If
you've left the corporate world to strike out on your own in
your own home-based business, you'll be acutely aware that
your financial success is up to you and you alone, perhaps
for the first time in your life. For obvious reasons, therefore,
your home-based business is probably run on a shoestring.
This
means, of course, that you do everything. Although you
are now CEO, you are also secretary, marketing director,
receptionist and gopher. But hey, that's the way you like
it,
right?! And when you're just starting out, let's face it,
you
don't have much of a choice anyway.
But
sooner or later, if you keep doing everything yourself you'll
necessarily curtail the growth of your business. It will grow
to
a certain point but no further because you're only one person
and there are, after all, only 24 hours in a day. Now, if
you're
satisfied with making a little money on the side, that's fine.
But if your business is your only source of income, you must
move beyond start-up if you are to become financially
successful and avoid stunting the growth of your business.
This
article looks at the growth stages of a typical one-person
home-based business and how to gradually grow your business
without being run over in the process.
INITIAL GROWTH
=>
One-(Wo)Man Band
As
already stated, when you first start out, you do everything
yourself. You're both chief cook and bottle-washer.
And you
can continue like this for quite some time because, initially,
you are unlikely to be fully stretched. This is exactly what
you should be doing.
This
is NOT the time to go out and spend money with
advertising agencies and hiring employees. For so long as
you CAN do everything yourself and everything that needs to
be done is getting done, this is the most efficient use of your
current resources.
=>
Don't Overcommit Yourself
During
this stage, however, it is important to be careful not
to overcommit yourself. You are a fledgling. You must
learn
to fly like a sparrow before you can soar like an eagle. So,
when you first start out, underpromise and overdeliver.
Also,
don't embark on an aggressive marketing campaign
until you have the business resources to satisfy the demand
you will create. Let your advertising grow in line with the
growth of your business, the addition of employees and
increased financial capacity.
=>
Pay Yourself
Be
extremely careful of your pricing during this stage also.
Make sure you include a wage for yourself in your overhead
costs and add a realistic profit margin (say 15-20%).
Remember, price equals costs plus profit margin. Costs
include direct, indirect and overhead costs. For a more
detailed treatment on pricing, read "Pricing Yourself to Get,
and Stay In, Business" (* link below).
=>
Profits Belong to Your Business
Plough
your profit back into your business. This is most
important. This is where your funds for expansion during
the next growth phase of your business come from. NEVER
use your business's profits to pay personal expenses. This
is what you pay yourself a wage for. Your business's profit
does not belong to you. It belongs to your business.
There
IS a difference!
=>
Avoid Premature Expenditure
During
your shoestring days, look for lower-cost substitutes
before incurring substantial expenditure. For example, don't
go out and buy a new fax machine, a new answering machine,
a new photocopier. Get one of those three in one jobs that
sits on your desktop and only costs a few hundred dollars.
Use
a good accounting software program rather than hiring
an accountant and hire from your family first if you need
temporary help. Another good idea is to negotiate with family
members to take over some household chores you would
normally do yourself to free your time to work on your business.
This works especially well with pocket-money age children
and teenagers.
During
times of temporary overload, hire temporary staff from
a staffing agency if no family members or members of your
social circle can do the job.
=>
The Glass Ceiling
After
a while, somewhere between the one year and three
year mark, you will notice that your business is beginning to
stagnate. At this point, you have stretched yourself and your
resources as far as they can go. You have hit the glass
ceiling.
At
this point, if you want your business to grow further, you
will have to grow it. It will not happen as part of an evolutionary
process beyond this point.
BEYOND
THE GLASS CEILING
=>
Hire Permanent Employees
The
time to hire permanent employees is when you reach the
point where you can't complete all tasks alone (or with the help
of family members) and/or your time is worth more than it would
cost to hire someone to complete your less complicated tasks.
Before
adding employees, carry out an inventory of the
necessary tasks required to operate your business. Once
you've identified all necessary tasks, assign primary
responsibility for each task to one person. Although one
person will be assigned more than one task, make sure no two
people are assigned the same tasks.
Also,
make sure at least one other person knows how to do
each task to cover yourself during times of staff shortages,
whether due to temporary absence due to illness, or when an
employee resigns and it takes you a while to find a replacement.
Finally,
and most importantly, when assigning tasks, assign
yourself the tasks you do best.
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Elena Fawkner is editor of the award-winning weekly ezine,
A Home-Based Business Online, a down-to-earth publication
containing practical home-based and online business ideas,
telecommuting job listings, original articles, free e-books and
much more. She also runs the A Home-Based Business Online
website at at http://www.fawkner.com.
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