Cash Flow Potentials

For the last decade, going to work meant getting up in the morning and traveling from home to an office, store, warehouse or plant.  New information from a private market-research firm estimates that as many as 1 3 million people squeeze extra hours into their work week by taking work home from their full-time jobs, while some 9 million people work exclusively at home.

Many people are now find that working at home is an ideal arrangement and decide to formally set up businesses there. The SBA estimates that more than 3 million of these home-based businesses are now operating throughout the country.

Because of the current economic climate, every day, people are striking out and achieving economic and creative independence by turning their skills into business revenue. Studios, lofts, garages, and basements are being transformed into the corporate headquarters of the newest entrepreneurs — home-based business people. And with recent technological advances and a rising demand for “service-oriented” businesses, the opportunities seem to be endless-

Is a Home-Based Business for You?

Before you dive head first into a home-based business, it’s essential that you have a plan, know why you are doing it, and how you will do it. To succeed, it has to be much more than just extra income or to be your own boss. Ask yourself these questions:

• Can you focus on work while at home and stick to business?
• Will you need an outside location to meet people and do presentations?
• How will you network – phone, Internet or functions?

Working under the same roof that your family lives under is one of the highest issues for someone running a business out f other home.  People have dealt with this in different ways by having a separate space that has a door that can be closed off to setting up a small office in their family space. It may not prove to be as easy as it seems but if you manage it right – its been done by thousands.

Legal Requirements: A home-based business is subject to many of the same laws and regulations affecting other businesses and you are responsible for complying with them.

Zoning: Be aware of your city’s zoning regulations. If your business operates in violation of them, you could be fined or closed down.
Restrictions on certain goods: Certain products may not be produced in the home. Most states outlaw home production of fireworks, drugs, poisons, explosives, sanitary or medical products, and toys. Some states also prohibit home-based businesses from making food, drink or clothing
Registration and accounting requirements. You may need a—

• Work certificate or a license from the state ( your business’s name also may need to be registered with the state),
• Sales tax number,
• Separate business telephone
• You MUST have a separate business bank account

If your business has employees, you are responsible for withholding income and social security taxes, and complying with minimum wage and employee health and safety laws.

Finding Your Niche
Choosing a home business is like choosing a spouse or partner — your decision must be approached by doing due diligence and a great deal of care. You need to learn as much about the market for any product or service as you can. Before you invest your time, effort and money, take a few moments to answer the following questions.
They’ll help separate sound ideas from those with a high potential for failure.

• Do you have a strong interest or passion for the business, product or service?
• What will be your product or service?
• Is there a strong demand for your product or service?
• What advantages do you have over your competitors?
• Do you have the talent and expertise needed to compete successfully or do you need to find partners that have them?

Developing a Business Plan
If you’ve researched your market, thought over the pros and cons of a home-based business, and decided to go ahead, it’s time to put together a business plan. Developing a business plan forces you to take an objective and critical look at your business idea. Even more, the finished product is a tool that will help move your business toward success.

The Financial Plan
Revenue fuels all businesses. With a little planning, you’ll find that you can avoid most financial difficulties. When drawing up a financial plan, don’t worry about using estimates. The process of thinking through these questions helps develop your business skills and leads to solid financial planning.

Start-up costs: To estimate your start-up costs, include all initial expenses such as fees, licenses, permits, telephone deposit, tools, office equipment and promotional expenses. Business experts say you should not expect a profit for the first eight to 10 months, so be sure to give yourself enough cushion.

Projecting operating costs: Include salaries, utilities, office supplies, loan payments, taxes, legal services and insurance premiums. Don’t forget to include your normal living expenses.

Projecting income: It is essential that you know how to estimate your sales on a daily and monthly basis. From the sales estimates, you can develop projected income statements, break-even points and cash-flow statements. Use your marketing research to estimate initial sales volume.You did do one before you made your decision right?

Cash flow: Working capital — not profits —pays your bills. Even though your assets may look great on the balance sheet, if your cash is tied up in receivables or equipment, your business is technically insolvent — in other words, you’re broke. Be sure to make a list of all anticipated expenses and projected income for each week and month. If you see a cash-flow crisis developing, cut back on everything but the necessities.

Most importantly - learn from others. There are only two ways to learn - mistakes or through others. Usually personal mistakes are much more costly! Make time to talk to other home-based business people....and even better in the same industry / space you are. Most people are very open and invite new people into their network. You can also join a home-based-business professional association. Maybe even work in on for awhile to test the waters?

Learn how to use business resources to strengthen your home-based business. Success doesn’t just happen — you have to make it happen.

Get More Information - Information is power. Make it your business to know what is available, where to get it and, most importantly, how to use it. Sources of information include:

• U.S. Small Business Administration - SBA District Offices
• Service Corps of Retired Executives – SCORE
• Local Chamber of Commerce’s
• Local Colleges and Universities
• Small business or industry trade associations