When you are planning to start your new business and become self-employed, you need to know about the things you need to do. But that is not all. You also need to know about the things you need NOT do.

Properly Balancing Do and Don’ts

Customers – Too Few or Too Many?

It is true that the chances of failure of a new business increase when it cannot generate sales. However, it is also equally true that the chances of failure also increase when you target everyone as a potential customer.

Suppose you work as a self-employed Web designer. If you try to convince everyone you know to create a website, it would take up much more time than the core business task, the creation of website designs. Moreover, it would be a waste of effort when you try to convince someone who has no idea about how a website works. It is not necessary to give an affirmative response to a business proposal if it would only be a headache right from the start.

The right thing to do is do your research about your target customers and build a plan to attract the right ones. If you do not know your customers, you have a slim chance of success with your new venture.

Funds – Too Much or Too Little?

Do you need to invest in the latest software? Do you need to buy a high-end desk for your new home office? Do you need to get help from an accounts expert? Your business and your budget determine the right answer to these questions.

If you have a Web-based business, you may need to invest in the latest software. However, if it is too much for your budget and you can do without it for the present, you can get it after your business starts to generate cash flow.

High-end furniture is, in most cases, a splurge for a newly self-employed individual. It may impress the people who come to visit you, but in the long run, it is of no use for your core business. Opt for functional furniture instead.

It is always a good idea to outsource certain tasks to specialized service providers. This would save you time and effort. Do not outsource any tasks related to your core business area, as it may have a negative impression on customers.

Belief – Too Optimistic or Too Pessimistic?

It is a bad idea to lie to anyone, a business associate or a customer or anyone else, when you begin your new business. However, this does not mean that no one would lie to you. A common mistake that a new entrepreneur makes is to rely on contracts. They think that just because it is in a written format, it is inviolable. A contract is important; however, it is seldom the last word on how a business relationship will work.

You need to focus on the relationship behind the contract. If the relationship works out, chances are the deal will work out too. If the relationship heads into trouble, no contract may be able to save the deal.

Every self-employed individual needs to understand that lies do not make the task easy. Do not display the show of a big company, with a number of employees, when you are actually on your own because it can backfire.

Attitude – Too Formal or Too Casual?

Too formal and you can be dubbed a fake; too casual and no one may ever take you seriously. The right thing to do is have a balanced attitude. Most importantly, do not lose your individuality just because you are now the self-employed owner of a business.

People lose patience with long, monotonous business proposals. Large corporations and their head honchos may take the formal approach because it suits them. A new-age, self-employed entrepreneur needs no such pretensions.

If you think that this means you can have a client meeting in your pajamas, you are obviously a little too casual. It is still a good idea to be a bit formal, at least in your attire, for client meetings, especially if they are with the large corporations.

Do not let the common perceptions dictate your attitude or your attire when you start your new business. You need not behave in a particular manner just because others do. Focus on your instincts. They will guide you in the right direction.

Purpose – Too Value-focused or Too Profit-based?

What is the goal of your business? This is the first question you need to answer before you give up your job and become self-employed. It is important to learn how to create the right balance between value creation and profit making.

If your business does not create value, for yourself and for your customers, it has no chance of success in the long run. You need to zero in on how your product or service can add to the value of yourself and your customers.

For example, your Web design business will create value for Web-based businesses to attract more customers and generate more profits for them. However, that is not all. You need to ensure profits for your business too. You may not be able to make profits immediately with a new business. However, you may be able to create value with it. Your next step would be to take apart the business concept and enhance it in ways that may contribute to profits.

It takes time, but with the right balance of key elements – you will succeed.

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Do you need a strategic business plan to begin a new venture? The answer depends on how you define a business plan. Every business must have a plan to begin with; but this does not mean that it has to be in a written format. Even a mental construction of a plan can serve as the foundation for your new business.

A study titled the “Pre-Startup Formal Business Plans and Post-Startup Performance: A Study of 116 New Ventures” by the researchers at Babson College displays the fact that there is no significant result in the success of a business started with a strategic business plan and that of a business started without one.

The question is: Why would you need a business plan if there is no significant difference in the end result? Below are a few things you need to think about before you make a decision about whether to create a business plan before you start a new business.

3 Reasons a Strategic Business Plan is Essential

A Business Plan Inspires and Motivates

When you have worked hard to prepare a strategic business plan, the chances that you will implement it increase. How does this work? You have to take one step at a time when you create a business plan. Taking steps helps you create a concrete plan from the abstract idea you have in your head.

