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Ask The Expert: Launching Your Online Home Based Business
Join AARP Expert Felicia Brown along with Janet Attard, author, small business expert and online publisher to discuss how to launch and move your home based business online.
Learn and Earn! COVID-19 has increased the appeal to continue working from home. Having a home based business could help you achieve that. Ask a question of our Work & Jobs experts to earn 50 points awarded via code emailed to you after you participate (one entry per week given points). Ends September 27.
Good afternoon, this concludes our series on launching an online home based business. Many thanks to Felicia and Janet for their time and expertise and everyone who joined to learn from this opportunity.
As Felicia mentioned earlier this week, you're also invited to AARP's virtual Online Career Fair on September 30th. Please find registration here: www.aarp.org/onlinecareerexpo.
One of the questions startups often forget to consider before they launch is how to make customers aware of their business and convince them to make a purchase. Well-established businesses may use paid advertising, but most startup home businesses can’t afford paid advertising, or don’t yet have enough information about customer buying habits to be able to predict their return on investment (ROI) for advertising.
Fortunately there are a number of low-cost strategies you can use to win customers. One really important one s to create a customer profile. The goal of the profile is to help you identify what types of consumers or businesses are most likely to buy from you, and what the buying habits are of those people.
Things to address in your initial customer profile include demographics (age, gender, location, income, etc.), the reason they might need what you sell, how they address that need now, and when and where they are likely to hear about the product or service and make a purchase.
Putting that information together will help you focus your marketing efforts on the most likely prospects, saving you time and money.
I’d love to hear what your reader’ experiences are as they consider or actually launch a business from home. Some of the concerns I’ve heard over the years are about choosing a good business to start, or getting the money to start a business without impacting personal finances. Age is another concern sometimes. Friends or family may try to tell you it’s too hard to start a business if you’re over a certain age, but yet seniors often start and succeed in their own business. So, if you’re on the fence about starting a business, what’s holding you back?
Two related factors that often hold people back are self-doubt and fear of failure. When we consider starting something new and look at other people who are already successful doing what we want to do, the first thing we say to ourselves is often something like “That’s too complicated. How am I’m ever going to be able to do that? “ Those thoughts get followed by a lot of other negative thoughts that start with terms like “I don’t have” or “I can’t.”
The thing to know, is that those successful business owners you see had the same fears and concerns when they were starting as you do. But instead of telling themselves “I can’t” or it’s “too difficult” or making up some other excuse, they took one baby step after another until they reached their goal.
You can do the same thing. Start simply, even making a list of things you need to do like you would if you were planning a party, and then “do” your list one step at a time. Where you see obstacles, instead of saying, I can’t do that, ask yourself how you can remove or skirt around the obstacle. What do you need to learn? What free resources are out there to help me? What can I do to limit my financial risk (which is often a concern) and still get this business started?
You know I've talking to business owners who are now launched but had no idea of how to get started. They simply had an idea. And, the amazing thing is most of them are working right from their homes. They don't have brick and mortars, which is a huge reduction in cost.
@JanetAttard1 if people think they need to have it all together, is there recommended reading or trainings, at low or no cost, they could seek out?
There are lots of free and very low cost resources out there. In fact,
AARP has some really helpful information on getting started here: https://www.aarp.org/work/small-business/?intcmp=GLBNAV-SL-WOR-SMBS
The US Small Business Administration (SBA) has an excellent online learning platform that covers planning, launching, managing, marketing and growing small businesses. That’s available here: https://learn.sba.gov/dashboard
SCORE has a learning center on their website, too. They offer a variety of topics such as starting a business, understanding cash flow and getting your business to online. You can find those here:https://www.score.org/biz-learning-center
Also, as I mentioned above, a list of startup tasks that you can check off one by one is handy. Here’s one people can use as a guide: https://www.zenbusiness.com/blog/startup-checklist/
There are also many excellent books on starting businesses that you can get in print or downloadable form. Some are general, covering all types of startups. Others are specific to certain industries such as how to start a consulting business, or how to start a food truck business, or a homebased day care business.
