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Avoid Home Business Mistakes
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Article 2: Basic Blunders
You may have heard some of these home-business basics before. But if you haven’t – or even if you have – add them to your checklist of mistakes to avoid.
- Insurance
Your homeowners’ insurance policy most likely doesn’t cover the equipment, supplies and records you accumulate for your home-based business. A number of insurance companies offer policies tailored specifically to home-based businesses, but increasingly insurers also offer additional coverage with riders for homeowner policies. Don’t assume you’re covered. But get covered. Losing everything with no recompense can be a business killer.
- Regulations
The last thing you want is for the city’s code enforcement officer to knock on your door and say that the business you’ve operated for years out of your home is not permitted.
“Failure to adhere to local zoning restrictions” can derail a home-based business, says Jack B. ReVelle, vice chair of the Orange County, California, chapter of SCORE.
As NASE micro-business consultant Gene Fairbrother observes, “While home-based businesses are a fast-growing entrepreneurial segment, some towns and homeowners’ associations are not too friendly toward home-based businesses or have restrictions you must comply with.”
Before investing in your home-based business, be sure it’s a permissible use, according to the local jurisdictions’ business and planning regulations. Do what’s required upfront to make it legal. If there’s nothing you can do to overcome local restrictions, it’s far better to find out beforehand than after you’ve invested in advertisements, stationery and other collateral that identify your home as your office.
- Telephone
You’re in business and need to be frugal, but some things shouldn’t be scrimped. Get a telephone line dedicated to your business. Don’t try to make double duty out of the home phone.
The first time Junior answers the phone the way he does when his buddies call will probably be all that’s needed to scare off a prospective client. Just as importantly, when it comes to writing off business expenses, your accountant and the IRS prefer a nice, clean distinction between what’s business and what’s not.
- Marketing
Don’t start spending your marketing dollars without a plan. And don’t put all of your marketing eggs in one basket.
After you’ve diversified your marketing efforts, be sure to measure which methods earn the highest return on your investment. Be humble enough to admit that even your best ideas aren’t working when they aren’t. Ego is your enemy.
Finally, don’t abandon your marketing when times are tight – or when times are flush. If you market consistently, you should see fewer dramatic ebbs in the ebb and flow of cash.
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