Operating your business from home
Many people who run a small business use an area set aside in the family home for work purposes. If you are doing this, you can make a claim for the area set aside so long as:
- It is used principally for business use (such as an office or storage area), and
- You keep a full record of all expenses you wish to claim.
You can claim a portion of the household expenses, such as the rates, insurance, power, mortgage interest and depreciation (if you own the house). If you pay rent to a landlord then you may claim a proportion of the rental cost rather than mortgage interest and rates etc. If you use a part of your home, you may also be able to claim GST on part of the costs of running the home. Expenses you may be able to claim GST back on include telephone rental, power, insurance and rates.
You must keep invoices, receipts, statements or other evidence for these expenses. You can only claim the expenses that relate to the area set aside for business and the purpose of the home use is to earn income or generate profits assessable for tax.
What is your USP?
The acronym USP (Unique Selling Proposition) is one that crops up time and time again in the marketing world. It basically means your uniqueness or that special ‘thing’ that your product or service has.
It answers the questions of why someone should do business with you rather than with their competitors. Many business owners have enough trouble defining what their company actually does and don’t spend the time to work out what the unique selling proposition could be. They need to know their USP in order to potential customers that they are the ones to deal with rather than other companies.
Professionalism still most important
Your USP is important, but at the end, to succeed in business you still have to operate professionally and give good value to your customers. Even though you work from home always conduct yourself in a professional manner. It is easy to “slacken off” with your attitude and actions because after all you are now at home. This is a trap. Run your business from home just as if you were in professional premises with clients visiting seeking your expertise and help.
And try to establish an edge to bring you the attention of your customers back to your business and to the products that you supply.
Look after your customers
A customer is someone or an organisation that buys goods and services you have for sale. Not long ago, customers were all pretty much the same. Most were males over 30 with families to support. Salespeople fell into the same class. It meant buyers were comfortable dealing with these salespeople and they trusted their guidance.
Things have changed dramatically over the last few decades. Men no longer predominantly do the buying. Women now make the important buying decisions for the family. Unfortunately, women are still treated as inferior by some salespeople so watch for this.
Another strong group today are the younger buyers. The young people’s market is huge because of their high earnings. Because they do not have families to support they have substantial discretionary dollars available for purchases. Sometimes younger buyers feel salespeople do not take them seriously, but any business catering to the specific requirements of the younger age group will find a profitable market.
Buyers today are more knowledgeable about available products and are better informed on the benefits and pitfalls of various products. To make a sale today, you need to show the benefits rather than just talking about them. Once your customers are convinced that you are honest and what you say is what they get, they will trust you with their money.
Open your doors and start
You should have now been through all the various processes to bring your business to a stage where you can open the doors (at home) and start. It’s time to start telling the world about your business venture by using promotion.
Time for some promotion
Many people have the wrong idea about promotion.It has been said that – “Contrary to popular belief, if you build a better mousetrap, the world will not necessarily beat a path to your door”. Even though you were based from home there is no reason why that should stop you promoting your business in the normal way.Regardless of how unique or great your product is, a customer is not going to be motivated to buy until he/she has been informed of its availability and its features. This is done using promotional tools that the business owner must take responsibility for and learn about, if he/she is to inform potential consumers.
Some promotional tools include the following:
- Publicity – This is usually known as free advertising and involves the stimulation of the awareness and interest in your products through mass media. It can involve press releases, news items, announcements, presentations at seminars, writing of articles, etc.
- Advertising – This is paid, or non-personal communication, usually directed to a mass audience. It includes radio, television, magazines, billboards, direct mail, newspapers, etc.
- Sales promotion. – This is a short-term inducement to stimulate traffic and includes: coupons, point of sale displays, free gifts, sweepstakes and other types of sales promotions.
- Personal selling. – This includes direct, oral presentation to prospective customers who you are targeting to buy your products and services. Personal selling is very useful for closing the sale after advertising has made the customer aware of your products and services.
9 ways to promote without spending a fortune
The following are suggested strategies to help promote your business without having to spend a lot of money.
