35 Steps to a home business
by Joseph R. Birkner
Copyright 1997 Joseph R. Birkner
Steps 1 to 12 Entrepreneurship, business skills needed for success, choosing the perfect business, business startup basics, procedures, stationery, equipment, mail order start up, where to find products to sell, how to create your own products and more…
Steps 13 to 22 How to approach suppliers, finding products, Information products, advertising, order filling, distribution and more…
Steps 23 to 35 Information products, advertising, order filling, distribution, avoiding TV hype and false promises, profit margin needed for success, controlling your product and information, Getting FREE publicity, mailing lists, E Mail Marketing, Internet, Networking…and more…
Starting a home business is the dream of millions of budding entrepreneurs. Maybe you have also thought of starting a home business but for one reason or another you never got around to it. Now, perhaps you are laid off or ‘down-sized’ and must ‘do something’ to survive. Maybe you are retired or perhaps you need extra money, whatever your motives are for wanting to become more independent financially or mentally, here are some step by step tips on how you can get started in a home business of your own.
1. WHAT IT TAKES TO BE AN ENTREPRENEUR
It has often been stated that an entrepreneur is a risktaker. Although that is true to some extent, my definition of an entrepreneur follows: “Entrepreneurs are not risktakers, rather, they see opportunities and seize them!” You will have to be a self starter and not depend on others. For example, when you worked at your “regular job” your boss ‘fed you work’ and you had to do whatever job you were given even though you hated it. On payday, you got your reward. As an entrepreneur, you’ll have to find WHAT you want to do, HOW to do it and WHERE to sell your creation or service. You’ll spend more time than you’d ever imagine but you’ll enjoy it better.
2. TAKE INVENTORY OF YOUR PERSONAL SKILLS, BACKGROUND, EXPERIENCE AND INTERESTS.
For instance, if you enjoy woodworking, then try to establish a business involving woodworking. Some thoughts that come to mind are making wooden novelties, birdhouses, whirligigs (wind toys), crafts or even building decks and sheds. Start with your hobbies to find a potential business opportunity that you already enjoy. If you do what you enjoy, the money will come, unless there is no market. So, don’t hock the family jewels to start a buggy whip manufacturing business!!
3. LEARN ABOUT COMPUTERS
Computers are big now and will be the growth area in the future. Learn a word processing program such as Ami Pro, Microsoft Word, or Word Perfect. You don’t need the fastest, most powerful computer to do a decent job and you don’t have to spend a lot of money on a computer or on training either. Used computer stores and mail order suppliers listed in computer magazines have good computers for low cost. Check out your local computer users group or your local adult education programs offered at local high schools and colleges for low cost training. Ask your reference librarian for help or check the “yellow pages “…but do it now!!
4. WHAT IS THE PERFECT BUSINESS FOR YOU?
The ‘perfect’ business in my view is one that you enjoy and is fun rather than work. For example, I always liked to tinker and build all kinds of contraptions from discarded items. I’d never throw away anything away without first dissecting it and salvaging good parts that I could use for other “thing-a-ma-jigs”. I once built a simple metal detector from electronic parts that I “stole” from a broken radio. I used a few resistors, a capacitor, some lamp cord wire [for the search coil] scrap plywood to mount the components and an old broom handle to hold during searching. Oh yes, the receiver was a cheap working transistor radio tuned to the right frequency and attached to the broom handle with [thick] rubber bands I cut from a bicycle inner tube that had a blow out. Despite the “Rube Goldberg contraption”, it did and still does work and I’ve found several coins with it and lots of bottle caps!!
You too have many hidden untapped talents that you can use to start and build your own business at home. Start by making a list of your hobbies and interests for getting ideas. When you do what you love, it is fun and not work!
5. NEVER START A BUSINESS THAT YOU DON’T UNDERSTAND.
A friend of mine, an accountant, said that someone asked him to ‘get involved’with designing and setting up web pages on the Internet. This sounded like a great opportunity, and when my friend told me that he knew nothing about web page design I told him to either get knowledge from books or seminars and courses or find a business that he understands and enjoys. Not having the time or interest to pursue web page design, he followed my advice and, several months ago, he set up a financial investment service business which was related to his accounting background. So, to get going fast, start the business that is closely related to your interests. Go with what you know!!
