When you are starting your home business, should you create your own product? Or should you promote other people’s products?
Admittedly there are advantages to both. But why settle for only one set of advantages? Why not set up your business so that you get the best of both worlds?
Here’s how.
1. Set up your website.
2. Set up your mailing list system. (I use Aweber and recommend you do too.)
3. Start out promoting affiliate products to your mailing list.
4. At the same time, build or acquire your own product. Make sure this is a valuable product and if not unique to you, then make sure it’s not widely available.
5. As you develop your own products, remove the affiliate promotions.
Let me explain…
When you choose affiliate products in the first place, choose them because they meet one of the important needs that your customers have. Over time, you will be developing your own products to meet those same needs – and that’s when you replace the affiliate product with one of your own.
Here’s why this is a good idea:
Customers are swamped by so many competing products in the market. How do they know which to buy? One safe and comfortable way is to follow the recommendations of a marketer or mentor they like and trust. So if you have been serving your customers faithfully, with quality information and sound advice, then you will be their preferred vendor. And that is a very nice position to find yourself in. Integrity pays off.
By: Gary Harvey
Posts Tagged ‘Starting Business’
Home Business Startups – A Simple Plan For Business Development
April 28th, 2010Business Partnerships – Doing It Right
April 21st, 2010
So you are considering starting a business with a partner or partners. If you’re doing so keep in mind some absolute truths. Most business partnerships end in a break up by a factor of 8 to 1. I know you’ve got the perfect formula – I’ve heard it before but… heed these words of advice. You must be willing to suffer the loss of your relationship if the business partnership ends.
Is your partner a friend or relative? If he or she is close to you, keep in mind the importance of this relationship. If you are going to have a partner, here is the best way to reduce compromising your relationship. Yes, even if they are your best friend or family member. Define to the finest detail your roles and responsibilities, all of your expectations and then have them reviewed by a non-biased third party (NOT YOUR MOM) and be sure the reviewer has a business background. Next, define exactly how all the income is going to be divided up – to the penny. Third, have clauses defining exactly how you may buy each other out for and how much in what type of payment if one party decides to leave. Don’t ever let the other party walk without a financial payoff — even if it is small. They will forever feel you jipped them and you’ll have an awkward five hundred pound gorilla between you forever. Finally, sign a document agreeing to these roles, responsibilities and financial issues. Consider this a pre-nup and be sure to understand the reason you’re doing this. You want to remain friends first and foremost because all the money in the world won’t buy you that relationship again. So, plan it out and make sure you are both on the same page with the same interest in starting a business. Don’t believe for a moment that you can separate business from your relationship — it’s a lie.
Have you “really” addressed the stuff that has been on your mind but is hard to talk about? Cover these things now before you go into a partnership and put plans in place that force a positive outcome fueled by your ability to recognize both of your shortcomings. Know your own personal limits and those of your partners. Most of the limits and problems in a business are fueled by personal “stuff”. It’s not that the personal stuff is all bad. Maybe you or your partner to be is married to a jealous spouse that will certainly have a problem with you starting a nationwide trucking service gone on the road 6 nights a week. Maybe your Mom lives nearby and requires your daily attention of which would certainly come to a screaming halt if you open that sign shop. Let’s face it, people are more important than money. If you don’t think so, ask the lonely and bitter millionaire. You will have to adjust your business model to suit both your lifestyles and personalities. This is the stuff, the personality “face the music” stuff that if addressed up front, during the planning stages, will reduce the likelihood of breakdowns and break ups of your new company.
By: Dan Nichols
Importance of Computing Business Profitability
March 25th, 2010
If you are the owner of a business or contemplating starting a business, you should understand the importance of computing business profitability. With any business, no matter what good or service is being provided, it is very important that the owner understand the business side of the business. The purpose of company is to generate a profit.
Revenue versus Profit
Many people think that profit is the money a business brings in. This is not true. The total money brought in by the business is called revenue and this is different from profit. For example, if you sell an item for $100, you have $100 of revenue. To get to profit, you need to subtract the expenses out. For that $100 product, it may have cost $50 to make, there could have been additional overhead costs of $10, and employee expenses of $5 associated with that product. That would mean that there was $65 of expenses associated with that one product. So out of that $100 of revenue from the one product, you will make $35 of profit.
As you can see, it is important to set your business goals to make a profit, not just make revenue. This is the importance of computing business profitability. You need to make sure that your business brings in enough money to not only cover the expenses but make sure that there is something extra so that you can take some money out of the business.
Fixed Versus Variable Expenses
When computing business profitability, you will notice that your business has many different expenses. Some of these expenses are fixed and others are variable. Fixed expenses are expenses that you must pay not matter how much product you make. Examples of fixed expenses are rent, employee expenses, and some utility costs. In the above example, the $10 of overhead costs and $5 of employee costs are fixed expenses.
Variable expenses are expenses associated with creating additional product. In the above example the $50 cost to make the product is a variable expenses. You only have this expense if you produce an additional product.
It is important in computing business profitability, that you make sure that you are at a minimum covering your variable expenses. If you are not covering your variable expenses, then you are losing money with each unit you produce.
Get Professional Help
Computing business profitability can be a tall order, especially for a small business owner. You should hire a competent accountant or attorney to help you with your analysis. There are many profitability ratios that can be used to show the health of your business.
The More You Know
The more you know about the profitability of your business, the better off you will be. It is important that you stay up to date regarding the financial health of your business. You should constantly be computing your business liability and making any necessary changes.
By: Gary Pearson
