Tag: cost savings

Do I need a business license?

Recently, I was asked if a business license was needed for a person who writes an income producing blog from home.  Without knowing where he lived or the rules in his area, I told him that in general the answer would be yes.

Your work-at-home business is in fact a business, and local municipalities generally want you to have a business license to operate within their area.  There are several reasons for this.  Your local governing body (city, state, town, township, county, etc) wants to know who is operating a business within the borders of their area.  They want to make sure all applicable laws and rules are adhered to.  They want to make sure no space is used in a way that isn’t allowed.  For example, my city has limits on how many customers (if any) may come to your home for your business.  Your driveway and garage must remain available for parking.  They also have rules to keep you from parking over-size vehicles or having obtrusive signage.

One of the biggest reasons local governments want you to have a business license is so that you can pay tax on your revenues or profits.  When I mentioned this in the conversation, several other people immediately balked at the idea of paying taxes and some present felt that it was a waste to have a license if it made you pay more in tax.

I realize that most people hate taxes, but I do believe your home-based business should have all applicable licenses.  Having a license legitimizes your business and makes you look more like a real business.  Getting the proper license eliminates the risk of getting caught without one.  Penalties do vary but if you are caught doing business without a license, at the very least you can expect to have to pay back taxes.

I think it sends a powerful message to your own self as well.  Your business is every bit as legitimate as any bricks and mortar business, and as a prosperous community member you are paying your share of taxes.

Getting a business license is usually not a big deal and the payoff is worth it.  You’ll never have to worry about accepting a delivery, seeing a client in if they come to your house, and you’ll be free to earn all the money you want with no fear of getting caught!  Any potential client can feel free to dig around about you, and they’ll find your business license is current and in good standing (and don’t think people won’t do this!).

If you don’t have a business license, try taking the first step toward getting one.  Call your local government offices and see what’s required and if you need one.

I won’t ask you to share in the comments if you don’t have a business license, but if you do, tell me why you got it and how it changed your business.

Where do your customers come from?

customersOne of the fundamental practices of running a successful business is measuring the results of your efforts.  There is an almost infinite list of things you could be doing to grow your business, but not all of them produce results in the same proportion to your efforts.  Depending on your business, some activities will produce big results and some will produce few or no results.  Every time you choose to engage in a promotional activity, you are choosing to leave countless others undone.

Another reason why it’s important to measure the results of your activities is that it’s almost impossible to get the best combination of promotional activities right from the start.  Each business owner has to take their best shot at what will work and then adjust that approach as they get feedback.  If something is working and bringing in business, do more of it.  If something has not worked at all, do less or none of it.  If something has worked but stopped working or isn’t producing results the way it used to, make a change.

It seems quite logical – try something, see if it works, adjust and repeat.  However, this is probably the single biggest place I see business owners having trouble.  Before being introduced to the concept of measurement, many business owners do what they think will work and when it doesn’t they either do more of the same or add yet more activities to their schedule.  This is not the way to go!  It will lead to exhaustion and wasting time.  Getting on a marketing treadmill that keeps going faster as you add more activities will not give you the information you need to adapt and change, nor will it help you focus on the activities with the highest payout.

How might you go about measuring your results?  It depends on what you are trying to evaluate, but here are a few examples to illustrate the idea.

  • If you are using search engine optimization on your website, you’ll want to see if your efforts are increasing the number of visitors to your site.  Start by measuring a baseline before you make any changes, then see if the number of visitors increases after you’ve done some SEO on your site.  You’ll also want to compare conversion rates before and after (i.e. what percentage of those visitors made a purchase or took an action you asked them to).
  • If you are tweeting out a link to a special offer, see how many people clicked on the link to view the offer and how many people ended up buying.  A simple way to see how many clicks you got is to make a shortened link for the offer using Bitly or another link shortener that you use only for this purpose.  Bitly can tell you how many clicks your link got.
  • If you run a print coupon in a local publication, consider the cost to run the ad and how many people redeemed the coupon.  Calculate if you came out ahead or not.  Also consider if any of the new customers you got will stick around and become repeat customers.

These are just a few examples of the idea of measuring your results.  If you are not measuring anything yet, I encourage you to get started today with just one thing.

What do you measure in your business?  How have you improved because of your measurement?


Strategy and growing your business

Solopreneurs must work strategically I talk a lot about strategy, and that’s because it’s truly one of the most important foundations to your success.  What is strategy and why is it so important?  How can it help you?



