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        a home based business onlinehome business ideas

        Another AHBBO Article
        Beyond Startup ... Are You Stunting the Growth of Your Home-Based Business?

        © 2014 Elena Fawkner

        If you抳e left the corporate world to strike out on your own in
        your own home-based business, you'll be acutely aware that
        your financial success is up to you and you alone, perhaps
        for the first time in your life.  For obvious reasons, therefore,
        your home-based business is probably run on a shoestring.

        This means, of course, that you do everything.  Although you
        are now CEO, you are also secretary, marketing director,
        receptionist and gopher.  But hey, that抯 the way you like it,
        right?!  And when you抮e just starting out, let抯 face it, you
        don抰 have much of a choice anyway.

        But sooner or later, if you keep doing everything yourself you抣l
        necessarily curtail the growth of your business.  It will grow to
        a certain point but no further because you抮e only one person
        and there are, after all, only 24 hours in a day.  Now, if you抮e
        satisfied with making a little money on the side, that抯 fine.
        But if your business is your only source of income, you must
        move beyond start-up if you are to become financially
        successful and avoid stunting the growth of your business.

        This article looks at the growth stages of a typical one-person
        home-based business and how to gradually grow your business
        without being run over in the process.


        => One-(Wo)Man Band

        As already stated, when you first start out, you do everything
        yourself.  You抮e both chief cook and bottle-washer.  And you
        can continue like this for quite some time because, initially,
        you are unlikely to be fully stretched.  This is exactly what
        you should be doing.

        This is NOT the time to go out and spend money with
        advertising agencies and hiring employees.  For so long as
        you CAN do everything yourself and everything that needs to
        be done is getting done, this is the most efficient use of your
        current resources.

        => Don抰 Overcommit Yourself

        During this stage, however, it is important to be careful not
        to overcommit yourself.  You are a fledgling.  You must learn
        to fly like a sparrow before you can soar like an eagle.  So,
        when you first start out, underpromise and overdeliver.

        Also, don抰 embark on an aggressive marketing campaign
        until you have the business resources to satisfy the demand
        you will create.  Let your advertising grow in line with the
        growth of your business, the addition of employees and
        increased financial capacity.

        => Pay Yourself

        Be extremely careful of your pricing during this stage also.
        Make sure you include a wage for yourself in your overhead
        costs and add a realistic profit margin (say 15-20%).
        Remember, price equals costs plus profit margin.  Costs
        include direct, indirect and overhead costs.  For a more
        detailed treatment on pricing, read 揚ricing Yourself to Get,
        and Stay In, Business?(* link below).

        => Profits Belong to Your Business

        Plough your profit back into your business.  This is most
        important.  This is where your funds for expansion during
        the next growth phase of your business come from.  NEVER
        use your business抯 profits to pay personal expenses.  This
        is what you pay yourself a wage for.  Your business抯 profit
        does not belong to you.  It belongs to your business.  There
        IS a difference!

        => Avoid Premature Expenditure

        During your shoestring days, look for lower-cost substitutes
        before incurring substantial expenditure.  For example, don抰
        go out and buy a new fax machine, a new answering machine,
        a new photocopier.  Get one of those three in one jobs that
        sits on your desktop and only costs a few hundred dollars.

        Use a good accounting software program rather than hiring
        an accountant and hire from your family first if you need
        temporary help.  Another good idea is to negotiate with family
        members to take over some household chores you would
        normally do yourself to free your time to work on your business.
        This works especially well with pocket-money age children
        and teenagers.

        During times of temporary overload, hire temporary staff from
        a staffing agency if no family members or members of your
        social circle can do the job.

        => The Glass Ceiling

        After a while, somewhere between the one year and three
        year mark, you will notice that your business is beginning to
        stagnate.  At this point, you have stretched yourself and your
        resources as far as they can go.  You have hit the glass

        At this point, if you want your business to grow further, you
        will have to grow it.  It will not happen as part of an evolutionary
        process beyond this point.


        => Hire Permanent Employees

        The time to hire permanent employees is when you reach the
        point where you can抰 complete all tasks alone (or with the help
        of family members) and/or your time is worth more than it would
        cost to hire someone to complete your less complicated tasks.

        Before adding employees, carry out an inventory of the
        necessary tasks required to operate your business.  Once
        you抳e identified all necessary tasks, assign primary
        responsibility for each task to one person.  Although one
        person will be assigned more than one task, make sure no two
        people are assigned the same tasks.

        Also, make sure at least one other person knows how to do
        each task to cover yourself during times of staff shortages,
        whether due to temporary absence due to illness, or when an
        employee resigns and it takes you a while to find a replacement.

        Finally, and most importantly, when assigning tasks, assign
        yourself the tasks you do best.

        => Capital

        To grow beyond the start-up and initial growth phases, you will
        need capital to inject into your business.  Now this,
        unfortunately, is easier said than done.  Banks can be leery of
        entrepreneurial ventures and venture capital is not easy to
        obtain.  But, although obtaining borrowed capital is difficult, it
        is by no means impossible.  Here are the main sources of funds:

        * Banks

        Cultivate a good relationship with your banker.  The more he or
        she understands your business and knows you, the more
        likely it is that your application will be approved.  And this means
        more than just fronting up when you need money.  Keep your
        banker informed of all significant developments in your business
        and routinely provide copies of your annual business plans.

        Be prepared to demonstrate that your business is capable of
        generating cashflow and think about what collateral you have
        available to put up if necessary.

        * Venture Capital

        In addition to a solid business plan and track record, venture
        capital providers want to see that you understand your
        customers and how your business is a good fit with their
        needs.  So arm yourself with competitive intelligence and
        satisified customers as references.  Also, be prepared to
        show you have access to experienced management staff.
        These individuals need not be on your payroll but you should
        expect to show that you have a depth of experience and
        talent available to you at least in an advisory capacity.

        * Revenue Stream

        Instead of selling equity to raise capital, consider selling part
        of the revenue of the business.  In other words, investors
        advance loan capital and get repaid by way of a percentage
        of the sales of the business.  This preserves your equity in
        the business and is attractive to investors because they
        receive an immediate cash return.

        This method has the considerable advantage of avoiding
        securities laws (it is a loan rather than a sale of securities)
        but it is only viable for businesses with high margins and
        strong sales.

        * Angel Capital Electronic Network

        ACE-Net brings companies looking for capital together
        with angel investors.  You can find links to ACE-Net at
        http://www.sba.gov/ADVO .

        * Direct Public Offering

        If your business has a strong relationship with its constituents
        (employees, customers, vendors and community), consider
        selling stock via a direct public offering.

        Other miscellaneous sources of funding include 401(k) plans
        and provision of loan guarantees by family members or friends.

        => Work On the Business, Not In the Business

        The third and final point to note about breaking through the
        glass ceiling is that you must make the mental transition from
        working IN the business, to working ON the business.

        Until your business hit the glass ceiling, you were effectively
        working in the business, much as an employee would.  In this
        sense, the business was your job, a place to go to work.  But
        beyond the glass ceiling, your business becomes an entity
        unto itself.  It is no longer your 搄ob?to work at the tasks that
        make up the business抯 operation.  Instead, your role is to
        work 搊n?the business as a separate entity, leaving the tasks
        to your paid employees.

        Hopefully you can see that shifting your perspective in this
        way is the key to the long-term growth of your business and
        the difference between true autonomy and indentured servitude.


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