How To Discover Your PERFECT Home Based Business – The 1st Of 7 Keys – A Profitable Business

This is the first in a series of seven articles that tell you how to sift through all the home business opportunities you hear about every day, and find the PERFECT home based business for you.

Are you ready to start making some real money in your own home business without working 60 hours per week? Are you ready to stop throwing your money down the “home business opportunity rat hole”?

Read on and I’ll show you how to test every home based business opportunity to make sure it fits the definition of The PERFECT Home Business, before you invest your time and money. Then, focus on the one that fits the best, and make it a success.

Each letter in the word “P.E.R.F.E.C.T.” stands for one of the 7 keys to finding the perfect home based business. Each key is something your home based business opportunity MUST have in order for you to enjoy the financial freedom and lifestyle you want.

What makes an opportunity P.E.R.F.E.C.T.? The “P” in PERFECT stands for “Profitable”. If your business isn’t profitable, why do it? If it isn’t highly profitable, you won’t be able to earn enough to make it worth your time, or you won’t be able to grow your business by reinvesting your profits back into the business.

“Profitable” means:

• High gross profit margin (preferably greater than 65%) and net profits of 20% of sales or better before taxes.

If you sell something for $1.00 and it costs you $.50, your gross profit margin is 50%. That’s about the profit margin most retail stores get. You need to do better than that to survive and thrive in your home business.

All of your other expenses such as advertising, overhead, and so on, have to come out of your gross profit before you have any “net profit”. If you sell something for $1.00 and the costs of your product, including all of your other expenses, add up to $.90, you only have ten cents per dollar in net profit (that’s a 10% net profit).

So, for example, if you want to earn $50,000 per year from home with a 10% net profit, you would have to sell $500,000 worth of your product. Wow, that’s a lot of product. Wouldn’t it be better to only have to sell $250,000 worth of product, or even less, to earn your $50,000 income goal?

That’s why you need a business with at least 20% net profit. And, if you really could sell $500,000 worth of products, wouldn’t it be better to have 20% net profit and earn $100,000 per year on that $500,000 in sales? The PERFECT home based business may even enable you to earn up to 40%-60% or more (sometimes more than 90%) in net profit. Yes, really.

At 90% net profit you would only have to sell $55,556 worth of product to earn your $50,000 income. That’s my kind of home business!

• “Profitable” also means a net profit (your “salary”) before taxes of at least $50,000 per year. And $100,000 or more per year would be more like it (unless your goal is to supplement your income to the tune of $500 to $1,000 per month. But, would you turn down $50,000 per year if you didn’t have to work any harder than you did to earn $10,000 per year?).

Your goals may be different than mine and you may be satisfied with lower profits. But, I believe you need to set your goals high, yet at a reasonable level. Then, even if you fall a little short, you will still be very successful.

• Low overhead (less than 5% of sales). Overhead is all the “fixed expenses” of running your business such as computers, printers, other equipment, furniture, office supplies, and office space rental costs.

A home based business is ideal for keeping overhead low, but you still have to be careful to minimize the space needed, the cost for utilities, and the equipment needed to run your business. Don’t go hog wild buying an expensive desk and file cabinets with your first profits. Instead, reinvest those profits in your business and keep your overhead low. You’ll be glad you did.

• Low labor content for manufacturing, assembly, or shipment of the product(s).

You don’t want to spend all of your time assembling and shipping something you sell. Most of your time should be spent on marketing and growing your sales and profits. The PERFECT home business enables you to sell products that involve little or no labor cost to make them or ship them.

• A high average order. Believe it or not, it takes as much effort to sell a $5.00 product as it does to sell a $50.00 product or a $500.00 product, maybe even more effort. So, the PERFECT home based business offers products with a high perceived value and a price well above $20.00. The exception is when you want to sell a low priced product, or even give something away, just to get customers added to your e-mail list so you can sell them other more expensive items later.

• Low initial investment required (less than $1,000 preferred). I don’t know about you, but business opportunities that require $5,000, or $25,000, or more to start scare me a little, unless the return is well worth the risk. There aren’t too many people that even have that kind of money to invest in a business. Why not find the PERFECT home based business that only requires $1,000 or less to get started, perhaps even a few hundred dollars?