But, a strategic business plan can’t be created out of thin air. You need to locate the target market, research and develop the idea, decide your product or service, identify the best ways to market the product/service, appoint a suitable team and make financial projections. All these steps lead to the formation of the plan.

The transformation of the idea into a plan gives a new entrepreneur the inspiration to begin his or her venture. It acts as the chief force that drives them to take on the challenge to create a  real business out of the plan. This, therefore, is the first step toward the realization of your dream to become a business owner.

A Business Plan Helps Secure Funds

If you have family or friends to fund your new business, you may not need a plan to convince them to become investors. But this won’t work if you have to go to others for the money. To convince them, you’ll need to prepare a strategic business plan that shows your active interest in transforming your idea into a venture.

Commercial banks, venture capitalists, government supported lenders – the places from which you can get the funds are numerous. But it’s not easy to convince them about a new business idea. And, it’s especially difficult if your business idea veers into a comparatively new and unexplored domain. Only a strategic business plan can make things work.

Does this mean you do not need a business plan if you have the funds? Well, it’s essential to have this document before you talk to potential investors. However, this does not limit the use of a plan to this situation alone. Even if you have arranged the funds, you can still benefit from a sketch of what, when and how you need to proceed.

A Business Plan Creates the Groundwork

The research and development you invest in preparing the plan makes it a good starting point. The plan helps you work out the steps you need for future business growth, considering any possible changes in circumstances. If you don’t have a vision about your new business, you may fail to achieve the success you desire.

If you think that the plan needs to be a 100 page document of white pages, you need to brush up on the basics. Such documents were in use decades back. Today’s business plans are slick, crisp and precise. You can expect an investor to go through the entire document only if it’s short and to-the-point.

Apart from the length, the content and presentation of the business plan also matters. Investors are only impressed if they find that you have put effort into creating the document. Analysis of the potential market, identification of customers, creation of a business model and other elements must be incorporated in the plan.

A lengthy, drab and monochromatic document can never attract investors. The best way to prepare the plan is to use slides to highlight the main points, an executive summary, a management team, a marketing plan and financial projections about your new venture.

A strategic business plan identifies the path you need to take to get your business from its present state to its future. The first task is to decide where you stand now, and the second is to decide where you want to be within a specific period of time. The next task is to create the path that takes your business from its conception to prosperity.

This path is your business plan.

Business Plan Photo via Shutterstock

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Have you ever wondered how to be a consultant? What does a consultant do? Well, the answer is simple – a consultant consults. The answer, though true in its basic sense, is much too vague.  If you want to become a self-employed consultant, you need to have a better idea about the business and the way to set it up. Let’s try to define the role of a consultant.

The task of a consultant is to provide advice to an individual or organization about matters in a specific niche. Still sounds vague; right? You need to dig a little deeper into the area before you plunge in to establish your business as a consultant.

Below is a step-by-step guide to help you start off as a self-employed consultant.

How To Be a Consultant: 10 Steps to Self Employment

Step 1: Identify the Niche in Which You Have Knowledge and Experience

You may have an interest in computers. However, this does not mean you can become an independent computer consultant (though it can give you a head-start in this field). Knowledge and experience coupled with interest is the only way to begin.

If you have knowledge about computers (hardware or software), have worked with these for a considerable period of time and have the latest detailed, information about them, you can plan to start a computer consulting business.

Step 2: Acquire the Certifications and Licenses

Some consulting businesses do not require formal training and certifications (e.g., gardening consulting). However, if you are planning to work as an accounting consultant, you need to get professional certifications from recognized accounting institutions.

Also, consider the licensing requirements to start a consulting business. The local or state legal guidelines may require you to get a particular license to work as an independent consultant in certain specialties.

Step 3: Decide Your Short and Long Term Goals

If you excel in a niche that has a good prospect, such as business consulting, computer consulting, career consulting and so on, you may paint a rosy picture of clients waiting for your advice within a week of starting your consulting business.

It’s not magic.  If you have such unrealistic expectations, you are sure to be disappointed. Every business takes time to grow and become known and established. If you lack the time and effort to start and establish a business, you may end up headed towards failure.

Step 4: Choose Your Target Market

If no one pays for your ideas and advice, your business will face failure. It will also face the same result if the recipients of your ideas do not have the money to pay you. The first thing you need to do is to decide whether you will advise individuals or companies.

Every niche in the consulting business provides these options. For example, if you are working as a career consultant, you may help individuals plan their careers. You may also work with a large corporation to help the employees excel in their chosen fields.

