If you've read my previous post on how to start a business with no money, this post will make more sense to you, if not feel free to read the corresponding post to catch up. The information I'm giving out here is what I've learned when I was first starting my own business.
So, where were we? Lets recap.
We've found a niche as a computer repair business. We've marketed to our friends and family and made a few bucks. We've advertised for free at local places using flyers (or anything similar to) such as trailer park or apartment mail areas, pin up boards and the like. These were essentially the first steps in starting your own business.
I can't express enough the importance of advertising now. This is the key to the door folks, starting a business without customers is like being in a paddle boat in the middle of a lake without a paddle.
Now that we have a few expendable dollars from our few family and friend customers, and if we're really lucky a few customers that picked up our name and number from our cheap advertising, lets worry about some good widespread advertising for your business. It's often a good idea... No, a great idea to start off in your local newspaper. Why? It's relatively cheap advertising, and because you're setting up a new local business, you might get a better rate. Make he ad small, list out your name, phone number, e-mail address anything to give the customer confidence that you aren't trying to hide who you are. You might be surprised at the number of fly by night businesses that have stole their money over the years. You should also include what you do and what you charge in your ad. Some marketers might say that you don't add what you charge, but if you want to build trust with people it's what I suggest. When I was starting my own business, I received many calls from local calls simply because I was open and honest in my ad(s).
Awesome, you have an ad in the paper, good. Now, you need to create a list. What is this list for? It's for ALL of your customers. Every last one of them. What is this list for? This list is for call backs, checkups and even testimonials. I'll discuss some of these in greater detail later. But for now, just know that the list is key to making more money.
When you approach a customer, ask them if they would be interested in receiving mail or e-mails about specials, deals, updates, or tid-bits of information to protect their computer, tune up their machine, whatever. Adapt this, of course, to your personal business idea if it's at all possible, if you think it isn't then you need to think harder. This is the bread and butter of your business, like it or not. You'll spend five times the effort selling to a new customer than selling to someone who has already made a purchase from you. Imagine having to spend 1 hour to make $30 from a customer you already have, or spending 5 to make $30. You can do the math, it's much more cost effective to market to a customer whose already a patron of your business. No matter if the customer "opts in" or not, at least give them a call within 30 days to be sure that everything is going "OK", but let them know you'll be calling just as a check up on your work and make sure they are satisfied. This builds trust. Be sure to follow through, all you need to do is miss the call and they forget about you and lose trust because you don't follow through.
If you want to set up a business for success, then you want to be sure that Uncle Sam is on your side... Well, at least off your back. You'll want to immediately setup two separate accounts. One account for your revenue and subsequently your profit, and another account for your taxes! The magic number I've used to never get hit at the end of the year without being able to pay is: 25%. You'll almost never have to pay 25% of your earnings in taxes, but with new laws coming out each year for taxes, it's much better to be safe than sorry. Regardless, you'll probably pay close to 15%, and hey, who doesn't want a 10% bonus at the end of the year for your total earnings.
The next step of course is to expand. As your coffers grow and learning how to start a business with no money is in the distant past, and your new goal is setting up a business for success. Success comes with time, with hard work and dedication for your business. You'll find rough spots, you'll find great victories and grave defeats. You'll find that business waxes and wanes, but in the end if you stick to it, stay strong and keep your head held high you'll do just fine.
The next question people I talk to usually ask is, "When do I need to hire employees." The answe to that is rather simple, but each person has to answer it for themselves. What do I mean by that? Lets use the computer repair business as an example again, and lets say you have a part time job working 30 hours a week. Your schedule might only be 50 hours a week to start. 30 hours at your job, and 20 working on setting up your business. After several months of advertising, word of mouth, return customers, phone calls from all over your city, you are now doing 70 hours a week, 6 weeks in a row. You're working 30 hours a week at your job, and working 40 hours a week either at your house, at the customers house or at an office somewhere working on computers. Can you keep this up? Do you need help? I don't know. Personally, I've done 80+ hour weeks before I decided I needed help. Each person has their own limit. It doesn't make you a better or worse business person, you just need to know your limits.
On an aside, don't HIRE someone, sub-contract them. That way you don't pay their taxes, they do. You don't insure them, they do. This sounds like a way to "skimp out", but you're just starting your own business and you need to test the waters. Even though it seems like smooth sailing now, a storm can brew just beyond eyesite and you don't need to drag someone elses life down with you. Make sure the person you are contracting understands it's potentially temporary, you'll call them whenever work is needed, and discuss their pay rate and how you don't take taxes out. You'll need their full name, social security number and address to fill out the proper form to hand them. Talk to any tax professional and they'll tell you what form you'll need.
Thats is for this post, I'll discuss more on how to start a business with no money again soon, as well as other ideas for building up your existing business, advertising and more!
I hope experiences from starting my own business can help you out and help you to set up a business more effectively!
TechSavvyT
Friday, March 5, 2010
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