Investing the Profits from Your Home Based Business

by: Rhiannon Williamson

Having made the bold and glorious decision to sack the boss and go it alone you are one of the few who have what it takes to succeed. You have an entrepreneurial spirit and a strong will and these are rare and valuable attributes that will guide you throughout your professional and personal life.

Now that your business is up and running and you’re profiting from your efforts, it’s time to turn your attentions to investing the profits from your home based business wisely and for maximum gain.

One of the most consistently returning asset classes over the long term and the one that the majority of us can profit from is real estate.

Understanding market cycles

Now, you’re most likely aware that property markets are cyclical – this is because there is a direct correlation between the underlying price of real estate in relation to individual buying power. Simply explained: when property prices rise above what first time buyers can afford to pay the market slows down, stagnates and sometimes readjusts – but as soon as purchasing power increases again, either with a drop in interest rates or an increase in GDP, so property prices begin rising again.

And there are even ways to make money from real estate during a market downturn!

Investing in real estate for income

Depending on the nature of your home based business your monthly income may be slightly erratic – some months being better than others! If you invest in property assets in a buy-to-let or even jet-to-let capacity you can secure yourself a consistent monthly income which may afford you an added degree of financial security.

Buy-to-let is when you purchase property for rental purposes – this make be an apartment you corporate let, it could be a house you student let or even a family home you rent out long term.

Jet-to-let is similar but it involves purchasing overseas property for short term weekly or fortnightly rental to tourists. This type of letting is usually very lucrative indeed during peak holiday periods but may mean you have a property that is empty for a few months out of season.

Both types of property investment return you a regular income and at the same time the physical real estate asset will grow in value over the long term and if ever you wish to release the profits from your investment you can sell on the property and take the gains you have accrued.

Investing in real estate for profit

The alternative to building up a property portfolio for income generation purposes is purchasing property and selling it on relatively quickly to realize the gains the asset has accrued.

You can do this in a number of ways…firstly you can purchase run down property in need of renovation, tidy up the property and turn it into a home before selling it on at a higher price and reaping the profits gained.

Alternatively you could seek to beat the curve by buying into up and coming areas, waiting for prices to boom and then selling on for profit. This is quite a risky strategy for a first time investor as timing the market is hard!

An alternative to this is looking overseas for the latest emerging property markets worldwide and buying properties to renovate or properties off plan and then flipping them on for maximum gains in the short term.

Financing your investment

As a self-employed individual it can be tricky to get a mortgage unless you have audited accounts, bank references etc., etc. If you don’t have all of these requisite documents there are other options available to you.

The main options are re-mortgaging your primary residence and releasing the equity that you have accrued already for reinvestment in another property project or taking out a self-certification mortgage where you make a large down payment and basically tell the lender how much you can afford to borrow!

A winning attitude

You’ve already proved you have what it takes to succeed against the odds by establishing a profitable home based business, now apply the same steely determination to your real estate investments and you will succeed in making the maximum gains. Start small, begin gently, test the market and your understanding of it and slowly build up a profitable real estate portfolio from the profits of your home based business for maximum financial gain.

Good luck in achieving your goals.

About the author:
Rhiannon Williamson is a freelance writer whose articles about property investing and emerging real estate markets have appeared in publications around the world. She is currently working on a brand new property investment resource http://www.amberlamb.com/

How to offer 30 day terms the right way.

by: Marco Terry

What is trade credit?

One of the major differences between consumer and commercial transactions is that most, if not all, consumer transactions are paid in cash or by credit card at the time of sale. Because of this, most consumer businesses never have to worry about extending credit to a customer and can run their operations on an "all cash" basis. This allows them to focus on their core competencies because they don't have to carry slow paying Accounts Receivables and go through the expense of collecting on such accounts.