Strategy is having an idea of how something will help your business before you start doing it.  This applies both to big, sweeping changes like adding a new marketing technique and it also applies to one-time things like attending an expo.  Having a strategy makes it so much more likely you will succeed, and even if you don’t you’ll know it sooner and not get sidetracked for as long as you would without strategy.

New business owners often have a fire to get started, and as a result they start off running hard and just doing as many things as they can to build their business.  The idea of actually asking if something is a good idea to be doing in the first place seems pointless.  It’s easy to get into such a frenzy of doing that it’s hard to even find a few minutes to ask if you should be doing something.

Strategy helps you decide what to do and set some goals around what you expect to accomplish.  Most business activities have increasing sales as their ultimate goal but there are many intermediate steps.  One strategy might be to increase traffic to your website using social media.  This would ultimately increase sales (all other things being equal), but it’s an intermediate step.  If your strategy is to increase sales by increasing traffic using social media then you know what your social media activity is supposed to accomplish before you even start doing it.  Using some traffic measurements, you can tell how well it is working by measuring how much traffic you sent to your site before and after you started using social media.

One of the best things strategy can do is to steer you when you are off course.  What if you social media strategy, as you’ve defined it, isn’t paying off?  That’s not as good as it working great, but it’s much better that you know and can change course.  If your efforts aren’t working, you need to change what you are doing or find something new to do.

Strategy doesn’t have to be a big deal.  It doesn’t have to be formal or complex.  Just make sure you know why you are doing any business activity and what you hope to get from it.  Have a way to measure if your efforts are working, and know when to change course or pull the plug.

How do you use simple strategy in your business?  Tell me about it in the comments.



Two types of boundaries, part 1

Solopreneurs need good boundaries on what they let outPart of being a successful solopreneur is knowing how to set good boundaries.  The first type of boundary is what you let out, and that’s usually the first of the two types that solopreneurs have to learn about.


It’s easy to let too much out.  Solopreneurs do this by giving too much away, doing more then they are paid for, underquoting, and doing too much for free.  To be sure, some of this is good business.  If you deliver more than you promise, you have a chance of wowing your customer.  Occasionally allowing a call to go over for a few minutes to wrap up something great can make your client very happy.  Pricing yourself low may work in the early days of your business to get those first few testimonials and references.  Even giving away some of what you know for free can be a really effective strategy to let people check you out with no risk.

The problem happens when you do too much of any of these tactics or when you do them unconsciously.  You can end up making it too hard on yourself to make a living.  You can end up with a group of clients who don’t value you.  You might find yourself painted into a corner and not able to scale back to more reasonable deliverables.  You run the risk of attracting only people who want free or impractically low-priced products and services.

A bigger risk is burning yourself out and coming to resent the business you once loved.  It feels terrible to do work that is valuable and not have that work recognized.  It can make a person lose enthusiasm and not even know why.  Some people like to picture money as energy, and when someone pays you for your work it’s an exchange of energy.  Being paid adequately can help the exchange feel equal and help keep you motivated and charged up to serve other customers.

Letting too much out may not even serve your clients as well as you would like to.  If you try to tell a person everything you know in one consultation, they’ll probably be overwhelmed and not get as much out of it.  If you charge too little, people may not take you seriously and may overlook what you offer.  Clients may not use what they purchased if it was too cheap.

Why do people let too much out?  There are probably more reasons than I could ever list, but here’s a few to consider:

  1. They are new in business.  It can be hard to charge a decent rate when you’ve got no track record, references or testimonials.
  2. Fear.  It can be scary to quote a price that may drive some people away.
  3. Lack of belief in their own value.  If a person isn’t clear about the value of what they deliver, they may not feel comfortable charging enough for it.
  4. A desire to help.  Many solopreneurs would do their work for free if they could, so they feel funny charging for it.
  5. Not setting good limits on requests for free help.  Watch those “Can I buy you a coffee and pick your brain?” requests, they can kill your bottom line.

What challenges have you overcome in this area?  How did you let too much out and what did you do about it?  Tell me about it in the comments.

(For Part 2 of this series, click here.)

What is double-entry bookkeeping?

I was asked this question 2 times recently, so that means it’s time to blog about it!

I may not be the best person to answer this, but I will try to make it understandable especially since most solopreneurs I know (including myself) don’t relish doing their bookkeeping.  When I worked for corporate, and one of my roles was to interpret numbers for operations people so I do enjoy making the complex into something useful.  Disclaimer: this is not meant to take the place of advice from your legal or financial professional and should not be construed as advice.   It’s also not meant to be an exhaustive, comprehensive explanation but more of something to think about.

