Is Your Home Business Ready for the
N_w Y_[r? By Isabel M. Isidro
Managing Editor, PowerHomeBiz.com
December 2010
Is Your Home Business Ready for the New Year?
Copyright © 2010 PowerHomeBiz.com LLC All Rights Reserved. No part of this document may be reproduced without written consent from the author.
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As the New Year begins, it is time to look back at what you achieved last year (and other years prior) and assess the performance of your business. Knowing how well (or poorly) you did the past years can help you improve for the coming years. Here are 14 checklists for your home business start of the year review:
Assess Where Your Business Is Right Now Before you can move forward, it is always helpful to review the past year and analyze what worked and what did not work for your business. Put your thinking cap on, and look at the past year (or years) with an analytical eye. Be critical, and be honest! Whether you have a written formal business plan or just notes scribbled in your journal, look back at whether your business has achieved the goals and objectives you have set out when you started. What strategies worked for your business before, and what do you think can work again this time? What were the mistakes you committed and need to avoid? Now ask yourself: what could you do better this time? See how far you have gone in reaching what you wanted to achieve, and use the results of your business review to redefine your business goals for this New Year. You need to know the answers to three basic questions: Where is the business now? Where is it going? How is it going to get there? Specifically, ask yourself: Are you achieving the vision you have set out for the business? Do you feel that you are doing everything yet your business is still going nowhere? If you started the business to become the main source of income for your family, is the business earning enough to support yourself (and family, if any)? How is the business affecting your life? Does it allow you to have more time with your family, or do you feel more stressed and overworked? How has the economic downturn affected your business? Did you have to downscale your plans and cut back on your planned expenditures? Are the mission and objectives you’ve set out for the business still the same? If they are, how valid and relevant are these mission and objectives given the economic, industry and competitive landscape? If not, what compelled you to change them?
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What are the strategies that you followed with regards to products/services, operations, marketing, finance, and technology, among others? How successful are these strategies? What are you doing to increase your sales and market share? How effective are these marketing? What are the strategies to ensure that your business has adequate financing and cash flow for this year? Do you anticipate any problems with regards to managing the business finances? What were your strategies to improve productivity and lower costs? Get a clear idea of where your business really stands. Look at your business with an analytical eye. For all the bullet points above, understand the factors why there is a discrepancy, if any, between the actual performance and your desired performance. Knowing the “whys” can help you plan better for the New Year.
Make a List of Your Hits and Misses As a business owner, it is important to review how well your previous strategies worked in order to craft your strategies for the future. You don’t want to repeat the past mistakes without knowing what went wrong; or ignore those strategies that actually work for your business. Assess and review your past strategies, then write down what worked best for your business. Make a list of what worked in the past, and what failed – and then try to explain the factors that contributed to the success or failure. What led to the success of a particular strategy, and why did the others fail? Look at your revenue generating strategies. Considering the economic environment that you are operating in today, find out which monetization strategies gave you the most revenues, and which ones did not meet your expectations. Try to find opportunities that can allow you to expand your revenue sources, and ultimately increase the profits of your business. Think of any creative ways to generate income, including alternative non‐traditional ways. Consider whether there may be new and unique lines of business that you can pursue in the long run. Use the tools available to you. From your financial records to your web traffic analytics, look at the numbers to understand the strategies that worked – and failed. If you have not been using any analytics tool, then the first thing in your agenda for the New Year is to start putting in place tools that can help you evaluate the performance of your business.