- Get your business card into as many hands as possible. Your business card is one of the best low cost promotion tools you will ever have. Pass them out to friends, associates and relatives, and inform them that you have started in business and that they should let others know as well. Wherever you go, leave a stack of business cards and encourage the proprietor of the establishment to hand them out to their customers and friends – they may be interested in the services or price you are offering.
- Send out promotion on your letterhead. This informs potential customers that you are open for business, and sets out clearly the products and services you have to offer. When printing your letterheads, ask the printer to produce an extra few thousand to use for marketing purposes. The cost of the extra print will be minimal, so the basic outlay for this promotion is very low. It can look attractive because the logo on the letterhead and the colours used produce a nice image.
- Let all your suppliers know. See your suppliers and when opening an account ask if they would mind handing out your business cards. You will find that in many supermarkets there is a board on which people advertise their products and service, so take advantage of that.
- Send out a press release to your local newspapers and radio stations and make a point of packaging your products and services in such a way to publicise a particular angle. You need to ensure there is something “newsy” or interesting in your press release, otherwise it will look like advertising material. If you want to increase your chance of having your material published, enclose a photograph with your press release. Make sure it comes up with a particular angle or some point of difference, making the news item of interest. If you are experienced in a particular field, present articles to your local paper or magazines establishing you as a specialist in that area and this is a great way of publicising your business.
- Make sure you network with others associated with your industry. This is a great way of getting business and of making contacts, which will be invaluable along the way, as your business starts to grow.
- Send out a promotion sales letter to anyone you think may use your services or products. Make sure you write the sales letter in such a way that is non-threatening, and that it appears more as an introduction rather than a hard sell. You can also supply some samples of your products where possible and enclose a feedback sheet inviting comment on the product they are sampling.
- If you use the Internet, make sure you link into the online forums and participate in discussion groups or similar venues (but be careful not to spam). If you don’t have a web site, then you should seriously consider putting up a site advertising your business.
- Make sure you ask for referrals from current customers, as well as acquaintances and associates you are in contact with.
If you are the type of person who does not mind making telephone calls, make cold calls to sell your products or introduce your business. Make sure you describe what you do and if possible ask for an appointment to discuss your products further.
- Have advertising painted on your vehicles. This is a low cost way of advertising your business. If you don’t want to pay the cost of painting your business name and details on the vehicle, enquire about magnetic signs. These signs can easily be removed and placed on any vehicle.
Marketing tips for your home business
Here are some marketing tips if you are new to business and operating from home:
- Know who your customers are or who want to be your customers.
- Develop a customer referral program.
- Make sure your store front location is visible if foot traffic or passing vehicle traffic is important.
- Mix into the local community by being involved in sponsoring and local events.
- Join up a local organisation and start networking.
- Send out press releases if possible about your products or services to the local news media.
- Keep your website open and fresh with new content which will draw people back again and again.
- Develop a website which will really be an advertisement for your business including how you do things (as well as your products).
- Advertise where your target market will be rather than where you would like to advertise.
Basics of advertising – a little is better than none at all
Advertising is the means of getting information about your products or services to your potential customers. The first thing to be done is, develop a plan to define the potential customers you have in your geographical area – that is, the area served by your business. This means you will have to do some preliminary research and surveys in the area to determine the type of advertising you will use to reach those customers.
Ask questions such as: What radio stations to they listen to? What newspapers do they read? Do they use coupons? Do they respond to direct mail? Do they use the Internet? Once you have the information, set about to tailor the advertising to reach that market.
The whole basis of advertising is concerned with your business trying to get across to your customers that the product or service you have will benefit them. That is, you have to identify what is unique or special about your products. This whole theme or image should then carry throughout all your future advertising because it is what sets you apart from your competitors.
Advertising is an “investment” – not an expenses
A wise man once said, “The person who saves money by not advertising is like the man who stops the clock to save time.” In today’s fast paced, high tech world, businesses have to use some form of advertising to make prospects aware of what they have to sell by way of products or services.
As a business owner, you must realise that advertising is an investment in the future of your business. Like any other investment it is important to find out as much as you can about it before you make any sort of decision.
What advertising CAN do for your business?