First, why is it important to know what double-entry bookkeeping is?  It’s something that describes the capability of any bookkeeping software you might use and this may impact how much work your accountant has to do to prepare taxes or financial statements.  It also gives you the ability to get a wider variety of data from you bookkeeping records than a system that doesn’t follow this convention.

So what is it?

Double-entry bookkeeping  is a way to keep the records of the company that supports the idea that a business has assets (one side of the double entry), and that two groups of people have claim to those assets (the other side of the double entry).  The first group is creditors or people the business owes money to.  The second is the owner or owners.  Another way to look at is that the owners share in the business is what’s left over after debts are subtracted from assets.  Many transactions effect both sides, but some will only effect one side.

For many solopreneurs, it’s fine to just measure financial health based on cash.  Cash comes in and goes out, and you categorize it and get your data from there.  For other businesses though, this would not present a full picture.  Categorizing your cash in and out could be a simple form of double entry accounting.

For example, let’s say a business signs a 3-month contract to do tech support for a customer and gets a $3,000 check on the spot.  When the business owner leaves the customer’s place of business and deposits the check into his or her bank account, the business’ cash has gone way up but they haven’t actually done anything to be entitled to the income represented by the contract.  At the end of month one, they’ve earned $1,000, another $1,000 by the end of month 2 and the final $1,000 at the end of month 3.  The advantage of looking at this transaction this way is that it lets you know when you’ve earned the income not when the cash came in, although cash flow is important too.  Treating the contract this way also allows you to match the revenue more closely to the period of time over which you have expenses relating to earning that income.

What system of bookkeeping do you use?  Tell me about it in the comments.

Penny-wise and dollar-foolish

Solopreneurs need to spend wisely on businessHave you ever heard this expression: “penny-wise and dollar-foolish?”  It describes being wise with small amounts of money but foolish with big amounts.  I heard a story recently that reminded me how easy it is to fall into this not only for solopreneurs but for big companies as well.

A friend of mine was traveling with his girlfriend and two dogs.  They arrived at night at a big, chain hotel and took a room for the night.  They didn’t know the hotel allowed dogs and so the dogs slept in the car (it was safe, near their room and the temperature was fine).  The next day, as they were browsing the web to find a hotel for the next night, they found that the hotel they were in did in fact allow dogs so they let the dogs in for about 5 minutes before getting a call from management.

The concern of management was that while the hotel did take dogs, my friends were in a room that was not part of the hotel where dogs were allowed and they had not paid the pet deposit upon checking in.   Sounds reasonable so far, right?  The problem was that the management took a combative and accusatory tone from the beginning.  They insisted my friends tried to bilk them and had broken the rules on purpose.  The management also insisted upon a penalty fine of hundreds of dollars instead of just the $40 or so it would cost to deep clean the hotel room.  My friends offered to allow an inspection and offered to pay for the deep clean.  The hotel refused and wouldn’t even come to the room to look.  My friends paid the penalty, resumed their trip and have told a lot of people about this experience.

Here is a perfect example of penny-wise and dollar-foolish.  The hotel management staff were so intent on getting the few-hundred dollar penalty that they lost not only all future business from my friends but also that of the many people they told.  Had they been gracious and just took enough money to make sure they weren’t out of pocket, my friends and all of their dog-loving friends would now be fans of this hotel.

There’s loads of other ways to be penny-wise and dollar-foolish.  Do you alienate customers and lose big sales over small money?  Do you buy the cheapest version of products or services and end up wasting precious hours because of it?  As an solopreneur, it could kill your business to think this way.  Always consider all the costs of your decisions and put much more emphasis on dollars instead of pennies.

Have you ever caught yourself being penny-wise and dollar-foolish?  How did you fix it?  Share your experience in the comments.

Contact management for Solopreneurs

Michele Christensen explains how solopreneurs can manage contacts for free
Solopreneurs need a way to collect and organize their contacts

As a solopreneur, your contacts are a very valuable business asset.  By contacts, I mean all the people you know and have relevance to your business such as customers, prospects, networking contacts,  colleagues and opt-in subscribers to your newsletter.  Some of these groups should be handled by specific software such as a newsletter service for your subscribers and a shopping cart or subscriber list for your customers.  But what about all the rest of the people you meet?  You probably have hundreds of people you’ve met at networking events, trade shows, live training events and just being out and about, but what do you do with them?

For starters, DO NOT add them to your newsletter without their permission.  It’s possibly illegal under the SPAM laws, makes you look bad and generally annoys people.

