Many people would like to work for themselves. Although it is not for everyone it can be very lucrative for those people that can successfully pull it off. I grew up in the home of an entrepreneur of thirty-five years. At times money was short and at other times we had an abundance of resources. We enjoyed the fact that dad owned his time and was available when we needed him.
The greatest benefit of starting a home business is the freedom that it allows for the business owner. No one who has started a home business will tell you that it was easy or that the hours were short, in fact the number of hours put in weekly by successful home business owners far exceed those of the typical 40 hour employee week. Notice though that I continue to include the word 'successful' before home business owner, because there are plenty of home businesses that are started and terminated within the same year. On the other hand, there are plenty of stories of successful home business owners who have taken their idea and built it into an empire to be respected. Then certainly, there are enough stories of people that have started a business in their home and made a very comfortable living for themselves and their families.
If you have a desire to be free to determine your own destiny and also your own worth you may find a home based business to be a good place to begin. Desire should build within you a determination to build a successful entity. Once you have a determination to succeed, you must also find an idea that can be developed into a home business.
Once you have that business in place you will enjoy benefits that are not enjoyed by the typical W-2 employee. One such benefit is the ability to deduct reasonable business expenses through the use of a Schedule C on your sole proprietor 1040 form or 1065 form for LLC's and partnerships. These expenses may include things such as space in your home, mileage on your vehicle's business miles, part of your homes utilities, as well as furniture and equipment used for business. You may also be able to deduct your families self-purchased health insurance and medical expenses.
There are many benefits to starting a home business, but the best benefits will be developed in your own mind as you are beginning the process of exploration that precedes business formation. Good luck in your pursuit of freedom and self-worth. As a business owner myself I can say that it is well worth the sacrifices.
by Shane
Sunday, July 29, 2007
What is a SWOT analysis and how do I use it?
How many businesses start operations without a plan? Certainly, most businesses will have an idea of what type of product or service to provide, which is obviously important. From there the new business owner will then decide on a price and a distribution method for the new product or service to be provided. Once these decisions have been made the new business is born and the company is moving in a direction. In the end though the direction of the business is not clear and the strategy is non-existent. Although some businesses are able to fumble through life without a plan and earning reasonable revenues, too many businesses fail within the first year, while many will close doors in the second year.
In order to limit your chances of failure in the first or second year or as the business progresses later in life, you should approach business with a plan. Specifically a business plan is an ideal tool to determine the feasibility of a business. One of the primary tools associated with a business is a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
The first part of a SWOT analysis is the determination of "strengths." Strengths are features of your business, product, or service that provides benefit to your organization. Strengths should be approach from the position of what factors provide an advantage over other companies, products or services. What does our company do better than our competitors? When looking at your strengths, you should approach it from two different directions. First, you should look internally at what you feel are the strengths of the organization. Then you should look inwardly at the organization, as if you were a competitor to try to determine how other companies perceive you.
It is often much harder to analyze the second factor, "weaknesses", than it usually is to determine strengths. The first thing to keep in mind when working on weaknesses is to be honest with ones self. Some factors to consider are what could you do to improve your product, service, organization, and industry in general. It will do you no good to come up with a flimsy list of weaknesses that have no real relevance or weight. If you can honestly look into your organization and come up with a hard analysis of your organization you will find that is much more helpful and will be an excellent guide to you in the future.
The third factor "opportunities" actually is outward looking in nature. The idea is to analyze your industry and business environment for potential opportunities that can be developed by your organization. This step is often glossed over in a simple SWOT analysis, but it should really be a major focus of the company. The opportunities portion of the SWOT analysis is where you will find your future high ground once you have conquered your businesses original high ground challenge.
The fourth factor "threats" are another focus where many businesses gloss over. Some business threats are relatively obvious and can clearly be defined. Others are unimaginable and are not realized until it is too late to remedy. Your organization will gain a great deal of benefit from doing a proper analysis of the threats that face your company, industry, and economy.
About a year ago I had the opportunity to sit down with a woman that had opened a self-storage company. She expressed her concerns that the business was not doing as well as she had expected it should have done. She was facing the possibility of failure and in it would lose her life savings. Through our discussion we determined that she did not do a great deal of planning in advance of opening the business. Her original plan was reasonable in that most self-storage businesses do well once certain milestones are surpassed. In her case though there were too many weaknesses and threats to allow the business to be successful. Had she done an honest SWOT analysis in conjunction with a feasibility business plan it would have been determined that the business had little opportunity for success and that she would have been better off investing her funds in a conservative investment portfolio.
In an alternative scenario that I encountered also last year, I found a young organization that had done their due diligence in analyzing the industry and completing a very honest and specific SWOT analysis. The results of that degree of preparation helped them to steer through some very difficult situations and in the end are looking at some very healthy profits in the second year.
