How-to Grow a Home-Baseed Business Smartly

Growing a home-based business shares many aspects of growing a traditional small business. There are however a few specific details you need to consider in deciding if the timing is right to grow and how to do it. In this article, I will address areas where you can focus your attention and draw out greater profits.

1) Look at your overhead costs.
When you expand, you need to consider if the rate your overhead is going to increase along with your profits. If your overhead is increasing at a higher rate than your profits in an expansion, it may be a bad move.

On the other hand, if you can do something to increase your profits while keeping your overhead nearly the same, you're putting yourself in a more stable position for growth.

There comes a certain point in home-based businesses where you may need to take it out of your home. This is a major decision, and you need to make sure your business can cash flow enough to cover rent and any additional expenses of a storefront and make a significantly greater profit. Never buy a location outright because you often have no idea if it's going to work long-term for your business.

2) Take a look at your time.
In business, the ideal situations are moves you can make where the business is taking up less of your time and still making the same amount of profit.

On-line businesses are a great example of this in that once you develop everything on the front end, they have a 24-hour a day element to them that operates regardless to what you're physically doing.

Sometimes you have more work available than you can handle, and it makes sense to bring on another person. Instead of a traditional employer-employee situation, you may want to consider working out deals where the new person gets a percentage of the profit they bring in instead of an hourly wage. This ensures you're not going to be drained by someone who doesn't work. Check with a local business attorney in your area for more information on how you can set this up. Also, never enter into legal partnership situations--most fail when two or more people have different directions they want a business to go.

3) Decide whether you want to grow in quality or quantity.
Either business model will work, but you need to decide what is the best direction for your product or service.

If you have a service-based business, consider the fact that gained experience has value. At a certain point, you should be able to charge higher rates for a higher quality performance that you provide. This will result in less customers and less hassle but with the same or greater amounts of profit.

In other cases, you may need to do more what you're already doing. Suppose you have a craft business and buy supplies in small quantities in the beginning. As you grow, you should feel more comfortable in buying more supplies in bulk. Your initial costs go down, and you'll make more profit even though you haven't changed the price of your goods.

4) Make sure you can cash flow any major changes to your business.
I've seen too many businesses go under because they become too leveraged with debt. It can be hard enough to run a business that you don't need the added stress of keeping above interest payments.

5) Lastly, consider areas where you can diversify or branch into.
Over time, you probably have learned a little about other businesses related to your own. If it makes sense, it may be a good idea to branch into those areas. Having more than one service can also make your business more stable.