However, commercial transactions are different. Most clients ask their suppliers to deliver services immediately and then to invoice them for the work, payable 30 days later (also known as offering net-30). In effect, clients ask their suppliers provide them with "trade credit" for 30 days. Although suppliers don't like offering trade credit, most have accepted it as an industry standard and have learned how to operate and live with it. In fact, some suppliers have even mastered how to offer trade credit and use it to better position their companies with leading clients. Large creditworthy customers, such as the government or large companies, will usually demand trade credit as part of their contract negotiations. Some examples of entities that ask for 30 to 60 day payment terms are:

• o Fortune 500 companies
• o Large and medium sized companies
• o State government agencies
• o Federal government agencies

On the positive side, providing trade credit to the proper clients can be a tool that allows your company to win important contracts and position it for growth. However, providing credit is also risky and can erode the company's cash position if it is misused. Furthermore, offering trade credit to less-than-creditworthy clients can burden the company with bad debt and affect its growth prospects. Because of this, business owners must walk a fine line balancing their desires to grow their businesses with the necessities of offering credit to their customers.

Keys to providing trade credit successfully
The best way to minimize the risk of providing trade credit to a client is to perform a credit analysis on him. Although no credit analysis is 100% perfect, they allow business owners to make an informed decision on whom to issue credit to. Here are the three key points to making a credit analysis.

o Have the customer fill out a credit application
Have all your customers that want credit fill out a simple credit application. This will allow you to have all relevant facts in a single document. The application should ask for the following information:

1. Company structure
2. Banking relationships
3. Commercial references
4. Supplier references

o Check bank and supplier references

In their credit applications most clients will only list banking and commercial relationships that will position them in a favorable light - however - it is always a good idea to check on all of them anyway. Banks will only be able to confirm that the client has an account with them. Supplier references, however, may provide critical information regarding the clients' payment habits.

o Check commercial credit reports

There are a number of companies that sell commercial credit reports on businesses. As opposed to consumer credit reports that require special permissions, commercial credit reports can be obtained for any business without asking for prior permission. Reports vary in their level of detail and accuracy and can be obtained for as little as a few dollars. However, all reports will include important information to help your credit department make a decision. More detailed reports will cost a few hundred dollars. You can obtain credit reports from the following companies:
a) Dun & Bradstreet (www.dnb.com)
b) Experian (www.experian.com)
c) Credit.net (www.credit.net)

Doing a credit analysis on your clients will allow you to determine how much - if any - trade credit you can give them. Clients that do not have a favorable credit analysis should be placed on a COD (Cash On Delivery) basis, at least initially, to reduce the risk of non-payments.

The challenges of offering trade credit
One of the main drawbacks of providing trade credit is that it can create a cash flow problem for the company that offers it. Large suppliers with adequate cash cushions in the bank can easily afford to offer credit. However, small suppliers with lean bank accounts usually find that offering credit will drain their cash resources and create financial challenges. It is not uncommon for small businesses to find themselves with a cash flow gap after offering trade credit to their larger clients. This gap is created by the fact that the company's Accounts Receivable account is strong while the company's bank accounts and cash position are weak. The cash flow gap places the business at risk of missing payroll and debt payments. It also prevents it from pursuing new opportunities because they don't have the funds to buy resources or hire the necessary staff.

Bridging the "cash flow" gap

The biggest asset that most new businesses have, aside from their equipment and intangibles (e.g. employees), is their unpaid invoices or Accounts Receivable. Accounts Receivable is an asset that can be quickly converted into cash by using a financial tool called factoring. Factoring allows a business to sell the financial rights to their Accounts Receivable to a third party, called a Factor. As part of the sale, the factor immediately advances a large portion of the cash value of the unpaid invoices to the business. The business can then use this cash infusion to strengthen its cash position and meet its obligations. In the meantime, the factor, which now owns the invoices, waits to get paid by the customer. Factoring enables business owners to outsource their trade credit function to the factor and to turn their companies into the equivalent of an "all cash" business. If you want to learn more about factoring and how it can be used to grow your business, please read our white paper titled "Factoring: Cash on Demand for your business without debt or loans"