Step 5: Research Your Target Market

Individuals and organizations need consultants for a number of reasons. A tax consultant can help a millionaire plan his/her taxes. A computer consultant can help the employees of a large company learn software basics. A human resource consultant can help a big business implement a change in a policy.

After you determine the target market that will hire you for your expertise, you need to find out the various ways in which you may help them. This will help you market your consulting business. You need to tell your clients why they need you.

Step 6: Consider a Home Office

If your local laws permit this, it can work to your advantage in more ways than one. You don’t spend any money to buy or rent an office space to start your business as a self-employed consultant. You don’t need to pay for utilities separately. You don’t need to pay for a regular commute.

Along with the money, you also save time and energy when you work out of your home. You may acquire new premises after you have established your business and employed associates; but more on this later.

Step 7: Build Your Network

If no one knows you and you know no one in your field, you may find yourself in the midst of a disaster soon. It is important to start building your network as soon as you have decided to be a consultant. A strong contact base ensures that you have the sources to find work.

A professional network, coupled with a social network, can help you market and advertise your business. References are also important ways to find work in the niche. Rely on your initial contact base to build your network.

Step 8: Fix Your Fees and the Way to Bill Clients

As a beginner, you may not receive high fees as a consultant. Your charges increase as you become known as a consultant. Keep in mind your credentials and experience as well as market conditions, your target group and your competitors when you fix your fees.

Also, decide how you will bill clients. Hourly billing may seem to be a convenient method; the problem is many clients think that you charge too much for your time. It is best to use the project-based billing method when you start your consulting business.

Step 9: Arrange for Advertising and Marketing

You are not selling a house which, by the way, is much easier than selling your advice. Many of your clients may not be even aware that they need your ideas and advice. How do you market and advertise something so difficult? Believe it or not, you have a lot of choices – print media, cold-calls, online ads and many others.

Before you choose any avenue to advertise, decide your budget. If the costs go out of hand, the chance of success of your business plummets. Newsletters and brochures, advertisements in niche-specific journals, websites and blogs offer the best options.

Step 10:Determine Whether You Need to Outsource Certain Tasks

You may find it easier to handle all tasks of your business on your own when you start. But after your consulting business is up and running, you may need the help of others and you may decide to employ people. Check both legal and tax details before you do this.

You may also outsource some tasks that do not require your immediate attention. Make sure that the tasks are not connected to your consulting business. For example, you can outsource auditing for a career consulting business but not when it is your niche.

Consulting Photo via Shutterstock

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Does the name of a business affect that business’s success? In most cases, absolutely it does. So how do you name a business?

While the right name can make your business popular within a short time, the wrong one can doom your prospects. The right name can create a unique business identity, but the wrong one can mar it, along with your chances of success.

Do you go with something descriptive or something creative? Do you include a location in the name? Do you decide this on your own or get expert help? You need to find answers to a number of questions before you make a final decision to name a business.

How to Name a Business

Expert Advice: You May Need It

It’s not  easy to name a business. The name has to convey the right message and generate interest. Trademark issues must be considered and most importantly, you need to develop the right marketing strategy for the name you’ve chosen. If this is not particularly your field of expertise, hiring an expert may make sense.

If you’re in a sector where the name of your new venture is sure to affect its success, you need to involve an expert in the selection process. But don’t depend blindly on the expert. Instead, work with them to find the best name for your business.

Professional naming firms know what works and what doesn’t. You may come up with a name that seems good to you, however, they have the expertise to identify a name’s potential and evaluate its possibilities. They also know how to prevent legal hassles over trademarks.

Don’t think that hiring a professional is just a waste of money. The identity of your business depends on its name, at least initially. When you name a business, mistakes can lead to long term consequences that are costly in terms of time and money.

Informative or Abstract: Which Should You Choose?

Descriptive or creative? Real words or fabricated ones? Location-based or general? The questions are numerous. However, all of them are intertwined. Everything boils down to the basics – whether you need to choose a name that informs people about your business or a name that generates people’s interest, making them want to find out more.

There are no hard and fast rules to name a business. What works for one business may not work for another. This makes it even more important to think hard about the type of name that will be good for your endeavor.

You also need to decide whether to include a location in the name. While a location may define the proximity of your business for your target customers, it may become a problem if you expand your business to other locations later on. Just because your new business is small today doesn’t mean it will remain so in the future. The ideal name for your business should be the one that conveys the uniqueness of what you bring to your customers. But, the ideal may not always work for every business.

