Capital: The Key to Starting a Successful Home Business
by Rebecca Button on December 3rd, 2007
If you think "capital" is the uppercase letters at the beginning of a sentence, then this article is for you. Capital-the money you dedicate to starting your new home business-is the single most important aspect of planning out your business. It doesn’t replace creativity or a great idea or good marketing skills, but if you don’t have capital, then everything else combined may just barely be enough to keep your business above water-or it may not be. Starting a business without first having the money to start it is a huge mistake.
And yet this is a mistake many new business owners make. They jump into their home business feet first, without planning it out in advance, and without making the capital they’ll need. This is one reason for the high rate of failure among home businesses.
Before you start your home business, it’s important that you sit down with pencil and paper (an old fashioned method, but it works better than complicated computer spreadsheets, at least for these early stages) and plan out your business. What products are you going to sell, or what services are you going to offer? How much does it cost to make the products? Factor in everything; materials, the time you spend making them, the cost of boxes to package them in.
How are your products going to get to your customers? Will they come to your home? Will you deliver? Factor in the gas and the cost of repairs on your vehicle. Right now, the government allows $0.48 per mile in vehicle costs. Figure out how far you’ll drive in an average week, then multiply the number of miles by $0.48. This will give you an estimate of your weekly vehicle cost. And don’t forget to add the cost of insurance!
Or, will you be selling online? Factor in the cost of owning and maintaining a website. You’ll need to register a domain, buy hosting, and either create the website yourself or hire someone to do it.
How will you send products to customers? Do you have the equipment and software to print out shipping labels from your home? Do you have a computer that can handle it?
Planning ahead for costs-and saving up for them beforehand-is the surest way to get your home business off to a healthy start. Planning can sometimes seem overwhelming, but take heart. Every step you work out now, every penny you save up now, is one less you’ll have to worry about in the future.