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Reasons Why Majority Of Those Starting A Home Business Fail

Saturday, December 26th, 2009

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Reasons why majority of those starting a home based business fail, can be broadly classified into two.

1) They are not involved in any internet marketing training program.

It should be obvious that if anyone is not properly trained in internet marketing, he is not likely to succeed. “Newbies” fail to take cognizance of the fact that available statistics reveal that only between 3% – 5% of those starting a home based business eventually succeed.

Before going into most professions offline, most people take time to receive adequate training. One is therefore amiss as to why they should think it will be different online.

Internet marketing is a body of knowledge which is acquired and so the advise to those starting a home based business is to get involved in a good internet marketing training program.

2) They are involved in an internet marketing training program and yet fail for the following reasons.

a) The training program they are involved in does not possess the basic characteristics of a good internet marketing training program

b) Quite a sizeable number of “newbies” when starting a home based business, expect a “get rich quick scheme” and so do not expect to work hard to achieve success. Unfortunately, this is not usually the case with most home based business opportunities. The exceptions to this rule gives only a temporary succour to this type of entrants but no lasting relief. They still come back to start learning the basics of internet marketing through an organized training program.

c)Lack of basic educational requirements..
Unlike most professions/jobs which require you to present your academic credentials before entry, those starting a home based business, have a field day. The internet more or less has no regulator and so there is a natural sieving process whereby the “wheat is sifted from the chaff”.

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I will advise that anyone seeking greener pastures on the internet acquire some basic educational qualifications first of all, perhaps a minimum of a university degree in my view, to enable success.

d) A corollary of the above is that a number of those with requisite educational qualifications are actually not involved in home business as they are otherwise too engaged in their professions and so are not even exposed to internet marketing. Unfortunately for them, they do not know what they are missing Those who try it in conjunction with their work and are very busy executives find out that they do not have the time it requires and so have to drop it to concentrate on their job. “A bird in hand is worth a thousand in the bush” you would say.

e) Wrong business opportunities.
Some “newbies” starting a home based business fall into the hands of fraudsters in their bid for “get rich quick schemes” and so get their fingers burnt.
The more reason why they should be involved in an organized internet marketing training program which will “shepherd” them towards tried and tested money-making business opportunities on the internet.

f) Failure to adhere to basic accounting concepts of matching, cashflow & profitabiltity.
I have written an entire article on this and advise that new entrants into internet marketing adhere to these concepts and terminologies of accounting as enunciated in Starting A Home Business – Matching, Cashflow & Profitability

g)Failure to have knowledgeable and experienced mentors.
Even when involved in a good internet marketing training program, you may find out that the size of the training program and the hectic busy schedule of the originator who obviously should be a much sought after “guru” will not allow the close mentoring needed for those starting a home based business.

The system, if productive should have trained quite competent internet marketers who will still be involved in the training program and thereby pass down their own knowledge in addition to the originators’ as well as key ways to succeed with the training program. They will identify areas to cut costs and tools and resources to deploy to fast track your internet marketing success.

h) The time required in turning out a profit.
For those not even ordinarily looking for a “get rich quick scheme”, a usual complaint by those starting a home based business is that the time required in turning out a profit which I label “the learning phase” is too long. This usually ranges from about 6 months to 1 year for a serious entrant and can even be longer for a lay-about.

Tags: home based business opportunities, Internet Marketing - General, internet marketing training program, online business training, online business training program, starting a home based business
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Starting A Home Business – Matching, Cashflow & Profitability

Friday, December 18th, 2009

In starting a home business, the importance of the “Matching, “Cashflow” and “Profitability” concepts from the accounting point of view, cannot be over-emphasized.

Probably because I am a professional (Chartered Accountant) versed in that field, I notice a rampant non-adherence in home business online to this accounting concept, “Matching”. There is also a thorough lack of understanding of the meaning of Cashflow and Profitability all of which ultimately are major causes of failure of most home businesses.