Here are a few tips to name a business that do work for all businesses:

• Pay attention to what your clients want; not to what you want.
• Don’t choose a long name with difficult words.
• Use words that evoke familiarity.
• Don’t use puns, as they may not be understood.
• Incorporate your business before you use the “Inc.” in the name.

Professional firms often use a simple trick to come up with business names—morphemes. These small, meaningful units of words provide a good base for an interesting, yet informative business name.

Trademark Issues: How to Stay Safe

Trademark infringement may lead to legal battles where you lose precious time and money. Therefore, it’s important that you research the names you think will be suitable for your business. You may also find it helpful to hire a trademark attorney to help you avoid legal issues.

Don’t take trademark issues lightly: These conflicts can completely annihilate your financial resources. An ounce of legal prevention is worth a pound of cure in terms of time and money.

And the Winner Is

Now that you have three to five names as contenders, whether you came up with them yourself or had experts contribute them, it’s time to finally pick one. Here are a few ideas that may help you find the best one for your business:

1. Ask yourself: Does the name convey the company image you want to create?
2. Ask your target consumers : Does the name seem interesting? (You can do this with a market survey.)
3. Ask your marketing people: Does the name have potential?

The last decision rests with you: Follow your intuition, go with the expert recommendation.

Whatever your method to name a business, make sure you start to market the name as soon as you have decided to use it.

Internet Cafe Photo via Shutterstock

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Is it a good idea for a small business to outsource some tasks?

Contrary to what many small business entrepreneurs think, it is often a great idea to outsource certain tasks to others. But, before you make any decisions to outsource, here are a few things you need to think about.

Why, When, What and How to Outsource Tasks

Why Outsource Tasks?

You may have the talent to do it all. However, if you indeed do it all, it may become difficult to achieve the ultimate objective – to enhance the prospects of your business. While you may be able to handle everything on your own, you may not be able to focus on the more essential elements of the business.

It is possible to streamline your business if you outsource certain tasks to vendors. By doing this, you will be able to concentrate on the core areas of your business. The first step may be a little difficult, however, in the long run it will lead to an increase in efficiency.

Another advantage is the cost-effectiveness of outsourcing. When you decide to outsource specific tasks to others, you need not employ a large number of people or buy or rent office space to accommodate them. This can considerably reduce the burden of overhead and cut business costs.

Advanced technology has made it easier to appoint professionals from any part of the world for specific tasks. The availability of highly skilled freelancers combined with the accessibility of their services enhances the suitability of the option to outsource.

When to Outsource Tasks

For small businesses, outsourcing can be advantageous from the beginning. When you start a business, you need to make sure that you do not lose your focus. In such circumstances, if you have to handle tasks such as attending to calls or bookkeeping, you may not be able to do justice to the more important tasks at hand.

There is no right time for a business to outsource. The way your business works, the staff members you have and the tasks they need to handle daily play a significant role in the decision about when to outsource.

While a very small business can capitalize on the advantages of outsourcing from the very beginning, a medium-sized business may not need to outsource daily tasks considering this option only if they cannot handle new projects on their own.  However, this may only be appropriate if appointing a full-time employee is not justified.

If you feel that you are the only one who can manage everything efficiently, but do not find adequate time for the most important tasks of your business, it may be the right time to let go of your complete control over certain tasks and outsource them.

What Tasks to Outsource?

The first thing is to identify the core areas of your business. Any tasks directly associated with these areas must not be in the list of tasks to be outsourced. If the core business areas are outsourced, your clients may not be able to get anything unique from you – a mistake a small business cannot afford to make.

For example, a web design business must refrain from using third-party providers for any tasks related to web designing, the focal point of the business. However, the business can outsource tasks such as payroll management or inventory management to contractors.

The common tasks that small businesses may choose to outsource include the following:

• Repetitive tasks: Data entry is a good example of a highly repetitive task. While you may use your in-house staff for this, it may be a better idea to outsource this and employ the in-house staff for more useful work.
• Specialized tasks: IT support can be the right example of this type of task. While you may need IT support for your network, you may not need to appoint a full-time employee for this purpose. In such a situation, a contractor may be ideal for this specialized work.
• Expert tasks: Financial analyst is a good example of a position requiring a high level of expertise, but that you can still easily outsource. It may be difficult for a small business to pay for highly-skilled executives. However, you can appoint a financial analyst on a contractual basis at a much lower cost.