• Small inventory with rapid turnover, or no inventory required. Imagine your garage or basement stacked from floor to ceiling with products waiting for someone to buy them. Yuk! Much better to fill each order as it is received without having any inventory in your home, or at least a very small inventory. The PERFECT home based business will allow you to do that.

• Repeat or backend sales potential. One of the highest marketing costs is the cost of getting a new customer. If that customer buys your product over and over from you (repeat sales of a consumable product or a monthly membership fee, for example), or if the new customer buys other products from you later (backend sales), you can dramatically increase your sales and profit. This is a very important ingredient in the recipe for a successful home based business.

Top 10 Important Factors to Consider When Buying a Business For Sale

When seeking out a new business acquisition, there is literally a minefield of choices on offer. Each and every business sector will have varying business of all sizes, shapes and types. On the surface of things, a large number of the businesses you initially find in your internet searches, magazine reviews and discussions with brokers may appear to be ideally suited to your needs. However, armed with a few important pieces of information and areas to scrutinize may reveal hidden secrets or problems with businesses for sale that will help you to avoid inquiring about inappropriate businesses and ultimately making a huge financial mistake!

By following some of these hard and fast rules, you should get a better idea if the businesses you are considering are bargains waiting to be snapped up or literally acquisitions that could leave you up to your neck in trouble:

1) Turnover, Profit and Loss

First and foremost, any business you buy is about making money and in an ideal world, a return on your investment. It never ceases to amaze me the number of businesses that submit inflated or wholly inaccurate sales, profit or loss figures on business for sale adverts. First off, look at the margins compared to the sales figures – do they add up? You don’t have to be a qualified accountant to realise that is sales (turnover) figures are reasonably good, yet net profit is very close to the same level then something isn’t right. The same can be said if the net profit levels are very low. It translates that the business costs a lot of money to run and cash-flow is very thin on the ground. Even if the gross profit is high, this doesn’t really tell you anything. Essentially you need to know if after all deductions the business is making money.

2) Over Inflated Valuations

So may owners of businesses believe their company to be worth way more than it actually is. In many cases this is down to an emotional attachment which is perfectly understandable but a huge hindrance. In most circumstances, business owners don’t take the news too well when they are told the actual real value by a professional valuer. There’s no solid rule but anyone who is asking for more than double the net profit value of their business is probably a little ambitious. So for example, if the next profit of a business is 40k, asking for anything above 80k would be pushing your luck. Most investors or buyers of businesses would ideally want to make back their money within two years so any figures that would exceed this time period shouldn’t be desirable to any purchaser.

3) Years Trading

I’ve lost count how many fledgling businesses have been put on the market for ridiculous prices. Without even a full years trading, the owners have calculated their asking price literally on a few months turnover without taking into account market fluctuations, varying expenditure, not to mention a lack of goodwill value or trading history. This sadly happens all the time. Don’t be fooled by misleading sales, profit and loss figures. Without any tangible length of trading time to call upon, no business owner can realistically calculate a reliable sales price without the help of an accountant or professional business valuer. If you are considering a business of this kind, ask how the figures they are presenting have been met. In most cases, I would advise you tread very carefully when considering buying a business with very little trading history. The chances are it isn’t working for the present owners and the likelihood is, it won’t work out for you either.

4) Due Diligence

If you are serious about a business you have selected for purchase, you must carry out detailed due diligence procedures into the full workings of the business, as well as the financials. Only at this stage will you gain a clearer insight into the day-to-day running of the business and the financial history. You’ll see exactly where money is made, spent and wasted. Remember, once you own the business you take over all liabilities as well as the benefits of the business so do your homework and don’t get caught out!

5) Assets

All businesses that have any tangible commodity should have some form of assets in place that add value. This could be in the form of property, equipment, intellectual property, contracts or even the staff. Whichever way you look at it, the business and it’s strengths are solely the product of it’s productivity and assets are usually a part of this. What is important to you is whether these assets are able to maintain their value or whether they will depreciate. Bricks and mortar for example, tend to appreciate in most circumstances. Equipment however, can depreciate quickly and require regular maintenance or repair. So it’s important to gauge a real understanding of what the businesses assets are and whether they hold any true value or not.