Do yourself a favor. Before embarking upon a new venture do your due diligence in preparing or having a third party prepare a SWOT analysis for your business. By the way most comprehensive business plans will have a SWOT analysis built into it. Make sure that this analysis is also comprehensive and that it is appropriate for your business.
In order to limit your chances of failure in the first or second year or as the business progresses later in life, you should approach business with a plan. Specifically a business plan is an ideal tool to determine the feasibility of a business. One of the primary tools associated with a business is a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
The first part of a SWOT analysis is the determination of "strengths." Strengths are features of your business, product, or service that provides benefit to your organization. Strengths should be approach from the position of what factors provide an advantage over other companies, products or services. What does our company do better than our competitors? When looking at your strengths, you should approach it from two different directions. First, you should look internally at what you feel are the strengths of the organization. Then you should look inwardly at the organization, as if you were a competitor to try to determine how other companies perceive you.
It is often much harder to analyze the second factor, "weaknesses", than it usually is to determine strengths. The first thing to keep in mind when working on weaknesses is to be honest with ones self. Some factors to consider are what could you do to improve your product, service, organization, and industry in general. It will do you no good to come up with a flimsy list of weaknesses that have no real relevance or weight. If you can honestly look into your organization and come up with a hard analysis of your organization you will find that is much more helpful and will be an excellent guide to you in the future.
The third factor "opportunities" actually is outward looking in nature. The idea is to analyze your industry and business environment for potential opportunities that can be developed by your organization. This step is often glossed over in a simple SWOT analysis, but it should really be a major focus of the company. The opportunities portion of the SWOT analysis is where you will find your future high ground once you have conquered your businesses original high ground challenge.
The fourth factor "threats" are another focus where many businesses gloss over. Some business threats are relatively obvious and can clearly be defined. Others are unimaginable and are not realized until it is too late to remedy. Your organization will gain a great deal of benefit from doing a proper analysis of the threats that face your company, industry, and economy.
About a year ago I had the opportunity to sit down with a woman that had opened a self-storage company. She expressed her concerns that the business was not doing as well as she had expected it should have done. She was facing the possibility of failure and in it would lose her life savings. Through our discussion we determined that she did not do a great deal of planning in advance of opening the business. Her original plan was reasonable in that most self-storage businesses do well once certain milestones are surpassed. In her case though there were too many weaknesses and threats to allow the business to be successful. Had she done an honest SWOT analysis in conjunction with a feasibility business plan it would have been determined that the business had little opportunity for success and that she would have been better off investing her funds in a conservative investment portfolio.
In an alternative scenario that I encountered also last year, I found a young organization that had done their due diligence in analyzing the industry and completing a very honest and specific SWOT analysis. The results of that degree of preparation helped them to steer through some very difficult situations and in the end are looking at some very healthy profits in the second year.
Do yourself a favor. Before embarking upon a new venture do your due diligence in preparing or having a third party prepare a SWOT analysis for your business. By the way most comprehensive business plans will have a SWOT analysis built into it. Make sure that this analysis is also comprehensive and that it is appropriate for your business.
Why businesses fail?
Parts of this article are shown on my website. It is from http://www.thebeehive.org/. I am wondering if you have found these points to be true of the businesses that you have either started, been involved in, or been familiar with.
Why Businesses Fail
Why Businesses Fail
"Most businesses fail, but your's doesn't have to. Find out why most businesses don't make it past the first 6-12 months and what you can do to prevent it.
*Your business doesn't make profits.There might be a lot going on, but you're not going to make it if your expenses are higher than your income.
*You haven't saved enough money.You need to save enough cash to run your business for the first 6 months or so before you start making money. If you don't, your chances aren't good.
*You haven't defined your mrket and you don't understand your customer's buying habits.If you don't know who they are, how to reach them, and how loyal they are, how are you going to make money from them?
*You think you can do it all on your own.Believing you can do everything yourself is the fastest way to burn out.
*Your business has grown too fast.If you don't have the cash to buy more inventory, pay more workers to meet your demand, or even chase the people who owe you money, you're taking on more responsibilities than you can handle or afford.
*You depend on one customer.The more customers, the better your chance for survival. If you lose the one key customer you depend on for survival, your business will not survive.
*You haven't priced your product or service properly.If you sell your product or service below what it costs you to make or provide them, your business will not survive.
*You don't manage cash flow well.When you're starting, you have to pay for a lot of things up front. You'll also be waiting for money to come in. Make sure you find a balance, or you'll run out of money and be out of business.
*You don't react to competition, changes in technology, or changes in the market.You can't assume that what you've done in the past will work all the time. Change with the times and experiment."
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