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Look at the key strategic and operational tactics that helped your business the past years. What bootstrapping strategies worked for you? Given the economic uncertainties, how did you keep your costs down while ensuring profitability? One strategy could include bartering for services in‐kind. It may also be the use of the model of product development life cycle combined with continuous improvement to keep the initial costs down; after all, you don’t have to wait for perfection before releasing a product. Review your search engine optimization strategies. For any business today, search engine optimization is a key element of any marketing plans. After all, search engines can drive huge amount of targeted traffic – and if we’re talking of organic search engine results, free. Is your website ranking for the words/phrases that you expect your visitors to use? Has your traffic from the search engines improved, or has the traffic decreased? Learn the factors that draw traffic to your site – quality of content, topic, title and description tags, quality and quantity of links – and make sure you replicate these winning factors in web pages you will develop for next year. If you must, get help from search engine optimization service providers, or take the time to learn how to rank well in the search engines. Check the press that your business has received, if any. If your business received press mentions this year, review the coverage you received – what angles were used, what was said about your business, how do you think the reporter found about you or your business, and what pitches worked well. If you sent out press releases (both paid and free), make a list of the sites you think gave you the most coverage including links on the Web. For the New Year, actively seek out media attention for your business. Start by making a list of editors, journalists, even bloggers covering your industry. Develop relationships with them, offering your expertise to help them in the pieces that they are developing. Go even as far as developing a list of top journalists/producers who are tweeting, and contact them via Twitter. Consider social media. Is your business on Facebook or Twitter? If not, maybe it is time to check if social media could work for your business. Are your competitors using social media, and if so, how successful are they in terms of gaining followers and the responsiveness of these fans to their postings? If you are already using social media, look at all the sites where you have a presence. Which ones are bringing you the sales, traffic or strategic connections your business needs? If you are not getting the sales that you need, is it because of your execution or is this particular social media site simply does not work for your type of business? If you are on Twitter, check out what types of tweets are giving you the most clicks, who are the users retweeting your posts, and what types of hashtags worked best for you. If you’ve got a Facebook page, determine what types of posts give you the most comments and feedback.
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Analyze your Numbers The only way you can really know how well your business is doing is by knowing the bottom‐ line. This assumes, however, that you are able to do regular bookkeeping, generate financial statements based on your bookkeeping journals, and analyze those statements to really understand the financial condition of the business. Do you know your margin of profit? Even if your marketing campaigns are effective in bringing in customers, if your margin of profit is too low, it will be hard for your business to actually make money. Do you know how much it cost you to produce the products you sell? If you are buying from a wholesaler and then sell off the finished good, it is easier to calculate the costs of your goods. But calculating this number may be trickier if you deal with intangibles such as information or an item that you produce yourself. How much does it cost to sell your products? From marketing and advertising expenses to labor, calculate how much it costs you to get your products out of the door. For example, if you sell on eBay, look at the fees that you need to pay to be able to sell on eBay. Calculate your pay per click marketing. Do you know how long it takes you to collect – and the cost of collecting – your accounts receivables? Have you prepared your budget for the New Year? Ask yourself tough questions, especially if your revenues and profits declined. Admittedly, business is tough today, but what could you have done to prevent the hemorrhage of your bank account?
Develop your Goals and Strategies for This Year Think of what you want to accomplish this year. Make a list of your objectives for your business, and then list the activities that can help you achieve the objectives. Be specific. Keep your objectives as detailed and measurable as possible. Even better, make a note of what you need to achieve every single day. Putting a specific deadline on tasks or goals can spur you more into action. It is essential that you create a realistic strategic plan that you can review periodically to assess how you are really doing with your business. Put down in writing your goals for the New Year. If you did not write your plans and goals for last year, make sure that you put in writing your goals for this year.
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This way, it will be easier for you to review how you are progressing and make it easier to review your goals on a more regular basis. Or if you need to change your goals mid‐way through the year because of new opportunities or directions, it will be easier for you to see where you are. For example, if you are a blogger who earns primarily from serving ads, an example of a goal and its activities maybe: Goal: Increase ad revenues by 20 percent before end of the year. Increase traffic of the blog by as much as 50 percent. Write at least 5 new posts per week, carefully analyzing the traffic statistics of each post to determine the types of posts preferred by the audience. Review ad placements and formats, and experiment which ad format works best in terms of generating ad revenues. Explore other ad networks to find the right ads to put into the site. Participate in blog carnivals at least once a month. Submit content to social bookmarking sites (even strive to develop content most likely to get to the front page of Digg, for example). Use social media to market the blog. Join Twitter and post links of blog posts on Twitter. Create an account dedicated solely for the business on Facebook. Connect with at least 3 bloggers per month, whether in terms of commenting on their blogs or requesting for blog roll link exchanges Don’t be afraid to get help. Your problem, just like most small business entrepreneurs, is the lack of a regular and impartial assessment of how your business is doing, as well as the lack of help in terms of creating your strategies. Especially if you are a solo home‐based entrepreneur, there’s no one else around to give you a different perspective of your business. If such is the case, consider signing up with various mentorship programs such as those offered by SCORE or your local Small Business Development Centers. Or you can network and try to find other entrepreneurs you can bounce off ideas and give you advice about your business. Prepare your strategic plan for the New Year. A strategic plan is different from a business plan, inasmuch as scope and coverage. Start by examining the vision, mission and objectives of your business – especially if you have to change them based on your present realities. Then proceed with crafting the strategies of your business – e.g. growth will be funded internally, fulfillment and shipping with be contracted out, new web sites will be launched, among others. The next step is to examine how you are going to achieve your strategies by matching your resources, budgets, and timetable and performance targets. Do a SWOT (strengths, weaknesses, opportunities and threats) analysis to help you understand the environment you are operating in, and how your business can be fortified to face all the challenges for the coming year.