6) Liabilities

Just as assets can increase a businesses value, on the flip side liabilities can drag it down. It is vitally important to check that the business you are considering doesn’t have any notable liabilities in place. These can include debts or bank loans, vehicles or faulty machinery and even unproductive staff. If the liabilities are bound to increase the financial burden on the business in a notable way, consider your position carefully, This could be the sole reason that the business is being sold in the first place.

7) Disputes

Legal disputes or otherwise can be a massive headache for businesses. With ever increasing employment and business legislation in place in the modern world, it is not uncommon to find a business for sale that has one or more ongoing disputes which could hamper the future of the organisation. It would be extremely wise to ask the present owners of the business to declare any disputes whether past or present to determine if they are a stumbling block of any kind. If you take over the business, you have to take ever their disputes.

8) Competition

It goes without saying that any business wants as little competition as possible but it is very unrealistic or unlikely to expect this to be the case in present times. What you need to establish is whether the competitors will affect the business to the point where it could cause irreparable damage or if they are simply too insignificant to be concerned about. Sometimes competition is healthy and it keeps you as a business owner focuses and on your game. What you essentially need to recognise is whether any competitor will take too much of your market share to affect your turnover or whether the business you want to buy is strong enough to fend them off.

9) Employees

In the majority of cases, a business is judged by its workforce. If you have the opportunity to examine the workplace, speak to employees or at least observe the day-to-day workings of the business then do so. You want to know whether this business has a skilled and productive workforce. Anything less may be a concern.

It would also be very prudent to have sight of employment contracts or be made aware of any contracts that involve high salaries, bonuses or clauses that could be of a concern to you and the business.

10) Longevity

The bottom line is that any purchase you make is for the long game and your investment needs to be returned over a set period of time. In all cases, you need assurances that the business you seek to buy has the stability and productivity to maintain longevity to carry out and fulfill your long term strategy. Whether you intend to own and run the business only for a few years or for many decades, you have to weigh up all factors to ensure that your long term investment is a wise one.

Naturally there are many other factors to assess when looking to buy a businesses for sale, but these key points should get you on the right path in the offset. Each business is different and the circumstances surrounding the sale are always different. As the buyer, it is up to you to uncover the reasons as to why the business is on the market. We aren’t all naturally gifted at carrying out detective work but with some common sense approaches and prudence, you should be able to reveal all the facets of the business for sale before making any final judgment as to whether to buy or walk away.

Advantages And Disadvantages Of Computer Leasing

Are you in the initial stages of starting a business and somewhat dismayed by the costs associated with getting a new workplace up and running? Thankfully, there are a number of financial programs and options that can mitigate the sticker shock a bit. In this article, I will examine one of them – computer leasing – and help you decide if it’s right for your new venture. As we all know, there’s no doing business in the modern world without the aid of computers (unless you’re Amish), so you need the hardware. Let’s just see if we can get it to you at a fair price.

Computer leasing, for the uninitiated, works much like any other lease – a lending company makes a capital investment on an object, whether it be land, an automobile, or office equipment, and then the leaser signs a contract to use the object and pay regular payments towards its cost. At the end of the lease contract, the leaser has the option to make a final payment towards the cost of the object and claim permanent ownership of it.

Computer leasing is an excellent choice for a small business because it mitigates the initial capital outlay necessary to get an office up and running. Hardware costs may be falling, but when you factor in software licensing, servers, networking supplies and all the other necessities for a digital office, it can still be quite expensive to get up and running. Leasing allows new business owners to spread that cost out as a monthly expense.

Even better, there are several financial advantages to computer leasing in all stages of the business cycle. Typically, the Internal Revenue Service allows a full 100% write off of computer equipment payments on a 10% or FMV lease. This can be a major deduction come tax time. In addition, most computer and technology leases do not carry a prepayment penalty, so if the liquidity of the business improves, you are allowed to pay off the lease early with no extra charges.

One concern that many businesses have with computer leasing is the constant onward march of progress – nobody wants to be stuck in a lease with equipment that is behind the technology curve. Most reputable leasing companies will allow you to pay off the remainder of the lease amount as a deposit on new hardware if upgrades are necessary. Thus, a business owner can continue rolling leases forward, keeping their office equipment up to speed with their competitors without making a great capital investment.