Last Updated on Mar 11, 2020 by James W
Here is a quick rundown of some of the motions you are going to go through when setting up a home based business. Though do remember that few articles on this planet can cover all types of home based business and the intricacies of its setup, so just look upon this as a rough ideas guide instead of copy pasting it into your loan application.
Come up with an idea
Capitalism is made up by an offer and a counter offer. Acceptance happens on both sides. In simple terms, you offer a price, the consumer offers a price (or offers what you ask) and you both accept. This is the basis of capitalism and is the first step you need to take. So ask yourself, “What are you going to offer?”
Plough through the legal side
In other words, find out if you are going to need a license to run your business, or a permit, or zoning permission or permission to build a landing pad. This article can really offer you no advice on what legal requirements your business idea has other than to say you need to make sure you find out the legal side of it if you want to make a go of it.
Come up with a business plan
This may seem like a piece of do-nothing advice, but you are going to fail if you do not have a business plan. We should really reiterate that point.
YOU are going to fail without a business plan!
Most businesses fail within the first two years, and some of them have very good business plans. Without a business plan you will fail and there is no exception unless you can poop golden eggs. You need a business plan from the very beginning and ideally you need to learn how to create a business plan from the very beginning.
Estimates for turnover
Your business plan should feature an estimate for costs and income, but you have nothing to base your numbers on. This is where most will resort to plucking numbers from the sky and pretending they are correct. You are a shiny fool if you do this.
Estimating your costs and income
Run small tests of your business on a tiny scale. If you are setting up a web design business then try to gain a new client and work whilst still doing your current day job. If you are going to sell costume jewelry online then buy a small batch of new product and try selling it online. Doing this is going to help you see how hard your future business really is and is going to help you create a better income prediction.
Be conservative if not downright pessimistic
When creating your income and outgoings forecast, you need to be pessimistic because those numbers are going to be closer to correct. Every expenditure you research should have a bit of money added on to it because the laws of the universe say the prices will go up before you have finished your first year of trading. Your income should be wildly pessimistic to the point of you earning very little over your first year.
Why earn very little?
You need to assume that you are going to earn less than you need to get by. It is going to help you predict how you may manage and make it through the year. The people who forecast a healthy flow of income are the ones that have no idea what to do when they do not achieve those numbers and simply end up getting in debt.
Buying your new fixtures
Do it with second hand goods. Do not buy new goods if you are setting up a new business. There are very few items that need to be bought new. Plus, if you have any purchases that can literally wait, then do not buy them right away. Save the money in a contingency fund until you desperately need the thing you were going to buy.
Buying new stock
If you have to buy new stock for your business then try to buy as little as possible. You are likely to find yourself stuck with your stock or selling it at a loss. This is not being pessimistic, it is just part of being a trader and it is why some traders seem really fussy over small purchase price margins. Assume you will have to sell at a loss, and if a line starts to sell well then that is the line you invest your money into in a bigger way.
The guest post is written by Sonia Jackson from www.cool-essays.com. She writes essays on different topics and can give you useful advice.