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Starting a Home Business - Part 1 of 3

Starting a home business is easier than you may think. Although there are a number of steps involved, most of them are more easily obtainable than you may think and require little up-front investment. In particular, businesses based on revenue from a web business requires some of the least amount of capital expenditures and setup. Resulting in the highest potential for a return on your investment and efforts.

Having an entrepreneurial mindset is the key to unlocking the creativity, determination and willingness to get through such a checklist and produce a profit generating business. However, even if you are unfamiliar with the world of business, and have had little exposure to the elements of business, it is still absolutely possible, with strong willingness to learn, research and work, to achieve excellent results. Starting a home business is not limited to people who have had years of background and experience. It is something that is available to each and every person that has the will power and desire to succeed.

This three part article will take you through a checklist of important items you should consider when starting your own home business. If starting a business seems like a daunting task to you, the checklist will help simplify the process by breaking it down into more manageable components and describing them in detail. Tips and pointers will also be given throughout the article to get you on the right track.


1. Mission Statement / Business Objectives
The most important thing you can do is be completely clear in your mind from day one what your business objectives and goals are and how you are going to achieve them. Set milestones, revenue goals and have a feeling of where you want the business to go. 

Determine who your competitors are; the benefits of your offerings over the competitions; the target audience of your product; how your products and services will cover costs and create profit; and the lifespan of your product cycles. All of which should be captured on paper in the form of a mission statement and a business plan. Both of which, however, may not always remain concrete throughout the life of your business. As your business grows and matures, you may make modifications to your original business plan to adapt to current market conditions, expectations and other factors. When these changes come into play, it is important to evaluate them against your original mission statement to be sure you are not losing focus on the fundamentals of what your business is all about. If it is inline with the basis of your business, revise or append the plan to meet your current needs while always retaining the original. There have been many cases throughout history where companies small and large have wandered away from their mission statement with disastrous consequences. This is because they became unfocused and became unaligned with their goals. Keeping focused and up to date with your written business plan, and always keeping your mission statement in mind is always advisable. Actually envisioning your company say 3, 5 and 10 years down the road - so that you have a mental picture of where you want things can help as well. Just as a runner in a race envisioning being number one through the finish line has a greater chance of accomplishing that goal.


2. Branding, Logo, Marketing
The critical importance of having the right branding, logo and marketed image cannot be stressed enough. Time and time again you will discover how much people will use your logo or your brand name as a basis of whether or not they can identify with your company, products or services. Therefore careful attention must be paid to developing a brand and image that is highly consistent with the expectations of your potential client base. Branding such as your logo in an advertisement is sometimes the very first impression a person will get of your company - therefore, like the old adage says, make that first impression the right impression. Every piece of marketing material you send out should shout the values that are important to your customers. Professional development of your branding, logo, and related materials is recommended.


3. Stationary, Branded Materials
Once your branding and logos have been established, use them! Everything from your business cards, outgoing faxes, envelopes, letterheads, right down to the coffee mug you hold - should all be leveraged to promote brand awareness. Think of it this way, if all of these things will be used anyway, such as envelopes, utilizing them as an advertising medium is a cost effective way in building mindshare. Since advertising in newspapers, television and billboards is expensive - it is important to be creative in your efforts to get the word out about your business. Creating mind share (peoples ability to recall your businesses name when thinking of the products or services that your company offer, example when thinking "I want a cold beverage", and recalling "Coca-Cola") has a lot to do with repetition in marketing (sometimes to the point of saturation), experiences with the brand, and many other factors. You can start this process by increasing the number of potential times a customer or potential customer will see your branding and associate it with a positive experience.


4. Incorporating
Yet another important initial step is the incorporation of your company. Depending on the country you will be based in there is typically two ways of starting your company (in the eyes of the government). One way is to register a 'business name', the other is to 'incorporate'.

Business Name
By registering a business name, what you are essentially doing is attaching a company name to yourself. You become the company. Revenue generated through this business name is typically taxed at your personal income rate, and the amount of things you can 'write-off' as a business expense and other tax advantages are somewhat limited. A negative aspect of this approach is your liability in the event the company fails or is subject to litigation. Since your company and you are one, you stand the possibility of losing personal possessions and the damage of credit ratings - rather than isolating the liability of the company to the company its self.

Incorporation
Incorporating is literally like creating a new entity in the eyes of the government. And this entity acts as a company. This company functions completely independently from yourself, and you become the company's 'sole proprietor', meaning you have been designated as the person which overlooks the operation of the company. You also become an actual employee of your own company as well, for such things as management of payroll. This way money the company generates and retains within the company will be taxed at a corporate rate, while money which is paid to you or others that are part of your company are taxed at the individuals personal tax rate. Corporations require their own bank accounts, checking, and other financial details - they cannot share your personal accounts as with using a business name. However, in the event of such things as bankruptcy or litigation - it is isolated to the company entity its self. This has the stronger likelihood of preventing such things as personal bankruptcy, personal liability, credit damage, liquidation of personal assets (house, furniture). Of course keep in mind that your own actions may cause you to incur personal bankruptcy, decrease in your credit rating or be subject to litigation.

Incorporating also offers some excellent opportunities for tax savings and ability to claim expenses, capitol costs and other things. Items such as your car, office space etc can all be expenses which will fall under your business as tax write-offs. This is the area where registering a business name is much weaker at achieving. You can then take advantage of this by using a company car versus a personal car, write off part of your home mortgage by claiming square feet of your property as office space. All of which has the potential to save you money both in the short and long term. Therefore it is very important to have an accountant that is very familiar with corporate accounting and how to maximize your tax savings. Be sure to set up an appointment with a reputable corporate tax specialist to help advise you on the best ways to conduct your purchases and route revenues generated. Although a corporate accountant can be expensive, they will also save you a lot in recuperated tax. For example, leasing a company car will typically allow for a much better tax savings than purchasing the car and allowing it to depreciate - accountants are great at this sort of thing, and as a business owner starting your business, you don't have time to research all of this yourself - let the people that know it best, advise you.

Click here for Part Two of this article.

About The Author
Jon Deragon is president and founder of Visca Consulting, a firm specializing in web site design, development and usability for businesses of all sizes. He welcomes any questions or comments you may have regarding this article or interest in the services available from Visca Consulting.
 


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