When you are looking for ways to make money, particularly when your kids are young, starting your own at home business seems like a fabulous idea.
You get to work from home, you make your own hours, you have tons of flexibility, and you have the potential to make some really good money. With all of those benefits, why not start a business?!
The reason of course is that, just like everything else that is worthwhile, starting a business takes work … lots of work. And, while starting a business isn’t rocket science, to start a business that actually makes money, you need at least a basic understanding of marketing, sales, accounting, taxes, and the industry you are about to dive into.
Ignorance is Not Bliss
The good news is, when you start a business, you are not exactly swimming in uncharted waters. According to the Small Business Administration, approximately 543,000 new businesses get started each month. Bookstores and the internet are full of information about how to start a business.
The bad news is, depending up on whose statistics you believe, anywhere from 30 – 80% of those businesses fail within the first five years. The vast majority of those failures are caused by one simple thing: lack of business knowledge.
How to Start a Business that Works
What do you need to know if you want to start a business that survives and can actually support you some day? You have to understand the basics in five key areas: product or service development, marketing, sales, taxes and accounting, and psychology.
1. Product or Service Development
All businesses start with an idea for a product or service. Successful businesses start with a product or service that people actually want and will pay for. Yes, there is a difference. I may think that a motorized plastic ice cream cone that twirls my ice cream around so I don’t have to lick it in a circle is a cool idea, but will I actually spend my cold hard cash for it? I don’t think so.
You can have the most amazing product on the planet, but if no one knows it exists, you are not going to be in business for very long. According to Peter Drucker, the famous writer, professor, and management consultant, all business comes down to two things: innovation and marketing.
What is marketing? It is the process of promoting and selling a product or service. How do you do that? For starters, you tell everyone you know that you are in business. Tell them what you sell. When I started my law practice, I sent letters and emails to literally every person I had ever met in my life announcing the opening of my business. Did it work? I don’t know for sure. But, I do know that I have been in business for over twenty years now, and I’m still going strong.
Marketing in today’s world also means having a website. Your website doesn’t have to be fancy. It doesn’t have to cost you tens of thousands of dollars. But you have to have a website. And, if you’re really serious about your business, having some sort of presence on social media (i.e. Facebook, Twitter, LinkedIn, Google+, Pinterest, Tumblr) also helps.
Lets face it. Unless you are a born salesperson (and there are some of those unique creatures in the world) no one really enjoys asking people for money. It’s scary to have to try to sell people something – even if you really believe that the product or service you are selling them will dramatically improve the quality of their lives. But, if you want to be a business owner, you have to get over it. You have to conquer your fear of rejection and start asking people to buy your stuff. No sales equals no business. Period.
Simply selling your product or service, however, is not enough. You also have to keep track of what you produce, what you sell, what it costs, and what you earn. In short, you have to become a numbers nerd. According to Peter Drucker, “What gets measured, gets managed.” In order to start a business that succeeds, you have to measure everything.
4. Taxes and Accounting
Not only do you need to keep track of your sales so that you can grow your business, but you also have to keep track of your sales so that you can make sure that the government gets the proper amount of taxes due from those sales. One of the quickest ways to fail in business is not to pay your taxes. Once you are behind with the government, you are done. The interest and penalties due on back taxes grow geometrically. Carrying that kind of debt will kill your business faster than just about anything else.
Another area that you have to understand and handle is accounting. If you hate paperwork and don’t have a head for numbers, again: get over it! You don’t have to torture yourself by doing all of the day to day record keeping involved in your business. You can hire someone to do that for you. But, unless you understand how your accounts are kept, and you oversee and monitor them yourself, you won’t know what’s really going on with your business, or whether you are truly profitable. (You also run the risk of having your bookkeeper skim off a nice portion of your profits from you!)
What does psychology have to do with running a successful business? Everything! All management, all leadership, starts from the top. If you want a successful business, you have to have your head in the game. You have to know what you want, and why you want it.
Are you selling cosmetics to your friends just to make a couple of bucks and get a discount on your own products? There’s nothing wrong with that. But, honestly, that’s a hobby. Are you creating a new line of organic pet food designed to help the growing number of dogs with food allergies? Have you researched the market to find out how many dogs have allergies, and how much their owners will pay for a solution to that problem? That’s sounding more like a business. Either one is fine: you just have to know what you want: a business or a hobby.
Finally, not only do you need to know what you want, you need to know why you want it. Starting a business and running it successfully takes a lot of hard work. There will be days when you don’t feel like doing it. There will be times when you don’t know what to do. Knowing why you are in business in the first place will keep you focused on your goal and will dramatically improve your chances of toughing it out and creating a business that works.
Starting a business can be the most amazing, creative, exciting adventure you have ever embarked upon! Or, it can be a frustrating, nerve-wracking pain in the you-know-where that ends up making you more financially strapped than when you started. Which one will your business be? That depends on what you know.
For more divorce advice and information from Karen Covy, go to http://karencovy.com