5 Tips For Starting A Business & A Winner!

I am so pleased to introduce you to Tracy from Mama-press. Tracy is my guest blogger today and brings a wealth of knowledge for anyone interested in starting a business - and for those who have a business, this is a great checklist.

Why talk about business on a children's decor blog? A high percentage of bloggers are blogging as a business, to complement a business or have an etsy shop. I, too, will be opening my children's lighting business shortly, as well as hold a firm belief that business is everywhere and whatever interests one has at some point they will use business skills.   Here's Tracy:

In today's economy, some people are starting home businesses out of financial necessity. Others are doing it out of pure joy and desire. Whatever the reason, you must use these 5 tips before embarking on this new endeavor:

1. Define your product or service. What are you trying to sell? Whatever it may be, you must define it, focus on it, and perfect it. Don't spread yourself too thin by offering everything under the sun. You should start off with one or two similar products you can do well, instead of offering a bunch of things you do sub-standard.

2. Determine your budget. How much money can you afford to throw into this? What are the basic requirements for getting started? Let's use an example of an interior design consultancy. You do not need much overhead as you'd work from your home (until you are hugely successful and can afford a studio!). Overhead, however, would include a computer and any design software, etc.. After considering fixed overhead, you must research and estimate all the variable costs involved (which are discussed further in step #4 below). After your costs are estimated, determine what initial capital outlay you need. Do you have some savings to cover this or must you borrow? Don't forget to factor interest in as a cost. What will be your ROI (return on investment)? What is your break-even point (how long until you recoup your initial investment)? There are many online resources to help you calculate these important figures.

3. Research competition. Who is your competition? How do you differentiate from them? What is your competition charging (you must factor this in when setting your price)? You should offer something different or better, rather than just "copying" what someone else is already doing. If you offer the same exact thing, you better have lower costs so you can charge a lower price. Know your competition so if a client asks you "why should I choose you instead of so-and-so" you can answer them intelligently.

4. Set you price. To do this, you must determine all the costs involved (which you've already done in #2 above). Using our example of an interior design service, your costs could be: your time (you need to pay yourself an hourly wage), your intellectual expertise (a subjective cost, but a cost nonetheless), gas to drive to Client's site, supporting materials for a presentation, etc... Each item must be broken down into a unit cost. If you create marketing materials to give a presentation at Client's site, determine the cost per folder or binder. Gas cost should be calculated as cost per trip. Add all these up to determine your cost per proposal. You must cover your costs and factor in a desired (realistic) profit before setting your price. You simply cannot pull a price out of the air.

5. Define your target market. You cannot effectively promote your business unless you know your audience. To whom do you wish to sell? What is the demographic make-up of your typical customer? Where do they shop, what is their style, what is their income level? You must understand them so you can tailor your marketing efforts towards them.

When all this is done, you can begin writing a business plan. You need all your thoughts, goals, and ideas, along with all the financial information, down on paper. This is critical if you expect to keep things organized and clear. Entrepreneur has great tips and how-to's for writing a formal business plan, as well as other tips for small business owners.

Tracy is founder of Mama-press, a site which offers free "press" to mompreneurs with small home businesses. She provides marketing tips to business owners, offers them an online catalog to showcase their products, and also provides mom-worthy tips and information to small business owners and their customers alike. Connect with her on Facebook and Twitter.

Thank you Tracy for those informative tips!
If you found this helpful please share it by giving a stumble, like or tweet! 

The winner of the DIY Slipcover DVD giveaway is:

Rachelle from The Shabby Tulip!
Congrats Rachelle! 
We expect to see your new slipcovers soon!

And now back to children's decor - if you're creating anything for kids' rooms don't forget to link it in Tuesday's Nursery! 

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Rachelle said...

Thanks again Nan for the awesome giveaway! This was a perfect win for me because I have a cushion that has a good sized hole due to puppy teeth :/ Can't wait to show you what I do with Shelley's help!!

Mommy LaDy Club said...

Thank you Tracy and Nan for the great tips. I did go through all of these steps with my business, and I think the one thing I notice the most in the handmade industry, are the number of shop owners who do not really research their costs and markets. They might have great, low prices, but you know that they will never be able to turn a profit, which is what you have to have to last.

Tracy @ Mama-press said...

Yes, great point! Even if it's just a side hobby for extra cash, rather than a potential true business for the long-term, these steps must be taken. One could be losing money without realizing it if she doesn't do the proper research beforehand.

Nan @ Playful Decor said...

Rachelle, Congratulations! And I can't wait to see your new furniture!

Courtney, great point. Pricing is so important. I think it defines a business from a hobby. Honestly, the pricing of a product may not be in step with a biz owner's personality and that may take a while to adjust to, but bottom line is making a profit!

Tracy, when doing taxes one year and adding up all the expenses of my home party biz, I closed up. A little bit here & there you don't really consider, but when you see the BIG number in the expenses column, reality sets in! Thank you again for a great article!

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