You need to create a budget for your home business in order to know whether or not you’re making a profit, expanding your business, and achieving the goals that you want. One of the first investments you should make is outsourcing your bookkeeping tasks. By hiring a virtual bookkeeping team, you'll save money in the long run, not need to worry about tax deadlines, and not require an actual "office" for them to work from. They can help you create a budget, which will help you plan for the future, manage cash flow, and even secure financing if you should need it in the future.
Research Your Niche
When you’ve decided upon a business and a niche, there are tools of the trade that you may need or want. See what is available so that you can research the tools and choose the ones that offer the most value to your business.
Avoid Traditional Office Supplies
It can be tempting to run out and buy a file cabinet, paper, printer, ink and so much that you relate to an “office,” but today you don’t need those things. Instead “think green” and avoid most of that stuff. You don’t need it, and you’re not ever going to need it. Even when it comes to printing, unless you have a position that requires it, you will save money buying a second monitor instead of printing things out.
Use What You Have
What items do you already have? You likely have a laptop, a desk, and other things that you can put into service already for your home business. There is no reason to go out and buy all new things when you are first starting out. Using what you have will enable you to spend money on things you don’t have.
Keep Your Budget Simple
Don’t get carried away in the beginning with adding extra phone lines, a new internet connection and things that you’re not even sure you need yet. If you only add things when you’re certain that you need them, you’ll keep your budget lower and controlled.
Question Every Expense
Before you add a new expense to your business, ask yourself if the expense will create a return on investment or not. If not, ask yourself why you really need the expense. Does it play an integral part of your business to help it keep running? Do you really need it? You do have to spend money to make money, but you should be smart about it. Your bookkeeper can help you discover areas where you may be overspending.
Work in Flexibility
One of the most awesome things about working from home today is the cloud-based technology that is available. You can essentially rent software instead of buying it outright, which means that you can deduct it fully each month from your income, and then if you no longer need it you can stop. Plus, most cloud-based software allows for flexibility in terms of features that you may or may not need.
Know Your Break-Even Point
Your break-even point is the amount of money you need to make just to keep the doors open without actually earning a profit. It’s your cost of doing business. This is an important number to note because it will help you determine your fees in the future. Reassess yearly and ask your bookkeeper for an analysis of the big picture.
There are a couple different types of slow payers. First, there are slow payers who will always pay and are super reliable, such as government contracts or large corporations who often pay invoices on a net 30 or net 60 payment plan. Then there is the negative type of slow payer who is very unreliable in paying. They’ll often be 90 days behind and only pay when you set up collections.
It’s important to differentiate these two types of slow payers. If you are prepared for the first type, you can deal with them, but the second type is very hard to handle and can be a killer to your service-based business. The tips below will help with any type of slow payer but are mainly directed at the slow and unreliable payer.
Have an Ironclad Contract
The basis of your business relationship should be spelled out in a contract. Having a contract in place helps you ensure on-time payment, and also helps you deal with issues that arise.
Choose Clients Wisely
You can avoid a lot of issues with late payments by choosing your clients more carefully. Do your due diligence on any new client to ensure that they’re a good fit with your business and that you’re a good fit with theirs.
Typically, if you build a relationship with every client they’re going to be less likely to want to ruin that relationship by not paying you on time. Make a point to check in with clients, share industry news, fun stories, news clippings and more. As you build that relationship they’ll appreciate you even more.
Tie Payment to Ownership of the Work
If you put a line in your contract and on your invoice that the work performed during the billing period transfers ownership after payment is processed, the client will be more likely to pay faster because they want to be able to use the work.
Cut Off Future Work until Payment Is Made
A big key to slow payment issues for the second type of slow payer is to stop all work until payment is made. This can work well if they’re on a deadline of some type and realize that they need the rest of the work to finish.
Collect Payment in Advance
In many cases you can avoid the issue of slow payment by simply collecting payment in advance. This can work well with a lot of types of services, especially project-based work that doesn’t include an hourly component. But even hourly work can be billed in advanced and charged against the payment.
Send Invoices ASAP
Don’t hold on to invoices, instead send them out immediately upon completion of the work or the time period involved. If you wait too long to send the invoice, the client might forget about needing to make payment and end up in a cash-flow shortage. If you don't have time to immediately send invoices, hire a bookkeeper.