If you’re trying to decide which book(s) to buy look for two things: a lot of good reviews AND a recent publication date. Books that are older than 4 or 5 years old may not have up-to-date information on doing business online, which is an important topic.
@JanetAttard1 these are great resources. Makes me want to stick my toe in entrepreneurship. Let's be clear, it may not be easy, but worth it. I heard that many start on platforms like Etsy or Ebay where they do all the work for you. And, let's not forget platforms like Poshmark that allow you to try your hand at "selling" things for a small profit.
I've been talking to business owners who have successfully scaled. They started in their kitchen or basement and now on the shelves of big box stores.
@JanetAttard1 can you talk about manufacturing/scaling to our readers a picture of where they can go, what they can do once launched?
Talking about scaling a business, one common mistake new business owners make is buying advertising without understanding how to make realistic projections about the results they might expect from their ads.
Traditional media, and some online advertising, sell ads based on CPM. That means the cost per thousand. If you pay $20 CPM, it means you pay $20 for each thousand subscribers, or listeners or viewers. So if a newspaper or an online newsletter has 100,000 subscribers, and they charge $20 CPM, your cost for one ad in one issue or edition would be $2,000. With CPM ads, you’d pay that $2,000 no matter how many people actually viewed or listened to the ads.
Another common way of buying advertising is on a cost per click basis (CPC), you pay a price each time someone clicks on your ad, whether or not they stay on your site or buy anything. So if you pay $7 per click for an ad, and over the course of a week 350 people click on that ad, your cost for that week would be $2450 whether or not anyone made a purchase.
In both of these cases, before you spend money, you need to have realistic expectations about how many people will interact with your ad and then convert (that is, make a purchase.) For instance, just because your print ad appeared in a publication that has 100,000 subscribers, it doesn’t mean you’ll get a lot of customers. It’s possible only one-half of one percent (about 500 people) of those subscribers might see your ad and visit your establishment or go to your website. Once there, perhaps only 3% (15 people) of the 500 who visited would make a purchase. If the item you are advertising costs $29.95, and each person bought one, your total sales would be $449.25. Even without accounting for your cost of goods, you’d be losing a lot of money on the ad.
Overall, conversion rates are usually a lot lower than new business owners expect. This blog post from Alexa will give you an idea of common conversion rates online. https://blog.alexa.com/average-conversion-rates/
Generally speaking, print and online CPC advertising tends to be cost effective if you are selling high-priced items, items people buy in quantity, or items that customers will buy repeatedly from you once you acquire the customer.
There are other types of advertising, too. But no matter what type of advertising you consider, be sure to understand your numbers, and those numbers include not just the cost of your ad and inventory, but also costs of employee time, packaging, etc.
I don’t have a lot of personal experience experience in this field. When my company sold products we were selling to small- to medium-sized businesses, so the situation was a lot different. But I do know of resources out there that you can learn from.
I’d start by reading Authority Magazine’s interview with Brian Fried on how to go from idea to store shelf. Be sure to read it all the way through.
Brian, who has invented many products that have become successful, is the founder of the National Inventors Club, which brings together a community of like-minded inventors and resources for inventors. The site has a lot of free information, and there is also a membership option.
As I’ve mentioned in other posts, your local organizations like SCORE, the SBDC, local government economic development agencies are all places you should look to for guidance. They can help you with your business planning to scale your business and let you know about resources that others have had good experience with.
There are scams out there that target inventors, so I’d also suggest reading this document: https://www.uspto.gov/sites/default/files/documents/ScamPrevent.pdf
SCORE offers these suggestions on how to scale a business: https://www.score.org/blog/how-scale-business
If you’re considering importing or exporting goods, you can find some basic information here: https://www.usa.gov/import-export#item-35922
You had asked yesterday about the unexpected things involved with working virtually, and I wanted to emphasize the importance of building a team and maintaining a good working relationship with that team.
Even though you are “alone” when you’re the only owner of a home business, you aren’t really alone if you build a good team to work with.
I had a minor incident yesterday – I needed to sign, scan and send a W9 to a customer, and my printer/scanner was giving me an error message that it couldn’t connect to the computer. Restarting the computer and shutting down and restarting the printer eventually fixed the problem. But if it didn’t, I would have called an IT professional I’ve worked with for years to have him troubleshoot.
