out about your business. No customers mean no
business! Passiveness will not get you anywhere in business.
3. Poor
time management.
One of the advantages of working at home is that you get to manage
your own time. This, however, presents an interesting dilemma: it
is hard to manage your own time! Poor time management is the Achilles’
heel of many home office workers, since you are on your own with
no one to supervise you, help you organize and prioritize. Complicating
this problem is the fact that distractions may be a few steps away!
Your spouse and kids may demand attention, your neighbors can drop
by, and hey, Oprah has an interesting guest line-up today! There
are a million and one reasons to distract you from being productive,
and you need to learn to manage your time effectively!
4. Considering
your home business to be less serious than a “traditional” job.
You may not have a
glamorous office in downtown or you may not need to wear those power
suits to go to work, but a home-based business needs to be treated
with the same professionalism that you put in your “traditional”
job. After all, your income will be directly correlated with the
amount of time, effort, thinking and money that you put in the business
– a far cry from the days of being employed when you get paid even
if your definition of a productive day is to write 20 personal emails
to long-lost friends.
5.
Not following the 80/20 philosophy. – that 80 percent
of your business comes from 20 percent of your client base. Remember,
it costs twice as much to get new customers than to maintain your
existing base. Keep your customers delighted, for it is far less
expensive and easier to market to current clients than to seek customers
who don’t have a clue who you are and what you do. Repeat sales
from existing customers mean lower per-unit marketing costs and
higher profits.
6. Not
promoting your business frequently.
Your business is only as good as the size of the market that you
are able to reach. While some businesses are self-promoting, most
often you need to aggressively get the word out about your product
or service. Too often self-employed workers and small businesses
look upon promotion as an unnecessary expense rather than the essential
investment it truly is. There are a number of inexpensive ways of
promoting your venture. Read the article “A Small Business Guide
to Free Publicity.”
7. Spending
too freely. During
your start-up phase, you may be awash with capital (or at least,
you do have capital). Avoid the costly mistake of unnecessary
expense. Unless your business model is solid and you have built
a steady stream of revenues, you cannot assume that you will have
cash and working capital forever. Some home business owners are
carried away in equipping their work places that they over-buy some
equipment. Ask yourself: do you really need that expensive massage
leather chair for your home office? Do you need that top-of-the-line
scanner when the most that you will scan is a picture of your 2-year
old daughter? Others, at the first brush of success, spiral uncontrollably
and expand too quickly for their own good. Poor financial planning,
mismanagement of funds or poor budgeting of expenditures are common
causes of business failures.
8. Not
spending the money when called for.
First, you need to understand the cardinal rule of business:
money begets money. You will sometimes have to spend to make money.
Getting legal advice requires paying for a lawyer. Sending out press
releases by yourself entails communication costs (fax, postage,
envelopes, etc). A lot of home business owners miss out great opportunities
because they simply refuse to make the investment where its needed.
Spend your money wisely.
9.
Not asking for help when you need it. Your tools to stay
on the right road and get back on the right path when things get
rough are planning, additional financing and expert advice. Seek
assistance; help is out there. Read business publications. Consult
your local Service Corps of Retired Executives (SCORE) chapter.
Seek assistance from your local chamber of commerce.
10.
Not having a contingency plan to deal with tough economic times.
Try as you might, difficulties
can hit a business at different times. Home-based entrepreneurs
are notorious for plunging into business unprepared. They have no
contingency plans or fall-back scenarios. some start their home
businesses naively thinking that everything will go smoothly, only
to find that the road is fraught with difficulties and challenges.
Part of the trick is to recognize the trouble soon enough. Learn
to be on guard at all times, and sharpen those creative thinking.
Being creative in your business thinking can point you on the more
positive direction. More importantly, you need to have a well thought-out
game plan to help you identify potential problems to the surface
before they occur and get the operation up to speed with little
lost time, effort and money.
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Copyright 2000. 2i Trade Resource. Article written by Isabel M.
Isidro, Power HomeBiz Guides. For more articles, visit Power HomeBiz
Guides at http://www.powerhomebiz.com.
PowerHomeBiz.com is an online magazine designed to stimulate your
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