Sales Leads - How to Generate Quality Sales Leads Through Public Speaking

by: Alan Rigg

Delivering speeches, seminars, and webinars (online seminars) is a terrific way to generate large quantities of quality sales leads. Why is public speaking such an effective lead-generating vehicle? Here are a few reasons:

• Speaking allows you to deliver your message to MULTIPLE POTENTIAL PROSPECTS AT ONCE.
• A well-constructed speech, seminar, or webinar can establish you as an EXPERT in your field and increase your CREDIBILITY with prospects.
• Every speech has the potential to REACH FAR BEYOND THE ORIGINAL AUDIENCE. If you deliver a compelling message, there is no telling how many times it will be repeated to others by your audience members.
  

What should you speak about?
Look for topics that are of particular interest to your target prospects. You can offer new approaches for solving especially troubling business problems. You can educate your prospects on compelling new technologies, or other concepts that will help them professionally or personally. You can discuss real-life case studies and share stories about how you (or your company) helped specific customers improve their businesses. Whatever topic you choose must RELEVANT and IMPORTANT to your target audience.

How should you construct your speech?
Constructing an effective lead-generating speech requires walking a fine line. You want to provide your audience with TRULY VALUABLE INFORMATION. However, you also want to MOTIVATE THEM TO CONTACT YOU for additional information. As a result, you have to make sure you don't provide so much information that your audience can solve their problems all by themselves.

This is not a big issue if you are speaking to generate leads for a product, as the audience members will likely need to purchase the product to completely solve the problems you discuss. Where giving away too much information becomes a real issue is when you sell services. If you share all of your knowledge about how to solve specific problems, why will your audience members need to come back to you?

To avoid this undesirable outcome, follow these seven steps to constructing an effective lead-generating speech:

1. Open with an "attention grabber". This can be a truly startling fact or an emotionally compelling story that relates to one or more of the key points that you will address in your speech.
2. Give the audience a brief outline of the key points you will be covering in your speech.
3. Describe the problem or problems your speech is intended to help your audience solve.
4. Describe the impact of each problem as graphically as you can. Engage your audience's emotions by asking them to describe how a problem has affected them personally or professionally. Another alternative is for you to tell compelling, real-life "problem impact" stories that describe how (current and past) customers were affected by specific problems.
5. Relieve the tension you have built up in the audience by letting them know the problems can be solved. However, DON'T tell them EVERYTHING they need to know to solve them! Provide a brief outline of the solution. That way the audience will need to come to you for more details.
6. Use glowing word pictures to help the audience visualize how wonderful their lives will be when the problems have been eliminated.
7. Close by revisiting the key points from your presentation and giving the audience a "call to action".
   

IMPORTANT NOTE: Be very careful about SELLING from the stage. Audiences become annoyed very quickly if they feel a speech is nothing more than a thinly disguised sales pitch. You must deliver truly valuable insights and information to your audiences to reward them for taking time out of their busy schedules to attend your speeches.

What "call to action" should you deliver at the end of your speech?
It is perfectly appropriate to include a gentle "call to action" at the end of your speech. Consider closing with a statement such as:

"If you would like to explore the possibility of applying the concepts that were discussed during today's presentation in your company, please give me your business card before you leave."

Here are some other effective calls to action:

• Include a "please contact me" checkbox on a presentation evaluation form that you give to each audience member.
• Give them a form they can use to request a free special report and/or subscribe to a free newsletter.
• Invite the audience to visit your company's website to download a free special report and/or subscribe to a free newsletter. NOTE: Make sure you require them to provide their name and e-mail address in order to receive the free value-added information!
  