- Remind customers and prospective customers about the benefits of your products or services.
- Enhances your company’s reputation and standing.
- Establishes and maintains your specific identity or brand.
- Encourages your current customers to buy more of what you are selling
- Increases sales to boost your profitability
- Brings in new customers to replace any lost ones.
What advertising CAN’T do for your business?
- It cannot create an instant customer base.
- It cannot sell products or services that are old or of poor quality
- It cannot solve any cash flow or profit problems
- It will not substitute for poor or indifferent customer service.
- It cannot produce an increase in sales without effort.
Steps in the selling process
If you are in business you need to understand the basics of sales and not only how the process works, but also how to develop them to suit your business and satisfy your customers.
If you are selling a product or providing a service the following are the steps you should be fully aware of:
- Have full knowledge of your products or services.
If you are in business you need to have a full understanding of your products or service, including how unique they are and what advantages or attributes they have over other products. You need to be confident about what your products or services have to offer your customers.
- Make contact with customers.
The sales conversations with people in your target market should start as soon as possible so you are able to get to know them and they get to know about you.
- Explain the benefits.
You will need to explain to your potential customers what you products and services can do for them. It’s important that they understand your product or service will solve their problems or satisfy their needs. This means you also need to know the advantages and disadvantages of your competitors’ products and services, so that you can offer your customers superior products or services.
- Finalise the sale.
Most business people focus on closing the sale. You should, however, focus more on satisfying your customer’s need and encouraging your customers to make a commitment to your business and products. The closing of the sale is not the end of the process, but should be the beginning of an ongoing relationship with that customer.
Distribution or delivery of your products is part of the sales process, although this is achieved after the sale has been signed and sealed. Once the sale has been closed, you still do not have a revenue stream from until the products have been delivered.
- Make sure you follow up.
After the sale has been completed, make sure you carry out the normal follow up. It is important to maintain a relationship with your customers because this type of service goes down well and if your relationship is a good one, then your customers will tell others. The idea of business of course, is to act in such a manner that your customers are satisfied and will return to buy from you in the future. Make sure that the follow up process is a key factor in your business strategy because it’s important to iron out any problems that may exist and you will not know about such problems unless you are following up and discussing any concerns your customer may have.
The 3 basic secrets of selling
The greatest impact on your sales will come from customers who have developed a good relationship with you and you understand clearly their interests and desires, and what they want to get from your business and your products.
There are a couple of basic secrets to successful selling:
- Satisfy Customer’s Needs.
The basic secret is showing your customers what they want to satisfy their needs and convincing them that you will do everything possible to help them satisfy that desire. It means that need to find out what your customers want and why they will buy it, and understand the reasons why they will buy it from you.
- Talk and Listen.
One of the keys to discovering what your customers are looking for is to talk with them and listen to what they say. This is very simple to master, if you are looking at winning over your customers and selling more products or services to them. As soon as you know your customer’s requirements, show them what you have to satisfy them and then ask for the sales order.
- Don’t pressure customers.
If you simply pressure customers to sign an order over without understanding what they need it for and how it will satisfy them, then even though you may get the initial sale, the important issue of obtaining repeat sales would have been missed. It is important that you ask your customers the right questions to see where they are coming from and then listen to what they say before making decisions as to the direction of your business.
Give customers what they want
If you don’t give customers what they want, there is no reason for them to continue coming to your business. Many business owners reduce prices to keep their customers happy, but they don’t appreciate that loyalty is a stronger incentive to remain a customer. Loyal customers will not be easily put off by a small shift in pricing by competitors. Customers are loyal because of good customer service and the relationship that has been established, which they care about.
If you don’t know what your customers expect, ask them. Once you receive feedback – do something about it. A simple questionnaire or a friendly chat with customers will tell you a lot about their expectations. You then need to inform your staff and put policies in place that will keep those customers happy and coming back for more.
The most important rule of all
The most important rule of all is to under-promise and over-deliver. Make sure your customers believe they are important by going the extra mile, in certain cases. If your customer asks for a delivery date, give a date that allows some leeway, and deliver earlier if possible. If you are asked for a quote, give a quote that contains a reserve, allowing you to bring it in at a lower price.