And that’s the thing. There will be times when you need to consult with others or hire them to handle tasks you don’t have the time or expertise to do. And as your business grows, you’ll find that hiring other small businesses (or eventually employees) will let you expand and grow your business.
Who you need on your team will vary somewhat from business to business, but most businesses can benefit from having an accountant and a small business attorney they can call on when needed. Besides those professionals, the people I’ve had on my team over the years include programmers, the experts at the web hosting company I’ve used for years, writers and editors, and when we sold products, a manufacturer we bought our inventory from.
Working virtually sounds like a great way to work, but there are some limitations, and if you've always worked in an office, working virtually may not be appealing at first.
One thing I’ve always noticed, is that when I don’t work away from the house, I work many more hours a day – just because the computer and the office phone are there. So, you have to learn to shut the real or virtual door to your office to maintain a decent work/life balance.
Then there are the interruptions. The house phone rings when you're on a business call, or a neighbor or delivery person rings the bell.
Another issue is something a lot of us got used to in the last year – isolation. When you work virtually and have virtual employees or work with freelancers, you don’t have the same kind of personal interaction you have in an office setting where you walk in and say “Good morning” to your employees (or fellow coworkers if you’re an employee) or admire the new photos of their new grandchildren or son or daughter they have framed on their desk. And you don’t’ have the enjoyable breaks in routine like someone bringing in some empanadas they made over the weekend for everyone to try, or another person sharing their recipe for Irish soda bread.
Zoom or Microsoft Teams, or Google Meet can help make some interactions a little more personal, and better yet, now that many places are starting to do in-person networking, getting out and talking to other business people is a big help with isolation.
Calling up a business friends and running problems or questions by them can help, too, or make an appointment to go out to lunch, or bring lunch to the park to chat, if you don’t want to eat indoors yet.
The other thing that can be difficult virtually, is communications. It’s easy for someone to misunderstand what you mean, or read things that aren’t there into a message when they aren’t there to see what you look like or hear the tone of your voice when you make a statement.
The solution to those types of problems is to remind people that if they have any question about what you say or mean, they should pick up the phone and call to ask. And that they should be afraid to disagree with something you’ve say. There have been a lot of times when I’ve said I wanted something done a certain way, and a freelancer would tell me they didn’t think that’s the best way to do it, and then would suggest a better approach.
Finally, I think you need to be respectful of the time of any virtual employees or freelancers you work with. You may be working at 10 PM and shoot off an email to a team member about something important you want done. But let them know that it’s a task they should do during their regular working hours – not something that needs to be done at that late hour.
All in all, though, the benefits of working virtually outweigh the inconveniences in most cases. Besides any cost and time savings, being able to let others work virtually for you means you you are not limited to hiring just the people who live close enough to commute to your place of business.
There are many ways to find freelancers to build a website. Two online freelance marketplaces that come to mind are Upwork and Fiverr. There are also website builders (software) offered by many webhosting providers.
My own preference for projects like websites, however, has always been to look for someone local to work with or someone who is available to talk by phone or video chat. There can be a lot of details involved in building a website, and it’s much easier to get details worked out if you can meet in person or pickup the phone or do a video call and go over details.
To find local freelancers, I’d recommend asking other small businesses in your area who they’ve used, what kind of site they had built, and how satisfied they are with the results.
Whether you’re using an online marketplace to find a freelancer or looking for someone local, one important key to success is to have a clear cut idea of what you want the site to accomplish for you and how it needs to work, and some idea of what you’d like the site to look like. A simple site that has a couple of case studies and a contact form to reach you is a lot easier (and less expensive) to build than, say a site for a salon that both sells some of their products online and wants to enable patrons to make appointments online.
Ask to see examples of sites the freelancers you consider have built, and if you expect to make frequent changes or additions (ie, write a blog, add products, etc.) if the site can be set up so you can do those things on your own. Also make it clear that you want to own the domain and all rights to the design. Get cost estimates and estimates on how long the project will take.