How should you prepare for your speech?
Preparing for seminars and speeches is a lot of work. Here are some of the key steps:

• Prepare your presentation materials, write scripts, and practice them to the point where you can deliver your presentation smoothly and convincingly without having to rely on your notes too much. If you don't have much speaking experience, you may want to join a local Toastmasters chapter. They do a good job of teaching platform and presentation skills.
• Secure a facility for your speech and make arrangements for any necessary audio/visual equipment.
• If you are going to serve refreshments, make arrangements for the refreshments.
• Develop and implement a plan for attracting an audience. This might include sending direct mail or e-mails, making phone calls, and contacting trade, professional and social associations and organizations.
  

What can you do to maximize your return on investment?
If you are going to invest the time and effort required to deliver a first-class speech, you should also develop a plan for maximizing your return on your investment. This could include the following activities:

• Give each audience member an evaluation form they can use to provide feedback and request additional information.
• Provide handouts that include presentation highlights and your contact information.
• Hold a drawing for some type of small prize (books, sample products, etc.) to encourage attendees to give you business cards and/or hand in completed evaluation forms.
• Block time during the day or two following your presentation to make phone calls to audience members. When you make the calls, ask for feedback and offer an opportunity to ask questions that might not have been answered during the event. Also ask for referrals to people they know who might be interested in your presentation topic. These referrals may become immediate prospects. At minimum they should be added to your invitation list for future events.
  

Delivering properly designed speeches, seminars, and webinars (online seminars) is a terrific way to generate large quantities of quality sales leads. If you follow the instructions provided in this article, you should see a satisfying increase in the number, size, and quality of leads in your sales opportunity pipeline!

About the author:
Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Selling: Why Most Salespeople Don't Perform and What to Do About It. His company, 80/20 Sales Performance, helps business owners, executives, and managers DOUBLE sales by implementing The Right Formula(tm) for building top-performing sales teams. For more information and more FREE sales and sales management tips, visit http://www.8020salesperformance.com

Home Based Business vs. Family Time

by: Ron LeBlanc

Ironically, most of us got into the home based business world because we wanted to have more time with family. So how is it that we sometimes have less time? Let’s take a look and see what can be done about it.

The promise of having more time with family is one of the major attractions for a home based business, but time has to be carefully managed and guarded. If you are in a regular job working at least 40 hours per week, it can be tough. One thing that must be communicated to your family is that there has to be a short term pain for a long term gain.

You have a finite amount of hours available to you, but here are some suggestions. If you have children at home and it becomes chaos as soon as you get home, then one possible strategy is to stay at work an extra hour later. You can return quite a few phone calls in an hour and it would probably be uninterrupted. A home based business can have a remote office!

Another strategy is to take mass transit if you normally drive. It may allow you an extra 30-60 minutes per day to organize contacts, return phone calls, or listen to training materials with your mp3 player. If your company has training or motivational phone calls that are at a bad time for you, it is possible to record them (check with local laws on it).

I have recorded many calls to a $39 digital voice recorder with a $15 connector that goes from my phone to the recorder (available from Radio Shack). You are then free to listen to the calls on your time.

I make it a priority to spend time with my kids when they come home from school. I work from home full time, so I take a break mid-afternoon to see how their school day was and enjoy a snack together. I then head back to my home office until dinner time.

I also have less need for sleep than the rest of my family so I frequently take an hour or two at night or early morning. This can be extremely productive time for a home based business, but unfortunately does not usually allow you to return phone calls. I used my lunch time at my old workplace for that using a cell phone – my investment in the large minute plan was worth it.

The exact solution for you has to be determined by you for your particular home based business. However, my advice is to plan ahead and block out the family time. Make sure you clearly communicate with all family members about what time you are blocking out for your business activity. As long as you communicate well, you should be able to spend anxiety-free time on your business.

With some good planning, you can be successful in being good to your family and your home based business.

