3 Keys to Finding a Profitable Home Based Business This Year

Home based businesses run the whole range from scam to legitimate. Almost everyone has received an email claiming one can be an overnight success for a small (or sometime large) one time investment. Needless to say, most of those emails go right into the trash folder.

How does one find a real legitimate and profitable home based business? Over the years, three basic principles have applied for starting any business and they hold true for home based businesses too.

The first key to finding a profitable home based business is locating a product or service that is in demand. This is probably the most obvious step, but it is definitely the most overlooked step too.

The first thing most people do is pull out a calculator and a sheet of paper to start figuring out how much income they can make. The first step should be looking at the product or service.

One of the best ways to see if the product or service deserves further consideration is to make a list of all the features and benefits. The benefits should be numerous and unique if possible. As the number of benefits increases, the broader the market will be for the products or services.

The second key to finding a profitable home based business is evaluating the competitive landscape. The list of features and benefits one made earlier will pay off here. Google makes this step very easy and quick now.

Simply go down the list of features and see what shows up in Google. A second time through the list pairing benefits with features should help one fine tune the research process. A pattern should start emerging showing that there is either a lot or no competition.

If there is strong competition for that product or service, it should become evident whether the product or service in question has a unique twist or special pricing that allows one to be successful. If the product or service is over-priced or not unique, it is time to start looking for the next program to evaluate.

The third key to finding a profitable home based business is looking at the current marketing system. A proven marketing system is worth it’s weight in gold. Most people looking at a home based opportunity lack sales and marketing training. It is a skill set that takes time to learn and starting a business while learning sales and marketing is very difficult.

A customizable website, advertisements, testimonials, sales letters, postcards, flyers, business cards and training on how to use these assets are necessary for a basic marketing system. If these do not exist, it takes lots of time and money to create them. If the product is unique and has a competitive advantage, it may be worth the time and money to create the collateral. Otherwise, it is time to start evaluating another product or service.

In summary, a good home based business is one built on good business principles. Sound principles apply to a $500, $5,000 or $5,000,000 business. If the business does not meet these principle tests, it is time look for another business to evaluate.

Leadership Training Has a High Return on Investment (ROI)

Job-related training is a given for most businesses. When I worked for a manufacturing company, it was part of the hiring process to train a new employee about the company in general and equipment that would be used most often. The benefits of training in this regard are many, with government regulatory compliance usually near the top of the list. Another reason companies train is because of organization-specific systems, processes or software. There is no way to do the job required without teaching someone about that particular system.

What about the other areas for training – such as leadership, knowledge sharing or team building? Called human capital management, these areas are often crossed off the budget rather quickly during tight economic times. It might seem that HCM topics are merely perks and easily expendable for short-term budget planning. However, this decision may cost the company more money in the long run. Probably the best way to keep training front and center for companies is to prove that HCM training impacts the bottom line.

How can you relate productivity to leadership or team building? The same way companies measure any other variable in a process. While doing streamlining, a process is analyzed for every single input and output, along with variables and measurement of margins. The way to drive out waste is to reduce the variability in the process. Seems pretty simple.

But how do you measure something perceived to be intangible, such as leadership? Truthfully, leadership of a team or process is tangible – we can see the impact immediately. The challenge is in teaching company decision-makers to equate the work of their teams to the business’ financials.

Ram Charan – author of “What The CEO Wants You to Know: How Your Company Really Works” which focuses on the fundamentals of making money – says there are three questions every leader must be able to answer: 1.What is the money making model of my organization? 2. How does my team contribute to the money making model? 3. Do all of the people on my team know the answers to questions one and two?

Think about the impact of these questions. Are you able to answer them? Along with the questions, Charan covers five building blocks of the money making model: cash, margin, velocity, growth and customers. By educating leaders on the basics of the company’s financial structure, everyone in the company can work toward specific goals.

In a paper written by Jim Mahone and Chuck Bokor titled “Valuing Leadership Training: Economic Impacts and Return on Investment” the impact of leadership training is quantitatively analyzed through two different courses and in two different industries. Their results yielded a nearly 15 percent return on investment when comparing the cost of the initial training to the overall impact to the organization, as well as a projected 179-to-1 rate of return for the benefit-cost ratio. Think about how much a 179-to-1 rate of return would impact your own company.

“The reason these ratios are so high can be explained by the fact that leadership training develops the capacity in individuals to deal with all kinds of situations,” the paper claimed. “The benefits of making the right decision for individuals in senior positions of leadership can be tremendous, while the costs of making the wrong decision can also have substantial impacts.”

Leadership training is not just about making team members feel valued or engaging employees in the company goals. Leaders must have the business knowledge and acumen to affect a company’s bottom line as well as continually learn better decision making skills so they can have the confidence to handle any situation or choice that arises.

Business Loan Difficulties – Solutions for Bars and Restaurants

Many traditional lenders have unofficially removed bar and restaurant properties from their short list of business loan candidates. Other lenders will restrict their restaurant lending to a handful of restaurant businesses with a long track record. There are two dominant reasons for these actions by traditional lenders:

(1) Bars and restaurants will usually have the highest failure rate among new businesses. Traditional banks have discovered that an infallible strategy for avoiding such business loan failures is to avoid making these kinds of loans in the first place.

(2) Commercial mortgages for bars and restaurants will involve special financing requirements for liquor licenses and items generally categorized as FF&E (furniture, fixtures and equipment). As a result, there will be a perceived intermingling of various assets looked upon as collateral by the traditional banks, and this extra level of complexity discourages many traditional lenders from actively making commercial real estate loans to bar and restaurant owners.

Business Loan Solutions

(1) One of the primary underlying reasons for a high failure rate among bars and restaurants is directly due to the commercial borrower being forced into short-term financing when long-term financing is essential to the health of the business investment. Businesses (and especially restaurant and bar properties) should not be financed with short-term funds. It is essential to obtain long-term commercial financing of at least 15-20 years (and longer is even better).

(2) Seller seconds and other variations of subordinate financing should be considered. This will permit the most aggressive commercial financing for bar and restaurant commercial mortgages, often up to 90 percent of the property value. This is important if you are the buyer because it will provide another financial tool to help with financing. It is important to the seller because it might enable someone to buy the property who could not otherwise do so. However, subordinate financing (including seller seconds) is not permitted by many traditional banks.

(3) Finally, restaurants and bars will frequently benefit from using credit card receivables to convert future cash flow into immediate working capital via a business cash advance up to $300,000. This funding solution will primarily be of assistance in providing working capital rather than initial business financing.

Other Solutions

Small business owners often encounter difficulties when reviewing their options for buying a business. Bars and restaurants have some unique problems, but commercial financing options are similar for many types of business properties.

Seeking business partners is a prudent alternative to review in many circumstances, but it has considerable merit when a bar and restaurant acquisition is under consideration. Business partnerships, of course, can also involve potential disadvantages. If a business loan cannot be obtained any other way, then this strategy might become a primary financial option.