State Payment Terms on the Invoice
Aside from having terms in your contract, remind your client of your payment terms by putting them on your invoice under terms of payment. This will help them notice that you’re expecting payment on time and the consequences of not doing so.
Offer a Discount for Fast Payment
A really good method of getting faster payment is to offer a very small discount on fast payers. Offering discounts as low as 3 percent will entice your client to pay you faster in order to qualify for the discount, because everyone likes saving money.
Charge a Late Fee
Be careful about actually charging a late fee to a client who will eventually pay but who is chronically slow. You don’t want to risk losing a reliable client even if they are often late at paying their invoices. But, if you have encountered a client you know you will not work with again, go ahead and implement the late fees.
Make a Phone Call
Don’t be afraid to call clients who’ve not paid their invoice for 20 days or more. It’s important to assume that it’s a mistake before you call so that you don’t sound angry or frustrated. You’d be amazed at how far a phone call will go to clearing up a late payment.
Finally, try to be a couple months ahead when it comes to your business expenses and salary. If you are 60 to 90 days ahead of the curve, it won’t be as hard to deal with late payers. Dealing with slow payers is going to be part of doing business in many cases, but you can eliminate most issues with late payments by thinking ahead and working with the client to ensure on-time payments.
Unpaid internships used to be very popular with employers and students. But, in the last few years there have been several high profile lawsuits that have not gone the way of the business. In fact, they were ordered to pay the interns back pay.
Of course, in the case of these lawsuits, the interns were not doing work in the field they were contracted to work in the internship; instead the firms were using them to do other types of work such as food runs, cleaning, and things that gave them zero experience in their field. However, it is still worth paying your interns and this is why.
Most People Can’t Afford to Work Free
In the case of a lot of internships, if you only offer unpaid internships you may miss out on some really exceptional labor. You’ll only be able to take on the people who have support from someone else such as a spouse or parent. There are many talented individuals who need to have at least their basic needs met to be able to even do the internship.
You’ll Get More Applicants
With paid internships you’ll get many more applications of a higher quality than you will if you offer only unpaid internships. Even if all you can pay is a small stipend, you’ll still get more high quality applicants.
Paid Interns Are More Likely to Work Hard
People are more willing to work harder, and do everything they can if they are also going to be paid during that time. Plus, you won’t have to worry about if you occasionally ask them to do things that aren’t in their field.
Paying Lowers Risk of Lawsuits
Due to the recent legal climate, it is best if you pay a small amount (even minimum wage) to interns in order to lower your risk of lawsuits by interns. This is really an important reason to consider paying your interns.
Improves Your Brand's Reputation
When others find out you offer paid internships over unpaid internships, your credibility will go up and your reputation will improve immediately. Unpaid internships are often looked down upon and even can be seen as scams.
Improve the Value of Your Program
Interns who are paid are more likely to be of higher caliber than unpaid interns, not to mention more diverse. Paying allows you to be more choosey about whom you let into the program and have higher standards of success.
You Can Gain from Your Interns' Work
Legally speaking, you can still get free interns, but one of the criteria is that you cannot gain anything from their work if you don’t pay them. By paying a small stipend you open up many possibilities because anything they create on the job belongs to you.
Paid Interns Become Fans
When you pay an intern, they’re very happy to be doing the work they’re doing and happy they were given that chance to gain real work experience. When it’s over they will likely talk about your company in a good way, thus improving your reputation in many ways.
While ultimately it’s up to you on whether you pay your interns or not, keep in mind that the law states that you must not increase your revenue by whatever the interns do. Plus, the internship must benefit the intern and not you. By paying them, you change the entire dynamic so that the internship becomes a win-win for everyone.
All parts of a business work together. They need to do more than co-exist, in such a way that it is seamless. From planning to marketing to sales and customer service, it all needs to go together so that you can please consumers and make more sales. All businesses must figure out the following for themselves.
Put Your Customers’ Needs First
Everything you do must be thought of and seen from your customers’ perspectives, not yours or your workers'. If your workers aren’t on the same page they might accidentally insult your customer. Create a mission statement that you can use to share your vision with your team. Using a customer relationship management (CRM) service that works with your shopping cart will help.
Be Able to Explain How Your Solution Is Different
Everyone in your industry is marketing to your customers, often offering the same things that you are. But, if you can explain how you’re different you’ll win the sale. The only way to do that is to continuously watch the competition, incorporating the lessons learned into your product development and delivery.