About: Janet Attard is the founder of Business Know-How, a website now powered by ZenBusiness Inc. An author, small business expert and online publisher, Janet has more than 30 years of experience providing how-to information and problem-solving strategies for starting, marketing, financing, and running small and home businesses. In the past, her company was a contractor for the US Air Force Office of Small Business Utilization, America Online, The Microsoft Network, and General Electric Network for Information Exchange. For more information about Janet, visit her website, JanetAttard.com. ZenBusiness, a Public Benefit Corporation, is a one-stop digital platform with the mission to make starting, running, and growing a new business simple and accessible.
That’s an important issue, Lisa.
When you run your own business as a sole proprietorship, you are responsible for paying two types of taxes on your profits: income taxes and self-employment tax (what social security tax is called for the self-employed.) The taxes due get calculated when you file your 1040 tax return, but if you’ve made a profit and owed any taxes last year, the IRS requires most businesses to file and pay estimated income and self-employment taxes 4 times a year.
To report the earnings and losses from your business, you include Schedule C with your 1040; to report self-employment tax, you include Schedule SE.
These IRS links help explain what you need to know:
Schedule C information: https://www.irs.gov/forms-pubs/about-schedule-c-form-1040
Schedule SE information: Schedule SE (Form 1040 or 1040-SR ), Self-Employment Tax to report the Social Security and Medicare taxes.
Quarterly estimated tax info: https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
If you are selling products on Etsy, you may also may need to collect and remit sales taxes in some states, or where Etsy does the collection and remittance, you may still need to file sales tax reports.
These two links talk about sales taxes for Etsy sellers:
If you have any trouble understanding the tax laws, it would be worth while to talk to an accountant.
Happy Monday and welcome to the kick-off to our AARP Conversation on Launching Your Online Business. No with everyone working remotely you can do your business as well. If you've been thinking of launching a business consider starting from home.
Janet Attard founder of Business Know-How will be with us for this entire week answering your questions on how to launch, grow and scale all online. There is nothing to hard for her. I hope you stay with us for the week and learn all she has to share.
Thanks for those kind words, Felicia.
One of the things I learned in the many years I’ve had a business, is that running a business is hard… but it’s a whole lot easier if you have someone you can question about challenges you are facing or bounce ideas off. Over the years, I’ve gotten help by asking experts questions, and I’m looking forward to giving back by answering your questions now.
While there was a time years ago when people didn't want to say their businesses were homebased, things have changed. Running a business from home is one of the most popular ways of starting a business. In fact, Homebased business, make up about half of all small businesses according to the SBA Office of Advocacy.
“Online” is just a business location. So, launching a business online requires pretty much the same steps you need to take to launch any business. The basic steps would be:
- Research the idea (to make sure it’s viable)
- Check local regulations regarding homebased businesses (you may not be able to produce or package foods from a home business; Also a lot of traffic in the neighborhood or signs on your location could be a problem)
- Write a business plan (to help you determine how much money you’ll need to start and run the business, how big the market is, how you’ll market the business, and other operational details)
- Register the business name and get a business certificate
- Register a domain name for your business even if you’re not ready to put up a website yet
- Decide what form of business you’ll operate under (sole proprietor, LLC, or corporation)
- Get an Federal Employer Identification Number (FEIN/ also shortened to EIN) for the business. This is important even if you don’t have employees.
- Apply for a sales tax number if you’re selling taxabe goods and services
- Have a logo and business cards made up
- Set up social media accounts and pages
- Plan your marketing
- Set a target date to launch the business.
- Start your marketing.
I’d recommend contacting your local Small Business Development Center and/or your local SCORE chapter. Both resources offer free help for startups and existing businesses and have people on staff who are experts in a wide range of areas. The employees and volunteers who work in these organizations have often been business owners themselves and are well connected in the business community. Some of the specific areas of expertise may vary depending on the organization, but look to these organizations to provide guidance on everything from finding manufacturers, getting prototypes made, streamlining your own processes to improve productivity, writing your business plan and knowing where to look for loans or investors.
SCORE.org can refer you to the nearest SCORE chapter, and you can find your nearest SBDC on sbdcnet.org.