How to Outsource Tasks

After you have decided when and what to outsource, the next job is to find the right partner. The best way to do this is to get recommendations from your business associates and contacts. You may also find a number of contractors from online platforms dedicated to connecting businesses with outsourcing partners.

Finding the right partner is all about understanding whether your requirements correspond to their specializations. After you have selected a contractor to outsource to, the next task is to draft a contract to specify every detail of the outsourced tasks.

The best way to ensure that the partnership works out is to be clear about everything. Because you are the one providing instructions, you may be the one to blame in case of any misunderstanding. To ensure proper communication between your business and your outsourcing partner, it is best not to leave anything to assumptions.

Keep in mind that the contractors you appoint may need some time to adjust to your work processes. Also, keep away from micromanagement as it may hinder your outsourcing efforts.

The entire idea of outsourcing is to save time – and focus on the core aspects of your business.

Outsourcing Photo via Shutterstock

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• Differences between employment and self-employment.
• Reasons that make self-employment so popular nowadays.
• Ways to curb the risks associated with self-employment.

Have you asked yourself, “Is it the right time to quit my job and start a business on my own?”

The answer, as much as you hate it, is – it depends. Your circumstances are unique; they determine whether this is the right choice for you.

While self employment seems to be a safer option than paid employment in present times, whether it suits you or not depends on a lot of factors. Before you try to determine which option is right for you, you need to understand the difference between employment and self employment.

Employment Versus Self Employment

Employment is Like Renting, Self Employment is Like Owning 

The latter option gives you the flexibility to make alterations and modifications according to your wishes. Something you cannot do in the former case.

Employment Gives You a Single Source of Income – Your Employer

Whether you are earning a salary or incentives, all of these come from this single source. However, this is not a constraint if you choose self employment. You may be able to earn from different sources, such as product sales, client consultations, etc.

Employment Can Never Guarantee Job Stability, Even When You’re a Star Performer

Self employment, on the other hand, may take time to establish. However, it can guarantee stability after a specific period – and with considerable effort.

Now that you are aware of the ways in which self employment differs from employment, the next question is:  Why should you consider it?

Reasons for Self Employment

No Considerable Difference in Income

While it takes time to earn profits from a new business, once it is up and running, the income can be as much as employment. Moreover, the rewards you get are directly proportional to the efforts you put in. Something that may not be available in a corporate environment.

Ease of Availability of Government Programs

Your eligibility depends on a number of factors. However, if your business idea is viable, you may be able to find assistance from government programs aimed at entrepreneurs.

Options Available Whatever Your Age

It may be difficult to find a new job after a certain age, especially at times of economic crunch. There are no such limitations on opportunities when you work for yourself. Furthermore, you may continue working for as long as you wish when you own and operate your own business.

Achieve a Work-Life Balance

If your work is all that you have, you are losing out on precious “me-time.” When you opt for self employment, you can create a work-life balance and maintain it too.

You Get to Chase Your Dream

The most important reason for self employment is perhaps the fact that this gives you the way to chase your big dream and make something out of it. If you have a vision, but never try to realize it, you may have to live with this regret your entire life. Self employment gives you the chance to be your own boss.

It seems that it truly is the right time to try your hand at your own business. However, it is more easily said than done. This is a big decision and it involves a lot of risks as well. Before you take the plunge, below are a few things you need to know to reduce the risks.

Reduce the Risks of Self Employment

Make Sure You Have Enough Security Money

When starting a new business, the first thing you need to keep aside is ample security money. Nothing can guarantee the absolute success of a new venture. For this, you need to make sure that you have adequate funds to pay your bills for at least a few months.

Make Sure You Have Work Experience in the Same Field

If you are venturing out into a field you know nothing of, chances of failure increase. It is better to acquire some experience before you take any step in this regard.

Make Sure You Have a Business Plan

Creating a business plan can make or break your business. For this, you have to find answers to a number of questions regarding the viability of the idea, the availability of the market for your products or services, the position of your competitors, etc.

Make Sure You Have a Plan of Only What You Can Afford

Big plans may not mean anything if you do not have a sound basis for such plans. The finances you can arrange and attract play a significant role in the business plan you prepare.

Make Sure You Have Additional Financial Resources

Keep in mind that you have to spend more than you plan initially. The costs, almost always, are more than what you planned. In such a circumstance, you may have to arrange for more funds. It is, therefore, important that you have sources from which you can borrow.

Assessing your circumstances is necessary for determining whether it is the right time for becoming an entrepreneur. Ample planning and research are necessary for starting a new business and making it a success.

Self Employed Photo via Shutterstock

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