PLANNING CALLED KEY TO GOOD HOME-BASED BUSINESS

Writer: Joe Bryant (806) 746-6101 E-mail: j-bryant1@tamu.edu
Contact: Dr. Greg Clary (903) 834-6191 E-mail: g-clary@tamu.edu

AMARILLO – A key to a successful home-based business is planning, and it should be carried out at several stages of the enterprise, a management economist with the Texas Agricultural Extension Service told entrepreneurs attending a seminar here.

You have to plan what you need, what you want, what you already have and what you can afford, Dr. Greg Clary, Extension Service economist from Overton, told the group. When you implement your plan, he said, you have to plan some more to determine what to buy, how to buy, where to buy and where to put it.

“Then, over time, you must evaluate your plan and make modifications to improve it,” Clary advised.

What you need will depend upon the type of business you have, Clary said. “But one primary thing you need in a home-based business is a way to communicate,” he said. Another is some type of management information system for inventory, accounting and other demands. “There are a lot of alternatives for these,” he said.

Also on his list of basic needs for a home-based business are a place to be creative, a place to have some solitude, a place for storage, access to marketing and promotion, and consideration of any special needs unique to your business.

“There may be things you want, but what you get may be different from that,” he noted. “Your bankbook may be a limiting factor. Your available space may be a limiting factor.

“If there are some things you already have, it’s going to help your cash flow” in starting a business, he said. Those things could include space, extra furniture, shelves, a computer, a personal telephone line and miscellaneous office equipment.

When planning what you can afford, Clary said, “the first challenge as a home-based business is to keep your inventory low. Things you need whether you turn a dollar’s worth of sales or not are a major cost, so be economical.

“There are some things you can’t afford to be without,” he said. Those include a management information system , a separate telephone line for business, and perhaps an 800 phone number. Other desirable items can be acquired over time, he suggested.

Technology components to consider, he said , include a computer and peripherals necessary to meet specific demands; software or shareware, possibly including a database for business contacts; communications items which might include a portable phone, pager, answering machine or voice mail, copier, plain paper fax and color scanner.

Important elements of the business financial plan, he cautioned, are knowing the break-even cost, monitoring the cash flow and determining the source and quantity of capital.

Goods and equipment for the business can be bought in several ways, he said. These include cash, loan from a bank or finance company, credit cards, venture capital, credit from vendors and barter. In addition to buying from prominent retailers, Clary suggested the entrepreneurs watch for business liquidation sales, auctions by police or other agencies, garage and moving sales, estate sales, secondhand stores and items offered on the Internet.

“Every time you make a decision (on equipment or supplies), make it from an economic viewpoint,” he urged. “Go back to your basic purpose for the business.”

Implementing the business plan includes deciding where to put everything in the home, he said. Use all your existing space wisely,” he said. “There’s a lot of wasted space in a house; both vertical and horizontal space. And there are lots of innovative ways to use it.

“Keep asking yourself, `Does this work?’ and `Where can I improve it?’,” he challenged.

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