Starting a Home-Based Business? Read this.

You cannot charge what you like

When you are starting as an entrepreneur you do not have a strong portfolio. In fact, you may not even have a portfolio. A portfolio works as evidence of what you are capable of doing. It affects how much you charge as people will not pay top dollar for untried works. This leaves you with two options: charge very low or offer your services free.
I do not suggest working cheaply as it is demeaning and can drain you before you have started. It is also harder to train your first clients to actually pay you fairly later on.
If you do offer a lesser fee, be sure to state how much you have discounted your work. This make it easier for people to know what your true value is.
How about starting for free?

I actually prefer this over cheap wages as everyone knows there is no such thing as free. By working for free you will be able to tackle the trust and risk question that your potential clients could have. If you choose this method, get paid in kind. You can request a review or testimonial for the free work done. Or ask that they refer others to you. Also make sure that you can use the work you have done for them as a case study or portfolio piece in lieu of payment. If your client says no to any or all these walk away. It shows a disrespect for your time and effort. Oftentimes such people were never going to pay you fairly even if you were skilled for the project.

You must charge for your costs

First of all I love PayPal for the convenience it provides to people who work beyond borders. I like the fact that it’s cheaper than using direct bank transfers and is less time consuming than Western Union. But I do not like that there’s no option to pay for goods without absorbing the costs as the service provider. Truthfully speaking it irks me each time having to go on SalesCalc first and then manually adding the transaction cost before I issue an invoice through PayPal. Having lost quite a bit of my profits this way I’m not sure when I’ll forgive myself for those lost dollars. For this reason I hope PayPal will put a bit more thought into improving the seller’s experience.

Taxation matters

Freedom from a formal workplace does not mean the freedom we imagine. While it seems like all the money you earn is yours to pocket, it really isn’t. You need to think like a business and if you aren’t careful you’ll charge at or below your true cost of business.

Almost every mentee of mine makes this mistake. I did it too in my first year and half of business. My pricing back then was part guesswork and 80% foolishness. I charged by what I needed in that month but did not consider all the costs associated with my business. As long as my books were green I was happy. In fact I was not aware I was under-earning until I calculated my annual cost of business. The day I completed those calculations was the day I wished I could kick myself. Yes I had made enough for subscriptions like Canva, Hostgator and And.co. But I did not have enough to make my money work for me. And the insulting part was no one had warned me that I would double my costs once I had a proper system in place.

Make no mistake, I believe costs must remain low as income increases. But I soon found that I had to increase my expenditure to match the growth plan I had in mind. So all the super profits I had in the beginning went pouf and I suddenly had 3 figures not 4 figures in my account.

Now you may not understand this if you’ve surpassed the 5 figure mark or live in the west but 4 figures in my country is good money for most of us. To not manage 4 figures meant I was worse off than the formally employed and that was upsetting. Worse still, was the moment I realised that my increased income threshold would necessitate paying taxes if I continued to grow…

Have a growth plan at the start

Fail to plan and you plan to fail. I’ve known the truth of this since the year I failed to plan how frequently I’d meet my thesis supervisor for my undergrad degree. I did not know I was supposed to do so so imagine my shock when she pointed out that she had been meeting others for weeks? Just so you know ignorance is not bliss. I had spent those weeks stressed and writing the first 3 chapters in a haze of confusion and had to scrap most of my unguided efforts.

But the essence of a good plan is knowledge. Read all you can about what you’re doing. While entrepreneurship is mostly a solo path with unique ideas there are often parallels to be drawn within industries. So read up or take some relevant courses. And when you’re done playing with other beginners, get a mentor, coach or consultant. You’ll be able to plan correctly with a better set of options for your resources.
Think there’s more you should know about starting and operating a profitable business? You’re right. There’s a whole world of knowledge out there. Join us on Instagram so we can exchange ideas. Or book a call here so we can devise a plan for you today.