You do need a way to keep track of these people though.  You may need to make a referral for a client of yours and you don’t want to be searching scattered piles of business cards trying to remember where and when you met that one guy who might do what that customer needs.  You also may want to occasionally touch base with this network of people you’ve worked hard to connect with.  Otherwise, they’ll forget about you and you’ll never even have a chance of being the go-to person when they need what you offer.  You may need a service yourself, and want to hire that really great person you met if only you could remember who it was.

There are lots of free and paid CRM (Customer Relationship Management) tools, but you may not need one.  I’m a fan of using simple, free tools as long as they suit your needs.  Unless you have specific requirements that indicate otherwise, I recommend Google contacts.  It’s what I use and I’ve been in business for 3+ years.  Here’s some of what I love:

  • It’s free and syncs with my Google email account, which I use to manage all the email that comes to my domain-specific email address
  • It works great with my Android phone
  • It’s simple to use, and you can add any fields you need
  • There is a generous notes section where you can write freeform notes to help you remember someone, e.g. “Talked with her at the bar at the September networking event.  We both have rescue mutts and like kayaking.”
  • Your entire contacts database is searchable so if all you can remember is that they had the word “Yellow” in their business name you can search on that
  • When you are ready to upgrade to a different contact management or CRM tool, your entire contact database can be exported into several formats with just a few clicks, or add on one of the free or paid tools available

Solopreneurs, study up before you hire out

Solopreneurs will benefit from being informed before outsourcing
Solopreneurs should gather some knowledge before hiring outsourced help

Being a solopreneur doesn’t mean you can’t ever have help.  Many people who run their own solopreneur business have outside help for things like bookkeeping, web management, social media, etc.  I’ve seen more than a few people get burned though, so I want to encourage you to do some research before you hire anyone for any task.  You don’t need to be an expert – one of the reasons to hire help is so you don’t have to become an expert.  However, knowing enough to ask good questions and to assess whether your potential new hire knows their stuff is invaluable.

For example, if you are going to hire out a social media marketing consultant it pays to know something about the subject.  One thing this consultant may do is discuss whether to link your accounts and post the same content across various sites like Facebook, Twitter, YouTube, etc.  Not only should they be able to make a firm recommendation as to whether you should do this, they should be able to tell you why they are making that suggestion.  By delving into this subject and understanding the pros and cons of linking, you’ll be able to ask probing questions, understand their answers and see if they can support their reasoning.  It’s not enough just to suggest a practice, they should be able to give you reasons for their recommendation.  If you haven’t gotten informed on the subject, you might be in a position where you just accept what they say and don’t even know that you should be asking any questions.

Another benefit of being informed is that you’ll have a good idea of how long something should take.  If the estimate you get is way beyond what you think it should be, you’ll be in a position to ask why.  There may be a good reason, but if not then the person under consideration probably isn’t a good fit for you.

Getting informed before you hire out also allows you to see what level of person you need.  I’m getting ready to hire out some very simple tasks that can be done from checklists I’ve prepared.  Because I’ve taken the time to see exactly what goes into these tasks, I know I don’t need a highly experienced person with a wide skill set.  If I was getting ready to add a big web store, I would need a much more skilled person with experience in shopping carts, payment systems, online stores, programming, WordPress, etc.  I would only know this though, if I took the time to research and see what goes into building a store.

One trap to avoid – don’t rely on the person you are considering hiring to school you on what you need.  Any information that person gives comes from their knowledge and you have no way of assessing if there is any bias or gaps in that knowledge. It’s up to you to learn enough to spot those gaps yourself and make sure you get good advice and make a good hire.

Have you ever made a bad hire?  What went wrong?  What would you do differently next time?  Do you get informed before you interview people?  Post a comment and let me know.

Make the most of a slow holiday season

Solopreneurs can use the slow holiday time to get ahead
How to use the slow holiday season in your solopreneur business

Now that December is officially here, a lot of us will see a slow down in business.  Events aren’t happening as much, clients aren’t as available and it takes longer to get a response from someone.  So what’s a solopreneur to do?  Believe it or not, lots!  There are some specific things you can tackle right now to set the stage for a great next year.  Imagine waking up on that first day back to work after the new year begins and being ready to jump right in!

Last year, I wrote a series on just what to do at this time of year to prepare for next year.  Click here to read part one of the series, and then follow the links to parts 2 and 3.

Click here for part 1 of the series “How to make the most of holiday slow time.”

In the comments, tell me some of the things you do at this time of year to prepare for a great next year.  I just may try your ideas out!

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