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Set up a review loop to help you plan your business. Create procedures that will allow you to take time to review your operations, and spot mistakes that can prove costly in the long run. The sooner you correct mistakes ‐‐ whether in terms of sales, product development or marketing – the better you can avert any disasters for your business.
Determine your Customer Acquisition and Retention Strategies Your business is only as good as the number and quality of customers you bring to it. Customers are the lifeblood of your business, and you need to always review how you are getting them in, and more importantly, how you are keeping them as loyal customers. Some questions you need to think about include: How well are you able to communicate the benefits of your products and services to your customers? How successful are you in conveying how your business can satisfy their needs and make their lives easier? How do you treat your customers? Do you treat your customers in a respectful way? Do you greet them and serve them well when they come into your store? Do you respond quickly to your customers’ emails, feedback and complaints? Remember, customers don’t owe you anything, but you need to earn their business. How does your business, product or service stand out from the rest of your competition? If you’re not standing out, do you know why? Is there something – whether service that you can kick up a notch, or a product line that you can offer ‐‐ that can differentiate you from your competitors, big and small? What percentage of your customers are repeat customers? How can you make your first time customers to buy from you again? Do you generate referral customers? How can you make your existing customers actually refer you to their family, friends and network?
Plan Your Web Strategy Whether you are operating a Web business, or just using the Web as an online brochure for your brick and mortar business, it is important to look at the numbers behind your web site. The Web has become an integral medium for any business today that it is important to understand how your web site is contributing to your overall goals. If your site is not using any web analytics
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software – whether the free Google Analytics or the pricier WebTrends – you need to install one as soon as possible. If you have web analytics software installed, ask yourself these questions: Do you have goals set up with your analytics? Whether you are selling products on the Web or collecting leads from your site, your analytics software should be able to tell you how well (or poorly) your site is able to direct your visitors toward the goals. If they are not buying or signing up for your newsletter, you need to know why. What is the best way to get visitors to your site? Is your site too dependent on a single biggest traffic source (e.g. 85% of your traffic is from Google), and if so, what happens if that referrer stops bringing traffic to your site? Are there areas where you can improve – e.g. increase direct traffic or increase referral traffic? What topics and pages attract the most traffic? What pages rank well in the search engines? How long are visitors staying in your site? If you are running an ad‐supported web site, you may not mind that users are visiting only one page and then leaving your site by clicking on an ad. But if you’ve got an online store, you may have to examine why visitors are only checking one page and leaving without buying anything. What are your best traffic referral sources? How is the social media bringing traffic and contributing to the attainment of your goals?
Formulate Your Marketing Strategies Marketing is a huge chunk of your daily efforts, both in time and in expense. It is important that you periodically monitor what worked for you in terms of bringing in the most sales, increasing awareness to your brand, and engaging with your customers. How do you market your business? Do you think you’ve used the best methods based on your goals and resources to reach your target audiences? Do you measure the success of your promotions? Do you know which marketing and advertising campaigns worked best in generating response? It is important to have a clear definition of success for each marketing action. Have you set clear targets to achieve in terms of sales or revenues? Do you know the return on your marketing investments? Compute your return on investment and find out how much each campaign actually cost. How do you craft your advertising and promotional materials? Are you including a strong call to action in your ads? Are your headlines compelling enough?
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Remember it takes two to tango – while advertising in the right medium is important, your ad should also be crafted to elicit the response you want. Are you using email marketing? How effective are your emails in bringing in sales? How can you improve your response rate? Look at the regularity of your emails, the subject lines you use, content you send out, and the quality of your lists. Email marketing, done the right way, can be a huge source of sales and return traffic for any business.
Pump Up Your Networking Networking is important for any business. For many things, “who you know” is very important. Having the right contacts can help open doors for you – new opportunities, new customers, new suppliers, new funding sources, new mentors, even someone just to talk to and bounce off ideas. If you’re a home‐based business owner, just having a meeting to attend and a chance to interact with other people can bring about a beneficial change of scenery and pace. Check out professional business networking groups in your area such as BNI http://www.bni.com/ and investigate whether participating in such a network can be beneficial to your business and yourself. Check if using sites such as LinkedIn, Facebook or even MySpace can benefit your business. Or join your local Chamber of Commerce and be active in your local business scene.
