Fifty-two percent of all small businesses are home-based, according to the latest available data from “Forbes.” And whether you’re conducting all of your business from home or using it as your primary office, you must properly manage it to be successful. Following are some tips to help you manage your home-based business efficiently, assuming you already have all the licenses and financing established.
Designate Your Office Space
Set aside a room or section of your home for conducting business. Designate specific hours of operation for your business, such as 8 a.m. to 5 p.m. Inform your family that they should not interrupt you during working hours, except during emergencies or breaks. This is imperative if you want to enhance your productivity level each day. It’s also more professional answering phone calls without having kids screaming in the background.
Create a Business Plan
A business plan should encompass all aspects of your entity, including a description of your business, the products or services you sell, market analysis, promotional budget and financial projections, according to the “U.S. Small Business Administration.” You will likely need a business plan if you borrow money from a bank, which will study your financial projections when making a decision to loan you money. Define the market or customers to whom you’re selling and determine the potential size of the market through research. Study how key competitors market their products and how much they charge. Use Census maps to obtain area demographic information to determine if you’re marketing to the right people. For example, if you’re selling high-priced women’s clothing, you want to target upscale areas–people with higher incomes.
Track Advertising Results
If you want to run a profitable venture, you must know which promotions or ads generate the best results. One way to accomplish this, especially if you’re running print or direct mail ads, is to key your promotions. For example, print a “3/16” on an order form that you mail in March. That way you can calculate the number of sales that direct mail elicits, subtract expenses and calculate your profit. You can also incorporate Web analytics if you run an online site, which shows which search engines generate the most responses.
Stay Within Budget Parameters
Manage your money closely when running your business, especially when you’re first starting out. Find ways to economize on office furniture by patronizing wholesale furniture dealers. Skim the classified for used desks or office machines. If you’re dealing with vendors, get bids from multiple companies and select the most economical one, assuming it has the necessary experience.
Set Aside Tax Money
Most home business owners pay taxes every quarter. If this is your intention, set aside a certain portion of your earnings for taxes. Determine the federal, social security and state tax percentages in your area and use that percentage as a benchmark. Many home-based business owners set aside 25 to 30 percent for taxes.