Starting a home business today is easier and more affordable than ever. Even so, there are many areas in which your home business startup can go wrong. Success depends on several factors including good planning and proper management. Here are a few common home business startup mistakes and how to avoid them.
1. Poor Planning
Starting and running a business involves many tasks that can quickly become overwhelming. If you forget one, you may inadvertently doom your business. A great plan is a road map that gives focus and a course for success. Without it, you may encounter many detours and end up in the wrong place. Successful planning involves an overall business plan that outlines your goals, but also planning your activities each day to ensure tasks get done.
2. Not Having Enough Capital
It takes money to make money. While you can start a home business on a budget, a business needs money to run. This includes money for services (i.e., website hosting), advertising and equipment. Your business plan outlines your current business finances, as well as projected income and expenses. If you’re low on capital, make use of the assets you already have (i.e., computer equipment), plan your startup on a budget, and reinvest income until your business is solvent.
3. No Designated Office
Many successful home businesses start at the kitchen table, but you can bet that once the business started growing it moved to its own area. Having a designated space for your office makes it easier to work, since you don’t have to clean up once you’re done working and you don’t have to worry about outside distractions. Further, if you want to take the home office tax deduction, you need to have a dedicated home office space. It doesn’t need to be an entire room, but it does need to be a section that is used exclusively for business.
4. Poor Time Management
Running a home business involves a host of activities. Many new home business owners are busy, but not productive. While a home business can be managed on a flexible schedule, that doesn’t mean you have lots of time for household chores, taking the kids to the park or naps. A home business needs to be treated like a job in that you have a schedule and set activities that need to be completed every day. Using a schedule and having a routine ensures that you’re managing your time effectively and are able to complete all the tasks required to build a successful business.
5. Ineffective Marketing Plan
Along with a lack of capital, bad marketing ranks high in why home businesses fail. Many new home-based business owners do what the marketing books say, such as tweeting, but there is science behind good marketing. Tweeting and other marketing strategies in and of themselves won’t work. Good marketing starts by defining your optimal customer, determining how your product or service will best meet the needs of your optimal customer, and putting marketing materials in front your optimal customer. You’ll notice that you don’t see feminine hygiene commercials during football games. Women watch football, but advertisers know that the football demographic will be more receptive to chip and beer commercials. You need to think the same way in your marketing.
6. Trying to Do It All
Most home businesses start with the owner wearing all hats, and that is okay. There is value in learning all the aspects of running a business. But ultimately, you can’t do it all. First of all, you’re not an expert in all areas. Second, your time is better spent focusing on the activities that make money, not in the busy work of running a business. As soon as possible, you should outsource tasks such as web maintenance, bookkeeping and administrative work. Although hiring help involves a financial investment, it will help you make more money sooner because you’re able to put more time into the activities that generate income.