Check out Your Competitors You don’t operate in a vacuum. Hence, it is important that you take time to see what your competitors are up to. Big businesses have departments dedicated solely to understanding the competitive landscape. Just because you don’t have dedicated manpower to find out what others are doing doesn’t mean that you can’t do it. Identify your competitors, both old and new. Are there any upcoming businesses that cater and address the same consumer needs as you are? Analyze their product offerings, including quality of their goods and services. Are there similarities to yours, or are they offering something that you are not? See the strengths and weaknesses of their products. Review how they offer their products. Check their prices and see how yours compare to them. How is their customer service? Review their web sites. What have they done differently this year? How does their web site compare to your site, in terms of navigation, look and aesthetics, and
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overall feel? Are there new content or features on their site? If you are in the same online retailing space, are there new product categories or lines? The web site is the first place where you can investigate about your competition. Make a list of the approaches and strategies they use on their site, and see how they differ from yours. Look them up on the social networks such as Twitter and Facebook, among others. This is how you can find out quickly about the latest happenings with your competitors and what strategies they are using to market to their audiences and increase their reach. Compare their web presence with yours. Analyze their web site to see where their strengths lie, especially if they rank higher than your site. Use a keyword competition check tool or Yahoo Site Explorer to check the number of backlinks your competitors have and who are linking to them. Examine their title tags and how they use their keywords on their pages. Look at how they craft their copy and their call to action. Lay out your plans as to how you will compete with your competitors. How can you offer better quality products? Will you compete based on price by lowering your prices while making sure that you don’t severely undercut your margins? Or will you offer something extra special in terms of customer service? Sign up for Google Alerts for your business, as well as your competitors. This will allow you to be notified immediately if your competitors are talked about in the media or generated new links for their website.
Create your Calendar of Activities It is important to break down your goals and activities into smaller and doable lists of tasks that you can do. To help you keep track of what you want to accomplish for your business, prepare specific timelines for your goals and activities – and stick to it. Whether you are using a planner, Internet calendar or any other scheduling systems, be sure to incorporate your activities into your planning system. Create specific targets for each month – e.g. make a list of what you want to be accomplished each month. And using whatever system works best for you, set up reminders that can help you keep your eye back to your objectives. Reminders can be in the form of popup in your Outlook calendar, a paper listing the activities that needs to be done pinned to your corkboard, or daily entry into your planner.
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Review Your Plan B It is always smart to have a backup plan in place in the event that things do not work out as planned. It is great to be optimistic about things and hope that running the business will go as smoothly as possible. However, things don’t always work accordingly. The strategies you’ve planned may not be working out as expected. Some catastrophe may happen, or someone in your family (or even you) may get sick and you may be unable to work on the business. As John Mullins and Randy Komisar explain in their book entitled “Getting to Plan B,” uncertainty is the name of the game for new businesses. You just don’t know if your assumptions are correct, and you need to be flexible enough with your plans as you test out your assumptions and see which of your strategies will actually work or not. You need to be able to revise your plans quickly when things are not working as you envision them, or you are seeing bottlenecks you never envisioned before. As the authors explain, “studies show that entrepreneurs who stick slavishly to their Plan A stand a greater chance of failing ‐ and that many successful businesses barely resemble their founders' original idea.” Create a backup plan for your business: Train yourself to spot mistakes ‐‐ especially if these are chronic mistakes that you do over and over again. The key is to enable you to become aware of these mistakes in order to stop it from becoming a full‐on disaster. Recognize that economic forces and laws may be beyond your control. The economy may still be in recession, and economic recovery may take longer than expected. You need to understand what’s happening around so you can better plan for these environmental changes, including making a fundamental change to your business model. Line up a list of professional advisors that you can turn to for advice and assistance. You don’t need to hire them now even on a retainer basis, but it is best to have at least the contact information of qualified professionals before a problem crops up. What if you are sued? What if the financing you are expecting suddenly fail to materialize? You need to make a list of financial advisors, accountants or lawyers – possibly recommended by someone you trust and who have stellar reputations. Ensure that your work on your computer is backed up. How much of your business will be affected if your computer suddenly dies today or your data is wiped out? Will you be able to get back on your feet immediately, or will you never recover the lost data? Consider using an online or remote backup service or use, or a backup hard drive that you can keep in a second location in the event that your office area suffered some mishap. Find a mentor who can help you navigate unexpected and unforeseen business developments. Your business may fall into a tight spot where you have little idea
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how to deal with and get out from. It may be time to recognize that you need someone else hold your hand, give you the advice you need and help you out of the difficult situation.
