Although I have a full time job that keeps me busy for a typical 40 hour workweek, I’ve also been a home-based business owner in my off hours. Twice, actually. Successfully handling a career plus a home-based business is a delicate balance and one that takes a lot of work and dedication. But you already knew that. What I’ve come to realize recently is that some other would-be entrepreneurs might not have some of the basic knowledge needed to run a successful home-based business. Tips and tricks that might normally take years to learn are often overlooked in the formative months of a new business venture. Today I’d like to share some lessons I’ve learned about becoming a successful home-based business entrepreneur.
I’m not going to discuss the common-knowledge type of lessons like writing a business plan or building a website or understanding search engine optimization. I won’t discuss the different types of business models: sole proprietorship, corporation, partnership, etc. These are all lessons that are readily available in any good business book. What I will discuss are the little details that are often overlooked at the beginning and might not be learned until you’ve been in business for a year or two – or scramble to learn after you realize you’ve been doing it wrong for too long.
Home-Based Entrepreneur Lesson 1: Know your target audience
This one might seem obvious. When we decide to sell a product or service we think we know exactly who is going to buy it. We might identify “married women aged 30-45,” for instance, or other basic demographic statistics and think that’s enough information to get us started. And yes, that’s essential information to have, but it only scratches the surface of truly knowing and understanding your target audience.
The key to knowing your target audience is to intimately understand those people who buy from you. Know their habits, their routine and their preferences. You have to dig deep and get to know the people behind that demographic information and understand them on a personal level. What does that 35 year old woman with a $50,000/year income eat for breakfast? What does she do on a Friday night for entertainment? Where does she take her family on vacation? And how do the answers to all those questions relate back to the product or service you want her to buy?
How do you learn this information? You have to ask questions. Lots and lots of question. Do surveys of current clients. Talk to potential clients and ask them about their habits and buying needs. Get on the internet and join forums where you think your audience might frequent and “become” one of them, interact with them and become their friend. You’re not making these inquiries to generate sales, so don’t give a sales pitch – you’re making these contact and establishing these friendships so you can better understand who your client is.
Home-Based Entrepreneur Lesson 2: Know your true expenses and profit margin
Let’s say you sell a product for $20 that costs $5 to produce. But is your profit margin really the full $15? No, of course not. And on the surface we know that we have to calculate overhead into that profit margin formula, but do we really understand all the details that need to go into the “overhead” calculation? We must count everything. Let me repeat that… we must count EVERYthing. Not just the expenses that have a big dollar figure attached to it, but also our time and creative energies that are spent to make the sale of each single product and the time it takes to build a successful business that might not generate direct sales but will generate a reputation in your field.
When we calculate overhead we must look at two different streams of expenses. First the hard costs of producing the product or service along with any other costs associated with running our businesses. Do you use sticky notes to doodle on while talking to a client on the phone? Both the pen and the sticky notes need to be calculated into the office supply column. Brochures, business cards, letterhead and envelopes are all common supplies we already calculate into business overhead expenses, but did you count the legal pad of paper or the day planner you used to write a note to yourself that a potential client requested a brochure to be sent through the mail? Did you calculate gas and mileage that it took to drive that brochure to the Post Office? You get the idea. Everything you use has to be calculated and tracked and recorded.
The other major overhead expense that is often overlooked is your time. If you’re providing a service to a client, the time you spend with that client is not the only time required to make that sale. How many hours did you spend tweaking your website or promoting your business on Twitter or Facebook just to generate that single sale? How many minutes did you spent stuffing envelopes or addressing post cards for a direct mailing campaign? Did you pull out your day planner at the doctor’s office to make notes about a client’s project or make a marketing phone call while driving your child to soccer practice? All those little blocks of time need to be captured and recorded in a time log. If you had to sit at your desk and make those notes or return a call to a client, you’d count them – so make sure you’re counting those minutes of work you do while multi-tasking in other areas of your life. Every single minute you spend thinking about you business or doing a task for your business needs to be recorded and calculated into your overhead calculations.
Home-Based Entrepreneur Lesson 3: Know what marketing is all about
Marketing is a big scary word. It’s a whole degree at the local university. There are entire corporations dedicated to nothing but marketing. The world of marketing is huge and overwhelming and intimidating. But without marketing, your business has no chance at success and you’ll flounder before you even start. In fact, many experts say you should dedicate 60% of every business day to nothing but marketing your business.
You don’t have to hire someone to do your marketing for you. And once you understand what it is, you’ll realize you can do the majority of it on your own. In fact, once you understand that marketing is nothing more than a game, you will realize how fun it is. Marketing is nothing more than bringing your message to your target audience in such as way that they want to buy your products or hire you for your services.
When you start doing your basic research on how to market your products and services do some Google searching for “grass roots marketing” – this is code for talking to your audience directly using techniques that are less expensive but often more effective. So instead of sending out a mass mailing of direct mail pieces you’re visiting the local Mom’s group and giving a lecture on a topic you’re an expert on that your audience wants to hear about. And as a side benefit you’re able to pass along your business information to that audience. For instance, if you are a home-based travel agent, your lecture might be about how Moms can be tourists in their hometown or how to organize a field trip with the playgroup to the local children’s museum. And don’t forget the benefit of using social media outlets as a tool for marketing your business – connecting with people you know or who are interested in your topic is another key marketing task.
In Lesson 1 you learned that you need to really understand the individual personalities and habits of your target audience, and knowing your audience will make marketing much easier. You know where your audience is, what they do and what their habits are, so bring your message to them and make sure the message is delivered in such a way that they understand it.
These three valuable lessons will help you be a successful entrepreneur. Truly understanding who your customers are, fully accounting for every expense in your business and learning how to market your product to your audience – these are lessons to build upon as you establish your home-based small business.