6. OBTAIN A BUSINESS LICENSE FROM YOUR LOCAL CITY OR TOWN HALL.
A business license costs about $10. Request 2 or 3 extra copies of the license with the official city seal on it, your bank will need an official copy for their files. Before a license is issued, the clerk checks the files to see if the business name you picked is available and is not already used by another. A DBA “doing business as” account is one such as: Mary Jones doing business as (DBA) “ABC Company”.
7. OPEN A BUSINESS CHECKING ACCOUNT AT YOUR LOCAL BANK.
Usually, a DBA checking account is FREE. You need the business checking account to cash your customer’s checks made payable to your business. If you do not have a business checking account, then you can’t cash or deposit checks. When opening a business checking account, the bank will ask for your business license and some form of ID such as a driver’s license. Start with a small deposit say, $100 and you’ll soon get your printed checks and you are ready for business.
8. ALWAYS USE BUSINESS STATIONERY
You must have business stationery ie. a printed envelope and letterhead and a business card in order to do business with suppliers. A local print shop such as “Staples”, “Office Max” and others can quickly print a small quantity (500) of each or you can type set your own with your computer and save some money. Don’t get fancy with your printing when you start out. Avoid paying for special logo designs when you can use a stock “:logo cut” at very little extra cost, but a logo alone, does not necessarily sell more of your offers so keep your printed stationery simple.
9. GET A BUSINESS PHONE AND AN ANSWERING MACHINE.
A business phone and a business answering machine with a professional outgoing message means that you are serious. Avoid using your personal answering machine and home phone as your business one too. Often I have reached ‘businesses’ that were answered by children or that had barking dogs in the background. When you answer the phone, say your company name, such as “ABC COMPANY, John Smith speaking..May I help You?” rather than a personal “hello”. Also, with your business phone you get a free one line yellow (& white page) listing for your business. The cost for a business phone is under $20 a month (basic service) with a one time installation charge of about $100. Buy an answering machine with a speaker phone so you can speak while you read or write. I use Phone Mate #8200 ($39.95) with good results.
An example of how having a business phone listing paid off was when a book publisher called directory assistance under our company name to see if we had a business phone before he agreed to work with us!! So, look professional and act professional and you’ll be treated with respect and opportunities will come to you seemingly out of the blue. I believe that the SMARTER (not the HARDER) you work the LUCKIER you get!!
10. CONSIDER MAIL ORDER
Starting a mail order business is another popular ‘easy entry’ way to start a home based business with little investment. The big problem is to find a product or information to sell. Reading and responding to classified and display ads in printed opportunity magazines, on-line business magazines and E Newsletters such as this one is an excellent way to gain entry into the mail order or direct marketing business with little money. Note, too, how and why the particular ad you responded to got your attention. Pattern, but do not copy, your own ads the same way. Example: use the word FREE if possible in your ad to get attention fast or use an attention getting ad such as “MAKE 1998% PROFIT SELLING INFORMATION!!”
11. WHERE TO FIND PRODUCTS TO SELL.
Trade shows, magazines, newsletters, on-line publications, manufacturers, and importers are good places to look for products to sell.
For trade shows, contact the Chamber of Commerce in your area. Also, contact local convention or trade centers via the Chamber of Commerce in any large city for a calendar of up-coming trade shows which are typically held annually. To attend these shows, you must be “in the trade” since they are not open to the public. Sometimes you may be able to get a free pass and badge from a sponsor. I’ve attended many trade shows in Chicago, New York City and in Boston just by contacting the sponsor and telling them that I am a direct marketer seeking new products.
You can directly contact manufacturers and suppliers requesting their wholesale prices (remember to use your business stationery). The companies can be found in the Thomas Register of American Manufacturers (22 volumes; 1997 cost $240) under 55,000 product & service headings. This valuable resource looks like a big green encyclopedia and is available in any large public or college library.
Contact a local field office of the Department of Commerce for Importing/Exporting information in the blue pages phone book under US Government Listings. Your local library and especially the business library of a College or University is an excellent source of business books, publications and trade magazines where you can get ideas for products that you can sell.
12. HOW TO CREATE YOUR OWN PRODUCTS.
Invent your own products by improving existing products. I taught a creativity seminar and asked the students to find as many uses as possible for a piece of fluorescent property marking tape. In 15 minutes they brainstormed over 167 uses!! Some were: fuel; toilet paper; decoration; a belt;a bikini; a hat, bookmark, fishing lure etc. Try brainstorming on any product that you want to improve. Simply list as many ways that come to mind in say, 20 minutes, of how you can improve the product. The more ideas the better regardless of how seemingly silly or stupid they may seem to be at first. Don’t stop to evaluate any of them now, rather just let your creative juices flow and you will find that you too can invent!!
