One Foot In Each Camp

Written by Elena Fawkner


Continued from page 1

After some time, your business will begin to generate income for you. As you start generating more income, you will begin to turn your mind to deciding at what point it becomes uneconomic to continue your day job. This is because, at a certain point, your business will reach 'critical mass',repparttar level at which it becomes uneconomic to continue your day job becauserepparttar 117507 return you get for your time and effort is greater from your home business. This is because your salary doesn't vary according to effort and results (at least not directly), but your home business income does.

As a general rule, you will need to wait until your business is consistently generatingrepparttar 117508 same level of income on a proportionate basis torepparttar 117509 time you spend on it before you start seriously considering quitting your day job. Once you get to that point, testrepparttar 117510 elasticity of your income. If you doublerepparttar 117511 number of hours a week you spend on your business does your income increase commensurately? If so, your income is elastic. If you double your time input but your income only increases by half, then your income is somewhat inelastic. You need to calculate how much time and effort you need to expend to generate inrepparttar 117512 form of business income what you are currently generating from your paid job. If this is 'reasonable' by your standards then you can begin to seriously consider quitting your day job. If not, you need to find ways to leverage your business so you can generate more income from a more acceptable commitment of time and effort.

Only when you have satisfied yourself that you can generate from your business sufficient income on a CONTINUOUS and REGULAR basis, should you consider quitting your day job.

That's onlyrepparttar 117513 threshhold question, though. Behind it are a whole host of other issues to think about before making repparttar 117514 break. For example, how will you fund time off? As a self-employed person you can forget about paid vacations.

Even if this doesn't concern you financially, consider what will happen to your business if you're not around for two weeks. Also, as a corporate employee, you probably enjoyed comprehensive medical benefits at your employer's expense. Again, these are gone. Be sure you take out your own insurance and think about income protection insurance as well. If you contract an illness that puts you out of action for a month, again, what happens to your business? You will need to take out normal business insurances as well such as public risk. Consider here whether clients will be visiting you at home. If so, ensure your insurances cover injuries to business clients. This is something that probably won't be covered under your general homeowner's policy.

Build up a network of contacts before you quit your day job. Not only will they be an important asset to your business in repparttar 117515 longer term, they can also help alleviaterepparttar 117516 feelings of isolation that you can expect to experience early in your home-based career. Something else to do before you quit your day job is to prepare yourself mentally forrepparttar 117517 realities of working from home such asrepparttar 117518 need for self- discipline, feelings of isolation, your tendency to procrastinate to name a few. Educate yourself by reading about what running a home business is REALLY like to minimizerepparttar 117519 culture shock when it happens to you.

Prepare your family too forrepparttar 117520 changes that they can expect. They need to understand that although you are at home, you are still working and they need to respect your limits during worktime. Of course, set up your home office as if it were a corporate office. Make sure you have two telephone lines and dedicate one to your business telephone andrepparttar 117521 other to your fax/internet connection.

And one final piece of advice, when you first start working from home, establish a "going to work" routine, at least to start. This will get you intorepparttar 117522 routine of working even though you are not leavingrepparttar 117523 house and you won't develop bad habits (such as procrastination or lack of direction) that will be difficult to break later on.

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** Reprinting of this article is welcome! ** This article may be freely reproduced provided that: (1) you includerepparttar 117524 following resource box; and (2) you only mail to a 100% opt-in list.

Here'srepparttar 117525 resource box to use if reprinting this article:

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Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions forrepparttar 117526 work-from-home entrepreneur. http://www.ahbbo.com



Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com




Pricing Yourself to Get and Stay In Business

Written by Elena Fawkner


Continued from page 1

RELATIONSHIP BETWEEN PRICES AND PROFITS

The easiest way to increase your profit is to raise your prices. But you canít just raise prices indiscriminately. Look for ways to manipulate niche pricing instead. This means looking for specific areas of your business where you have some latitude to increase prices.

The way to do this is to identifyrepparttar areas whererepparttar 117506 perceived value of what you are offering is higher thanrepparttar 117507 price you are currently charging. Start by carrying out a competitive analysis of your business. Find out how your product compares with your competitorsí onrepparttar 117508 basis not only of price but costs as well.

If you are going to source this information by approaching competitors directly, a word of caution ... DONíT. The Sherman Act inrepparttar 117509 US (and similar legislation in many other jurisdictions) prohibits businesses of any size from entering ďcontracts, combinations or conspiraciesĒ in restraint of trade. In other words, itís illegal to make deals with competitors about what price youíll charge or what services youíll offer. Merely discussing prices with competitors can be construed as an attempt to conspire on prices. This is one area where you just don't want to give evenrepparttar 117510 *whiff* of an impression of doing anything ofrepparttar 117511 sort.

So, be circumspect in your research. Never discuss prices with competitors and avoid frequent communications with them at all if possible. Instead, to keep tabs on what your competition is up to, read their ads, talk to their suppliers, engage mystery shoppers or send an employee to make observations.

Once you have completed your competitive intelligence, analyze your competitive advantages and disadvantages. If, as a result of your analysis, you learn than you have an advantage over your competition because your business is website design and you know how to do cgi-scripting but your competition has to outsource this function and this means a delay of one to two weeks, then this advantage is something your customers will likely pay more for. Adjust your prices accordingly.

WHEN YOU'RE THE PRODUCT

Some businesses donít offer tangible products at all. Sometimes, YOU arerepparttar 117512 product. So, how do you price yourself if youíre, say, an ecommerce consultant and your business is assisting brick and mortar businesses makerepparttar 117513 transition to ecommerce?

One perfectly reasonable approach is to start with a calculation of your actual expenses and your salary needs and then dividerepparttar 117514 total by a reasonable estimate of billable hours. An article entitled "Setting Fees" by David Dukoff gives a good overview of how to go about doing this.

Letís say your expenses and salary needs mean that your business needs to be generating $100,000 a year. Letís also say you prefer to charge clients byrepparttar 117515 hour rather than by quoting on projects. How much do you need to charge per billable hour to generate $100,000 per year?

Dukoff usesrepparttar 117516 following approach. To start with, how many billable hours do you have? Letís start with 2,080 work hours in a year. Deduct 100 hours for vacation time (2 weeks), a further 80 hours for popular holidays, 40 hours personal time and sick leave and 20-40% of time for marketing and administration. This leaves you with around 1,000 billable hours in a year. You therefore need to charge $100 per billable hour to achieve your goal of $100,000 income.

OTHER PRICING STRATEGIES

Other pricing strategies to include in your structure include discounts to encourage prompt payment or quantity purchases, seasonality issues (for example, end of season ďsalesĒ), offering senior citizen and student discounts and other promotional incentives.

As you can see, settingrepparttar 117517 "right" price for your products and services is absolutely crucial torepparttar 117518 profitability (read survival) of your business inrepparttar 117519 longer term. But with careful analysis and a methodical approach, you should be able to arrive at reasonable pricepoints without too much difficulty. Then it's just a matter of monitoring demand in response to price changes to settle onrepparttar 117520 optimum pricing for your business.

But don't rest there. Your prices operate within a constantly changing environment and you need to be ever-vigilant to ensure that your prices remain at their competitive maxima.

One final piece of advice: if in doubt, price high rather than low. It is much easier to discount prices than it is to increase them.

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** Reprinting of this article is welcome! ** This article may be freely reproduced provided that: (1) you includerepparttar 117521 following resource box; and (2) you only mail to a 100% opt-in list.

Here'srepparttar 117522 resource box to use if reprinting this article:

------

Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions forrepparttar 117523 work-from-home entrepreneur. http://www.ahbbo.com



Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com




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