Distribute Your Products/Services How Your Customers Want Them
The channels you use to sell your products or services are important, too. If you’re not selling where your customer is, you won’t succeed. You may need to invest in professional shopping cart software or have something built especially, but it should work with your CRM system so that sales and customer service can communicate.
Know How You’ll Advertise and Market
When you put all the above together, which ways will work best to advertise and market your business? Will you use a website, a blog, video, pay-per-click marketing, email lists or something else? Can your CRM help better segment your market?
Understand Your Budget Inside and Out
Everything comes down to money. You can only do what is within your budget to do. If you’re on a shoestring right now, don’t waste time looking at solutions outside that budget. On the other hand, sometimes a fresh set of eyes can tell you where you SHOULD and SHOULDN'T be spending money. A qualified bookkeeper can often spot areas where you can cut costs and then allocate that savings to another area that will grow your business.
Ensure Strategies Are Doable
Each part of your business will start with a strategy, the “big idea,” and you may have to tone these down based on your budget and resources.
Know What Tactics You’ll Use to Reach Your Goals
Tactics are based on strategy and what consumers will respond to.
Understand How It All Works Together
Finally, you need to know how all these activities will work together effortlessly. Kaylin Hessler-Leland's book, Putting the Pieces Together will give you a comprehensive look at how much integration matters in your business and how to implement the correct strategies and tactics for stellar sales.
When it comes to running a lean business, the name of the game is efficiency. You want to use apps that increase your efficiency and help you do more in less time.
This is a no-brainer today, as many people like paying for their online purchases via PayPal. There are other online payment processors and certainly you need more than one, but PayPal is going to be the one most people choose to use.
Quickbooks Online Mobile App
This is the most comprehensive bookkeeping system with some stellar project management, budgeting, and accounting features. You can use it with many other types of apps to keep your business financials a finger swipe away. Get it free when you subscribe to Quickbooks online, and you can send invoices, capture receipts, and get answers in seconds.
This is project management software that is low cost, and people love it. It helps arrange tasks, reminders, and more. Your clients can sign in too, or you can just use it to manage a team of contractors.
This is another project management tool to use that will do all the things Basecamp does. It is more designed for working with teams and clients who like a big picture visual "whiteboard" of what's going on.
Microsoft Office 365
Using MS Office is almost essential when working from home. Although you can use some free services like OpenOffice.org, MS Office is still the main one that most people use. And you’ll need it. Instead of buying the software outright you can use the online service for a monthly fee. What’s wonderful about that is that you do not have to worry about updates.
This is a file sharing and storing solution that works great with your clients and team. It’s not expensive and they even have a free version. They have also developed a project business version.
This is free software that enables you to keep track of notes from the web, voice, photos, and more, even handwritten notes. This is great for planning and organizing new products and services. With the ability to search pictures for text, this makes "paperless" offices a breeze.
If you manage social media for others, or yourself, using a service that allows you to automate some issues will cut down on the time that you use for scheduling, posting, and looking at performance of posts across multiple social media accounts.
If you have a lot of customer service issues, this is a great way to set up a ticketing system. Ticketing systems will save you a lot of time, money, and effort. With packages starting at just $5, it can't be beat.
This is a backup system that will save you from disaster. Saving on an external drive is not good enough; it’s safer and better to save your computer’s files in the cloud. Then if you lose your entire home, computer, external drive and all, your work is safe.
Starting a website with Wordpress.org self-hosted website is very important. And, outside of special platforms like membership sites (for example the New Rainmaker platform) and personalized websites, it’s free.
Whether you use MailChimp or another autoresponder service is not as important as actually using one. The time you can save, plus the ability to easily stay lawful in your communications with others, is amazing. Set up newsletters quickly and professionally in minutes.
You don’t need every one of these apps to run a lean business as some of them do the same thing. Choose which apps work best for your niche and the way you have designed your work flow. Remember that the more efficient you can become using apps, the leaner your business can become. At the very least, you should have a cloud storage tool (like these reviewed by Cloudwards) to keep your files secure, handy, and shareable.
The Bean Counters Bookkeeping team are pros at figuring out where businesses can cut costs to enable growth. Book a free consultation to find out how we can improve your bottom line.