Avoid responding to late night scam invention marketing companies who promise you the world and fail to deliver anything. Some highly touted companies may be fraudulent. Contact and question the Federal Trade Commission about the reputation of any invention marketing firms that you are considering. Do this before submitting your ideas and your money to them. Deal with reputable firms. The Patent and Trademark Office provides patent and trademark protection to inventors and businesses. It offers some information on invention marketing companies also that you may want to check out. It grants patents on inventions registers trademarks, publishes patent information and maintains files of U.S. and foreign patents for public use. If you invent a new product ask for information regarding patents and trademarks: Contact: U.S. Department of Commerce, Patent and Trademark Office, Washington, D.C. 20231 or call 703-308-4357.
13. HOW TO APPROACH SUPPLIERS, MANUFACTURERS AND MAIL ORDER DEALERS.
Using your word processing program or typewriter, write a simple, cordial, yet professional letter to the principal of the company such as the President (for small companies only) or Sales Manager. Avoid sending “dear occupant” letters, rather, look up the key executives names and titles in “Standard & Poors Directory of American Corporations” (available in the library) or call the company directly to get the name of the decision maker you need to contact. Use your business stationery to conduct business with suppliers. Sending requests on postcards or with hand written notes on tablet paper will be ignored. Also, if there is a charge for a catalog and you don’t include the payment, don’t expect to receive a reply. Why should a supplier, mail order dealer or business person mail out product literature and samples to “curiosity seekers?”
14. FIND A PRODUCT THAT PAYS OVER 400% PROFIT.
Unless you have a good profit margin (preferably, at least 3 to 4 times your cost) you can not make any serious money reselling products, with few exceptions. You can find high profit products from inventors who may have a garage or basement full of products, packaged and ready to be sold. You can place a “Products Wanted” ad in a newspaper and have suppliers contact you. Also, a good source of new products is foreign trade sources. Your librarian can help you find several importing resources. Also, the US Department of Commerce listed in the blue pages of your phone book can help with import/export issues. The yellow pages of your phone directory has listings of importers in the USA who have already imported the type of products you want. By dealing directly with these “import/export brokers” you can save the hassles of paying duty on imports and of currency exchanges and of waiting for slow delivery. Their relatively small service charges outweigh the potential, costly problems that an amateur importer may experience.
15. PLACE A TINY INEXPENSIVE CLASSIFIED AD IN A SMALL LOCAL NEWSPAPER ADVERTISING THE PRODUCT.
Don’t spend a lot of money on display ads until you know that your product will sell at a profit. Using hard hitting, attention getting words in your ad such as:
AMAZING NEW WIDGET CATCHES FISH LIKE CRAZY!! GAME WARDENS ARE WORRIED!!! FREE DETAILS. Your Name, address.
Test! Test! Test! Try various ads and placement until you find which ones work best, then run the same order pulling ad in other publications.
Key your ads so you will know where the responses are coming from. For example, you can vary the spelling of your company name as a key, or you can use a department number or a suite number. Examples: “My Mail Order Company” can be keyed as “My Mailco”; MMailo” “My Mail Order Comp” etc.
16. FILL ORDERS YOURSELF
Fill orders from a small stock of inventory you have on hand. This allows you to quickly respond to customers with a product you control without depending on drop shippers to fill your order. This also eliminates errors by third party material handlers. Use drop shipping for large, hard to inventory expensive ($100++) products that are sold in low volume. For high volume fast sellers, it is best, we have found, that it is faster to handle and fill all orders in house or locally, from stock on hand. Later, as sales volume increases, you may want to hire a fulfillment company to pick, pack and ship orders directly to your customer while billing you for their services.
17. REINVEST ALL PROFITS IN OTHER PRODUCTS.
Don’t plan your world cruise on the initial success from your first few product sales. It takes time to build a business. Reinvest profits wisely in new products.
18. HIRE DEALERS TO HELP YOU SELL YOUR PRODUCT.
There is only a limited amount of hours in a day. At first, do as much of the work in your business yourself, but know when to ask for and use help such as sales professionals. Sure, you have to pay dealers a commission, but they will reach markets that you can never reach alone.
19. REPEAT STEPS 14 TO 18 FOR OTHER PRODUCTS.
20. FIND HOT BEST SELLING “HOW TO” INFORMATION THAT PAYS OVER 1000% PROFIT THAT YOU COPY LOCALLY FOR PENNIES AND SELL FOR DOLLARS.