It is a good promotional strategy to major customers by continually exceeding their expectations. Most businesses today over-promise and under-deliver.
If you under-promise and over-deliver the resulting kudos will surprise you.
Your business is only as good as how you manage it
A business will only be as good as its management. A business or organisation is only as good as its leader. The manager has to be aware of the objectives the business has laid out in its business plan and do everything possible to reach those objectives. No business can run itself. There has to be a “boss” in place who “calls the shots” and makes the decisions.
It has been identified from research that poor management is possibly the main cause of business failure. This means that good management is the key to business success. Basic principles of how to run a business include obtaining the necessary accounting and financial knowledge required or the business education that enable sound decisions to be made.
The big mistakes of the home business owner
The main complaint that small business owners have is that they never seem to have enough time to do everything. This means that they have to learn how to manage their time so that time wastage is reduced and time is better allocated to duties that produce results.
Time management is not necessarily about working harder, but rather working smarter. It often has to do with what we are not doing, rather than what we are doing. Sometimes mistakes and omissions will keep us from running the business at its proper pace and this will inevitably result in stresses within the business, resulting in losses or failure.
Here are 4 top management mistakes that need to be avoided:
- Make sure you start your day with a plan. You may have worked hard, but it is possible you may not be doing the right things during that work time. Time management is not about doing things quicker – it’s about doing things right.
- Make sure you balance your life. The seven vital areas are: health, family, financial, intellectual, social, professional and spiritual – not necessarily in that order. A balanced life is more productive and organised.
- Make sure you get enough sleep. Studies show clearly that 75% of people complain that they are tired and this is attributed mainly to a lack of quality sleep. Sleep enables stress to be worked out of your system, which means both physically and mentally, you can get more work done the next day.
- Make sure you take a lunch break. No one can work productively for eight hours a day without a break. Studies show that the lack of a break will produce fewer results eventually. People cannot work a whole day without a lunch break or tea break and be productive.
8 tips for day-to-day managing
Here are some tips that will help you to manage your business on a day-to-day basis.
These tips apply especially if you have little capital to spare which would be one of the main reasons why you were operating from your home in the first place.
- Watch your buying. Make sure you are buying at the right price to give you a good margin.
- Always work with your staff. Make sure they are happy because happy employees will ensure the efficiency of the operation.
- Pay Bills on Time. Make sure you pay your bills on time. Having a good name in this area is important.
- Monitor your costs. Don’t overspend. Try and keep to your expense budgets.
- Learn from others. Learn from those who have successfully run a business. Sometimes, these can be your competitors.
- Keep your wages and salaries costs down. Make sure staff are well paid, but get rid of people who are not producing, because they will be a drain on your wages bill.
- Maintain good records. A business needs to keep good records, so that information can be easily extracted when required.
- Work closely. Work closely with your accountant and other adviser. Never think that you know it all. It is a good idea to keep your advisers informed of your progress, because they will often come up with suggestions to keep your business on the right track.
Is your home – based business on a course for fisaster?
Some small businesses are often faced with the “too much, too soon” syndrome, where their business grows far too quickly for its founders to handle. While it is admirable for a well-planned and well-executed new business to grow, some small operations grow too quickly because management becomes flushed with early success. This can often happen to a home based business so watch this area carefully.
The growth of a successful small business should not be measured by sales alone, but also by profitability. A small business can easily grow too fast. When this happens, cash-flow problems are the first warning signs.A lack of adequate profitability, especially in conjunction with such infrastructure problems as rising inventory and receivables and declining employee skills will always result in cash-flow problems at best – and survival problems at worst. While the founding entrepreneurs would have built a successful business, they would also have created a challenge beyond their expertise, management and abilities.
They launch into new product lines or services, expand into unfamiliar fields, employ too many employees, purchase expensive plant and begin plans for an IPO without the necessary experience, business skills, capital or support. As a result expenses start to exceed revenues at an increasing pace each new month and the business finds itself with huge problems to fix. The business then begins to hemorrhage – and dies.