About the author:
Ron LeBlanc, PE spent 20+ years in science and engineering when woke up to his true potential and began working from home. He lives in Boulder, CO and works out of his home. He enjoys helping other people learn to do home based businesses. Get his tip-filled newsletter and some special offers at http://www.be-do-have.com

Higher Prices Lead To Higher Profits - Part 2

by: Paul Lemberg

In the first part of this series we looked at the effect prices have on profits. A change to the upside can have a wonderful effect on profits while reckless discounting and careless price reductions will surely have a disastrous one. If you don't fully understand the implications, or haven't read Part 1, go back and do so now. (http://www.paullemberg.com/higher-part1.html)

By now you may be asking yourself, "What should my prices be?"

Before you go start changing prices, you need to clarify a core part of your overall positioning. You need a pricing perspective.

Do you want to be a low priced provider, or would you rather sell the premium product? There are good reasons for being a low priced seller. Just as Michael Dell - that's where he started, although he certainly isn't there now. Or look at Costco, or Amazon. If you look to these models for inspiration, make sure you have three things: a firm grasp on your margins, deep pockets, and the ability to do lots of volume. Without all of these three, you will surely go broke.

Where are you personally more comfortable? If you sell at the high end of your price spectrum, you are likely to attract higher end clients, and it would help to be comfortable in that rarefied atmosphere. On the other hand, you may feel better on the low end. It's a choice and you have to make it.

What will attract the type of clients or customers you want? Your price is a signal to your potential clients telling them who you are in the marketplace. And if your goal is to raise the quality of your clientele, the easiest way to do so is increase your prices.

Do you want a low service, volume business, or would you prefer fewer, select clients and give them "high-touch"? High-volume, low-touch businesses can be very profitable, and can generally scale more easily, but require more planning. Low volume, high-touch (select always means high-touch) businesses, may be easier to build and require less overhead. If you are thinking of a lifestyle business, go the latter route.

Do you want a quick in-and-out transactional business, or would you rather develop long-term, nurturing client relationships? If you want to build something easy to scale and perhaps sell down the road, high-volume, low touch may fill the bill. If you are developing a life style business to carry you into old age, or a "professional" business with a strong public image, think long-term and nurturing. Higher prices usually go hand-in-hand.

Develop a pricing perspective that fits your goals. Your decision will go a long way to determine who you do business with and how you do it, and will also effect how you can dispose of your business. There are no clear guides to the right choice. It's more a matter of preference and positioning.

But perspective is not the only element to pricing. By itself it will tell you how to price (high, low, middle of the road), but not the exact price itself. Before I share with you how to do that, let's examine a few common approaches to pricing.

As nuts as this may sound, lots of people price to pay the bills. No kidding. I've seen this advice in more than one article for professional service companies. "How much money do you want to earn? Divide that by how many hours you have to sell..." And so on. (By the way, cost-plus pricing is just as crazy.)

Price to time. This is what most services people do. They set their prices by the hour, or by the day. The biggest problem is this makes it way too easy for prospects to compare your price. It also puts them in control of your time if they do buy.

Price to competition. This is the most common form of pricing, and is the core of all prices based on market research. And it makes sense if your offer is comparable to that of your competitors.

One last common pricing structure is front-end or loss-leader pricing. Loss-leader pricing is not designed to generate operating profits. Its purpose is either to take market share from competitors or create customers to whom you will later sell other things.

If your goal is to drive your competitors out of business, and you have deep pockets to sustain an unprofitable price war, this can work brilliantly. Many big box retailers, including Staples and Home Depot have followed this strategy. Long years of low prices eventually crushed their competitors, and both raised prices when their markets thinned out.

If you have a profitable and expensive product or service, an effective approach is to sell something that is cheap. For instance, if you have a high-end seminar, a low end ebook or free consultation can bring in all the customers you want.

There are other considerations to pricing besides the bottom line. But if you want to understand how to increase your profits, stay tuned for Part 3.


About the author:
Paul Lemberg is the President of Quantum Growth Coaching: More Profits and More Life for Entrepreneurs, Guaranteed. To get your copy of our free report with detailed steps to grow your business at least 40% faster, go to www.fastergrowthnow.com