A quick way to launch your business is to buy “ready made” QUALITY books and reports that you can use NOW!! Later, add your own creations to your product line. A number of book publishers, mail order dealers and close-out sources often carry overstocked books called remainders at a fraction of the cover price. Check your phone book or contact your local book store for inventory. If you chose to sell used books for which there is a big market, consider yard sales, flea markets, bazaars and schools which are a great source of good used books, Profit margins, for these books are typically less than for your own materials because the publisher had to produce the book, promote it and pay royalties to the author. Margins can run 30 to 1000+% but normally average at about 50-75% range on a book by book basis. Used books, obtained at the sources mentioned can return 1000+% profit.
You can create your own info-products if you have the time and know how to do it. The high profit, approaching 2000%, comes from the low production cost of copying reports, books and booklets for which you have acquired the “rights” from the originator, copyright owner, or “prime source”. Depending on the size ie. number of pages, of the info-product, and the quantity you reproduce, will determine your cost. Usually, your cost is a fraction of the retail price of the material offered to the buyer. For example, a 24 page book on “MAIL ORDER SECRETS” that retails for $25-$35 may cost only $1.20 to produce in small quantities or as little as $0.75 in 2000 lot quantities thereby resulting in enormous profit potential to the dealer. Caution: It is illegal to reproduce copyrighted reports and books without the written permission of the copyright owner. Reprint rights certificates are granted to dealers who have paid for that privilege.
Copyrights provide protection from copying for literary, dramatic, musical and artistic works. They can be obtained for $20. The Patent Office does not handle copyright registration, rather, contact the Library of Commerce. To protect, say, your new information product such as a book, report or article, request FORM TX and Circular 1. “Copyright Basics”: from Register of Copyrights, Library of Congress, Washington, D.C. 20559-6000 or call: (202) 707-9100 [24 hr. Forms Hotline].
21. AVOID WORN OUT, CHEAP, WORTHLESS, POOR QUALITY, REPORTS.
People pay for information contained in a report and do not necessarily care what the report actually looks like PROVIDED the information is what they were looking for and not just a rehash of commonly available information merely repackaged. A one page report containing important data useful to the buyer, such as a financial newsletter that may cost $25 for a single page may be worth 10 times the cover price for the value of the information conveyed to the reader, while a single page report, poorly written or containing useless general information is not worth the cost of the paper it’s written on. So, insist on quality, and with your newly acquired computer skills, you should be able to deliver a quality document with little effort. Give your customers what you want.
22. PLACE A TINY INEXPENSIVE CLASSIFIED AD IN A SMALL LOCAL NEWSPAPER ADVERTISING THE INFORMATION.
Avoid placing expensive display ads without first testing your offer with a small, low cost, classified ad. Ads placed in local papers will run quickly, unlike ads placed in magazines which often have closing dates 1-2 months in advance of your actual ad placement date. In other words, you should know whether your ad pulls orders sooner when placed in small newspapers than in magazines. Consider other faster, inexpensive means of test advertising such as E Mail and the Internet as discussed later, where your ad is placed practically instantaneously in those media with world-wide exposure to potentially millions of prospects. Always test your offer before you invest large sums of money on any advertising campaign. It is wise to vary your offer in price and content depending on where you place your ad. If your product appeals to both sports fans and to investors you should put a higher price on your offer targeted to investors who may more readily recognize the value of your offer than a sports fan. Test, test and test again, then repeat ads that out pull another test ad while eliminating or modifying the lesser pulling ad.
23. FILL ORDERS YOURSELF
Fill orders from a small stock of copies you have on hand or copy as orders are received. Keep a small inventory of books that you acquired from publishers or other sources mentioned and fill orders from stock. Backorder, as needed.
24. REINVEST ALL PROFITS IN OTHER INFORMATION.
After the sale to your customer, you should be prepared to offer additional related information and products to your customer. That’s why you should strive to expand your line with new materials and money-making offers.
25. HIRE DEALERS TO HELP YOU SELL YOUR INFORMATIVE MATERIAL.
It’s a big world out there!!! You can not, alone, reach all of your best prospects, due to time and money contraints. Sure, you can do a lot of the ork yourself, at first, but soon you will discover that there are experienced dealers and distributors who know how and where to market YOUR products and information and make you both more money than you could make alone. The small commission paid to your dealers is well worth it.
