The End Game For Your Home Business
It’s Friday and the weekend starts in a few hours! Before you slip into you party clothes and paint the town red it’s time to catch up on with final installment of this week’s series on how to start a home business.
Yesterday we looked at some free business resources but today we’re going to take it a little further. The topic for is; what next? To be more precise, we’re going to look at things you need to take into consideration if you home business turns into a full time job.
For the purposes of this exercise, we’re going to assume that your little home business has hit the big time. It’s profitable and customers are beating a path to your door. You’re managed to eliminate your credit card debt so the money you’re now making is all yours… well, nearly all yours.
The Taxman Cometh
If you have a business then you need to pay tax. Yes, you could try to dodge it but, currently, if you’re convicted of tax evasion you could face fines running into thousands of pounds. Knowing our legal system you’ll probably be out in 3 weeks for good behaviour but it’s still not a nice experience.
What Taxes Is Your Business Liable For?
Corporation tax: Paid annually, this tax is levied against the profits you business makes. Business expenses and your personal pay are deducted from the your profits and the kind man from HMRC takes his pound of flesh. This figure is currently 20% in the UK.
Don’t be tempted to buy yourself lots of ‘business essential’ goods if you don’t need them. If you’re ever audited you might come a little unstuck. Besides, every pound you spend on your business account is a pound less you get to keep (even if it is going to be taxed).
All the information you need can be found on the HMRC Corporation Tax page.
Top tip: Get yourself an accountant that specialises in dealing with small businesses. You’ll be amazed how much money they can save you.
How to Find Good Staff
Staff that value their jobs and want to contribute to your business success are like gold dust but you need to find them. If you home business has blossomed from a personal passion into a major player then your want dedicated workers. They need to share your desire to make what you have the best. How do you find team players like this?
If members of your family have worked to help you build up your business then you probably don’t need to look any further. If not, you need to bring the best you can afford into your company. YOur clients may be paying for more than one service. Ask them if they know anyone that they think would be a good fit. Grill candidates in the interview. Let them know what you expect and don’t be shy telling them.
If you have a web based business, consider using Virtual Assistants (outsourced staff who work answering you emails, sending invoices, email potential clients, etc).
Top tip: If you go down the route of using a recruiting agency find one that specialises in your niche. Look for recruiters that have worked in your industry.
How Big Do You Want To Be?
The sky’s the limit but what’s your limit? Maybe you started a home business to earn a little extra money but now it’s turned into something huge. How big do you want your company to be? As the number of clients grows and your revenue increases you’ll probably need to put in more time managing the day to day running.
If being the big boss isn’t for your then set a limit. If you only want 100 customers then don’t accept any new contracts until an existing client drops out. If you don’t want to to deal with employees then for your company to stay small. With those points in mind, don’t take your eye off the ball. If you let things slip a competitor will eat your business for breakfast.
Top tip: Make a plan. Write down your aims for you business including the reason why you started it. If you start to falter, read your plan from start to finish and get back on track.
What Happens If It Goes Wrong?
I could say it won’t but life throws some unexpected things at us from time to time. You’ll need to keep a slush fund in place for a rainy day. Here’s an example: your man with a van business is in huge demand and you employ two workers full time, 5 days of the week. Everything is going fine until they roll your van. Your insurance won’t pay out because there’s nobody else at fault (and you took the cheap third party insurance policy). Whilst the going was going was good you used up most of the company profits furnishing yourself with a rock star lifestyle. Oops!
Make sure you have enough money in the pot to cover the eventualities that have a big impact on your business. Insurance is key. Yes, it can get expensive but spending a decent sum to ensure your business thrives is better than taking a risk and losing it all.
Top tip: Budget for unforeseen events. Take a leaf out of a money traders books: reinvest 50% of your profits and keep the other 50% in the bank.
Plan For The Day You Close Your Business
At some point you want to consider what your ultimate aims are. Are planning on closing down your business and retiring? Do you want to sell up and move on? Regardless of where you’re going you need a plan. Think about your customers. If your aim is to close up shop you’ll need to let them know especially if you’re offering some kind of local service where you have repeat custom.
Think of how upset you’d be if your favourite shop closed down unexpectedly. Yes, you would probably go and find somewhere else to shop but it’s an inconvenience.
Top tip: Think about your competitors. If you have a list of customers consider selling that list but make sure you tell your clients.
That’s all. If you have any points of view you’d like to add simply drop them into the comments box below. See you next week.