The Matching Concept in accounting simply states that revenues earned in any accounting period must be matched with the expenses incurred in that same accounting period.

Cashflow is basically the expression of cash/funds that are received as against cash/funds that are spent within the same time period.

Profitabilty involves a matching of revenues(not cash) with expenses(not cash) incurred within the same time period.

Let us first start with “Cashflow”
Applying this to a home business, it is important that if anybody starting a home business wants to succeed, he should ensure that the cash/funds he receives from all sources he has decided to apply to the home business in any time period is at least equal to the amount he disburses on the home business in the same time period, which may be most appropriately, monthly,

Simple, it sounds? In reality, it beats me hollow to see many “Gurus” running training programs recommend to “newbies” many tools, resources, subscriptions which obviously? at the stage the newbies are in, in most cases, they should not be incurring such expenditure. And poor “newbies”, in the belief that they are being “shepherded” correctly, follow hook, line and sinker, the “recipe” of these “Gurus” much to their own peril.

Some “Gurus” do this out of mischief (to sell products/services) but you will be surprised at how many do this out of ignorance of the extreme importance of “Cashflow”.

“Cashflow” is the most important in the short run as a home business making profit in the short run can run out of business with inappropriate cashflow management. On the other hand, a home business making an actual accounting loss in the initial period can survive and ultimately turn around to making profit in the long run.. In fact most businesses start out making an accounting loss in their initial year of operation and turn this round to a profit in subsequent years.

Next to ““Profitability”.
This becomes crucial more in the long run as anyone starting a home business must ultimately ensure his revenues exceed expenses otherwise he will run out of business.

A common misconception however is that the home business must pay for itself almost right from the outset. You will loose a lot of home based business opportunities this way. What is crucial is the ultimate income potential of the home business. In fact only “get rich quick schemes” come this way.

Now to “Matching”
This in the accounting parlance is actually more related to “Profitability” in that it determines the way any profit you earn in your home business will be deemed accrued. Anyone starting a home business must know that the initial outlays in your first few months should not simply be “written off” but should be noted as an initial expense which should be amortised over a reasonable length of time periods and should not be simply “loaded” into any one time period.

What deductions can those starting a home business make from all these accounting terminologies?

- Do not spend more than you have realistically earmarked and is indeed available(budget) on any home business in any time period. In fact borrowing to start a home business is like signing your death warrant as the expected revenues/cash is not likely to come in as fast as you expect.

- The yardstick for determining the success of any home business is not in the speed with which you start earning as indeed you do not start reaping very fast with many successful home businesses while you infact yield initially very fast with some “get rich quick schemes” and ultimately loose much more later.

- You are the architect of your own fortune or misfortune and you should not leave your fate entirely in the hands of any marketing guru purporting to train you in internet marketing but wisely apply the breaks in spending as appropriately explained in this article.

- The decisions to be takan by each one involved in starting a home business is dependent on his particular financial situation. As “Cashflow” is most important, anyone with good cash base should infact make informed purchase decisions even if he would be making an accounting loss initially as this will fasttrack his business while someone with a poor cashflow should bid his time by applying FREE tools which are indeed plentiful on the internet. I say “informed purchase decisions” because availability of cash is no license to go on a spending spree without basis since in internet marketing, you still need time to acquire the necessary training which involves reading relevant materials very widely, browsing forums etc

- You must get out of that home business if within a reasonable length of time you are now not covering all your costs, including the ones you had capitalized which you are amortising over a number of time periods.

- Quantify exactly how much cash is required to “survive” in any home business within the first six months to one year by which time you should hopefully have turned into profit and incorporate this in your cashflow projection to determine if available earmarked funds will be able to finance this.

- Be rest assured that spending much more than comes in initially is not a sign of the failure of an home business or indeed any business for that matter.

You can now make many more other deductions from the explanation of the above terminologies to guide you in starting a home business.

Tags: cashflow, home based business opportunities, home business, Internet Marketing - General, matching, profitability, Starting A Home Business
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