26. START SLOWLY AND GRADUALLY BUILD YOUR BUSINESS.
For example, don’t buy new office equipment when you can ‘get by’ with some used ones. Go step by step constantly testing the market. Stay with product lines that work and eliminate those that are duds.
27. DON’T BELIEVE TV GET RICH QUICK HYPE.
Building a business takes time, effort and money. Sure, a lucky few did make lots of money fast, but they don’t tell you how much it really cost them and how many other false leads they followed to achieve success. Realistically, at first, shoot for earning a few hundred dollars a week by inexpensively marketing good products and information having nice profit margins. Fill orders from inventory to control business activity.
28. THE KEY TO DIRECT MARKETING SUCCESS IS PROFIT MARGIN.
You need at least 3 or 4 times your cost to make money because advertising, overhead, postage, product costs, and your salary must be included. Avoid low margin products or you’ll go broke fast!! As mentioned, there are products available that allow 400% profit margins and information products with 1000+% profit margins. If you try to obtain these suggested margins then you are on the road to success. If you try to sell a product that costs $2.00 for $2.75 you will certainly fail to make a profit because the operating expenses will consume your slim profit margin.
29. CONTROL YOUR PRODUCT OR INFORMATION
Another important key to success is to control your product or information. You become the supplier letting others help you sell your product. You achieve this control by buying products or directly from supplier aka “prime source” at below wholesale prices or by creating your own materials.
30. GET FREE PUBLICITY
Get FREE Publicity for your Company by writing press “news” releases to area newspapers. Editors will not print releases that are overly commercial. News items will normally be printed. Instead of writing a press release, call the editor, then briefly state why your home business would be of interest to readers. For example, YOUR business helps people…save time, money etc…and, other readers can learn from your experiences to start their own business too. Tell the editor that you are available to be interviewed for a feature story to be written about you. When you “GET FREE PRESS”, send me your clipping and remind me that I told you so!!! Good Luck!!
31. START SMALL WITH LITTLE MONEY
Always start out small, avoiding big cash outlays. Take one small step at a time but START!! Don’t procrastinate!!
The Directory of Business Development Publications offers publications to help you build and manage your business. FREE counseling for business is offered through several dedicated organizations: the Service Corps of Retired Executives (SCORE); Small Business Institutes (SBI’s); Small Business Development Centers (SBDC’s) and a number of professional associations. Contact: U.S. Small Business Administration Mail Code: 2550, 409 Third Street, S.W., Washington, D.C. 20416 or call: 1-800-827-5722 to request publications or assistance.
32. AVOID PURCHASING MAILING LISTS AT FIRST.
Typical mailing list customer response rate is just 3% (considered to be very good by industry standards). This means that if you mail your offer to 1000 persons you can expect only 30 replies and not all of them contain orders. To mail 1000 pieces of your offer is costly. Postage alone (at current first class rates) is $320, so don’t use direct mail at this time. Later, when you build a customer base, you should mail them additional (back end) offers from time to time and, these customers who already purchased your initial offer are very likely to respond to your other follow-up offers especially if you provided good service and quality products and information they wanted. Expect response rates of 10 to 15% at that time.
33. E MAIL MARKETING
Consider marketing via E Mail by offering FREE reports and valuable information, product sources and tips. Subscribe to E Mail Newsletters such as the one you are reading now and place low cost test ads to get world wide exposure for your offers. Perhaps, after you gain experience, you may want to create your own specialty E Newsletter for your interest such as inventing, woodworking, home repairs, energy sufficiency, etc.
Consider Internet advertising, perhaps on your own web page or on a high traffic mall, but remember that you (or the promoter) must publicize your electronic mall usually by print advertising or via E Mail. A low cost classified ad can effectively create “hits” at your web site or “mall”. Your ad may say: ” FREE MONEY MAKING OFFERS TO ALL VISITORS TO…YOUR WEB SITE” or have professionals handle creating, promoting and maintaining your site for you.
Tell everyone you meet what you do and listen to what THEY do. Offer to exchange business cards and refer clients to them. Also, if you see an interesting article that is related to the other person’s business, clip it and mail it to them with a note that says: Thinking of you…here’s an article you may find of interest. This little tip works wonders.
(Joseph R. Birkner is a writer, direct marketing consultant, inventor and President of Star Research Company a prime source supplier for unique high profit products and inventions and How-To Information. Contact him directly at Star Research, S’N S Plaza, POB 2121, Peabody, MA. 01960-7121 or E MAIL to: email@example.com)