Prepare your Mind for New Challenges Ahead You have already taken stock of where you are. You have thought about where you want to go. The next step is to ensure that you are in the right mindset as you continue your entrepreneurial journey, and commit yourself to staying with it. Pat yourself in the back for everything that you have achieved thus far. You have shown that you’ve got the guts and intestinal fortitude to launch a business. It’s not an easy road, and at times, full of excruciating challenges. But you’re here now, and looking forward to another year. Enjoy the success that you’ve already achieved! Get your working space or home office ready for the New Year. Start by cleaning up your work area: a clear mind starts with a clean area. Invest in filing and storage containers to help you get rid of the clutter and organize your space. Discard items you don’t need, such as old magazines and other paperwork. Make a list of tools, equipment and items that can help improve your productivity and ensure the continuity of your business. Refocus and think about the things that are really important to you. Understand what you want to achieve with your life, and how this business can help you get there. Commit yourself to success. As you already know by now, there will be a lot of challenges ahead. So you need to be motivated and convinced that you’re in this entrepreneurial journey for the long run and that this business is indeed what you want to do. If it will help you, splurge on a journal and write things down, from your fears, doubts, or ideas. Writing your thoughts can help you see things clearly and weed out the important things from the unnecessary things.
Try to Learn Something New As they say, the only thing constant is change. Hence it is important to learn to adapt to new ways of doing things, including reaching your target market. Five years ago, you wouldn’t have thought of promoting your business via online videos, but now the wide reach of online video sites such as YouTube has made it a very appealing way of reaching customers. Consider how having a video can help your business grow and get more
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buzz. Look at how a presence in social networking sites such as Facebook or Twitter can grow your business. Or whether direct mail can still work wonders for your business. Be on a lookout for ways you can improve your business, even if that means venturing into unknown territories. Study how others are improving their business processes, doing their marketing and promoting, or creating new revenue streams – and see how these new trends can work for your business. This means constantly keeping your eyes open as to what your competitors are doing. Subscribe to newsletters, magazines and publications that can educate you. Visit online forums and check out experts on the topic. With the growing popularity of ebooks coinciding with the rise of gadgets such as Kindle and iPad, make it a point to read books that can give you ideas on how to improve your operations.
Start the Work! What good is all the planning if you are not going to implement any of it? Firm up your plans for the first quarter, and then start the work. It feels mighty good to cross off from your list the first thing that you need to do. Then keep the interest and momentum going. It is so easy to lose track of what you need to accomplish. To encourage yourself to keep working on the goals you’ve set up, celebrate after every task you have accomplished. Reward yourself, even if that only means taking a day off away from work (meaning no Blackberries, no checking of emails or making phone calls). It may be helpful to put a visible reminder of why you are doing this business. Having a visual reminder can prop you up on days when you feel you’ve lost interest in the business or when you start questioning why are you doing all this hard work. Most of all, keep your passion and energy going, and have fun along the way.
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The Author Isabel Isidro is the Managing Editor of PowerHomeBiz.com, the online small business information site launched in 1999. Ms. Isidro has written numerous articles on the Web published on a wide variety of web sites such as Inc.com, MSN Finance, and others. She maintains a blog called PowerHomeBiz Small and Home Business Blog, and manages other home business information resources such as WomenHomeBusiness.com, LearningfromBigBoys.com and StartingUpTips.com She holds an economics degree from the University of the Philippines.
About the Publisher
PowerHomeBiz.com is the premier destination for home‐based entrepreneurs and self‐ employed individuals. The website provides tips, how‐to articles; "how I did it" success stories, motivational articles and other information to help small entrepreneurs start and succeed in their home business endeavors. PowerHomeBiz.com at http://www.powerhomebiz.com, is a privately held online publisher of home business and small business information. Other resources include: PowerHomeBiz.com http://www.powerhomebiz.com PowerHomeBiz Small and Home Business Blog http://www.powerhomebiz.com/blog/ Women Home Business http://www.womenhomebusiness.com Learning from Big Boys http://www.learningfrombigboys.com/ Starting Up Tips http://www.startinguptips.com
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