Last week a panel of experts answered your questions about how to grow your home business. Here are the best bits
The panel
Stuart Saggers is an underwriting manager at Direct Line for Business
Naomi Timperley is the co-founder of Enterprise Lab
Ella Gascoigne is the founder of Startup PR
Mark Asquith is the marketing director of creative marketing agency DMSQD
Simon Badman is a partner at SocialB
Adam Pollard is the co-founder of The Willoughby Book Club
Julie Waddell is the founder of the Little Smoked Food Company
Rog How is the co-founder of Howkapow
What's the best way to market your home business on a small budget?
Simon Badman: With social media the big question is: are you engaging or broadcasting? Firstly, look to make relevant connections with potential customers, rather than send broadcasts. Grow these relevant audiences through social media. Twitter and LinkedIn in particular are great for connecting with and engaging with potential clients and customers.
Julie Waddell: In general, advertising has very low response rates compared with face-to-face interaction. I'd focus on talking to people and see what that generates. It will also give you valuable feedback on what people actually think about what you're offering, and then you can tweak if needs be.
Rog How: Building an online brand from scratch can be really tricky. You need to try to have a really strong idea of what your brand is about and push that on all fronts. You need to be offering a unique product or site to really stand out online.
Are there any tips on cashflow management when employing freelancers if suppliers don't pay on time?
Julie Waddell: If you have contracts with your suppliers, a bank would look at an overdraft facility, which could help with the peaks and troughs as long as the income is guaranteed to come in at some point. Also, possibly explain to your freelancers that you need to extend your payment terms to a longer timescale for them so it matches with when you get the income. As well as this, though, I'd have serious words with your suppliers and tell them they need to comply with your terms and implement a penalty for late payment.
How important is it to have your own website when you start out as a freelance service provider?
Ella Gascoigne: When I started out it was just me, a laptop and a website that a friend helped me out with for free. I started out without any real money, so it was all about letting people know about me, but keeping costs down. I used social media to direct traffic to my website, and it grew from there.
I would say get something half decent up asap. It doesn't need to be expensive, but make sure it is well written and looks professional. You want to make the right impression.
How can you perfect your pitch to convert interest into sales?
Naomi Timperley: When I started out, I went to various networking events. I actually hate the word networking as it's really all about relationship building. People do business with people they know, like and trust. Worth having a look in your area at what support there is.
Simon Badman: I often work with small businesses who have 20-30 services they can offer and struggle in getting sales. My question to them is: "what do you want to be famous for?" They usually come back listing three things, of which they can also give examples of their work.
Confidence also comes in knowing what potential clients need, so market research is key. Web searches, or even just asking can help and you can then shape what you have to offer to meet their needs.
Julie Waddell: Have you got customer testimonials you can quote? If you're a little shy about selling yourself, these can help to do the job for you, and people like to hear that others have benefited from what they're considering paying for.
How do you ensure you manage your stock levels?
Rog How: We make small tester orders to try to diversify our stock as much as possible. You can then make bigger orders based on what sells. We also have regular sales to clear stock that hasn't sold well and our offering has gradually evolved based on this system. The ideal is to order stock only when you really need to.
Use a stock management system to keep track of things. Usually, whatever platform you are using should be able to do this for you. Also Google Analytics is really helpful once you set it up for tracking ecommerce data. You can look back over the past few months and get a really clear picture of what is selling well.
What advice do you have for managing the move from homeworking to an office? How do you manage the increase in cost effectively?
Julia Waddell: I'm resisting this move as I'm a great believer in only increasing costs if essential and if cashflow will allow you to do so before the return benefit kicks in. If you have to do it, look very carefully at your cashflow, make sure the investment in the cost of office space will be worthwile. If it is, go for it; if not, there are some great virtual office options out there.
Adam Pollard: It's important to consider all the available options. For instance, dependent on the nature of your business, additional storage locally might work. This would enable you to continue to work from home, but provide much needed space for stock, equipment and so on, and is likely to cost tens rather than hundreds of pounds a month. There's also an option in some locations to rent desk or office space by the hour, which could offer a significant cost saving.
Stuart Saggers: If you do chose to use a third-party storage solution, look at what the storage location will cover you for regarding insurance for the items stored in the event of fire or theft, for example. A lot of home business policies will not cover stock stored at third-party locations as it is outside your control.
What strategies can you recommend for growing a service company where word of mouth referrals are our strongest marketing area?
Mark Asquith: I'd suggest that you set aside time to attend events, but actually cherrypick these events so that you're targeting people who you'd like to do business with. Seems obvious, but many people simply attend everything, which of course tends to bleed your time.
The important thing is to really develop a follow-up strategy, strike while the iron's hot, and follow up any warmer conversations immediately after the events.
Ella Gascoigne: Social media is a great way to grow by word of mouth. Don't be afraid to use your personal contacts – if you know 30 people who talk about you to 30 people it is going to spread quickly and widely. I always make sure I get testimonials from clients, too, and put them on my website and LinkedIn profile.
How can we simplify the process of finding a policy?
Stuart Saggers: While home business insurance policies have been around for a couple of decades, many insurers will restrict acceptance to the historical consultant-type businesses, such as an accountants.
At Direct Line we do offer cover for employees (employers' liability insurance) within home business policies. As to simplifying the process, the best options are to search for the terms "home business insurance" or "working from home insurance" and then check the insurer's summary page for the covers they provide, or give them a call.
Is there a percentage profit I should be working towards for my business to be viable?
Julie Waddell: That depends on your costs, what percentage of income are they? What percentage of income do you need to reinvest financially? Look at your cashflow with what's coming in and what's going out (get a local bookkeeper to help if you can't do this yourself) and work out if the bit in the middle – profit makes it all worthwhile. You need to start with as much profit margin as you can because it's very hard to increase this later.
Adam Pollard: If you're looking to earn a living, have a think about what wage you'd (realistically) like to draw each month, and then work out what percentage of profit or number of sales you'd need to make to achieve this.
Beware, though, that pushing your profit margin up too high to make it worth your while might ultimately price you out of your market. So think realistically about where you can make up any shortfall in profit without driving your prices up, such as reviewing your suppliers or cutting out any unnecessary costs.
How and when should business owners give up the day job, find premises or take on employees?
Stuart Saggers: It would depend on the type of business, how labour intensive it is to grow, and what the financial expectations are of the individual.
The important thing to bear in mind is that, whatever the individual decides to do, they should ensure that as their business activity grows their insurance protection grows with the business. If someone takes on employees, they are legally required to have employers' liability insurance (although there are a few exceptions). With respect to the physical business assests, such as business equipment and stock, as you increase with growth in the business, you should ensure that you increase your insurance cover so that, in the event the worst happens, you are fully protected.
Rog How: I've always tried to minimise risk as much as possible when setting up. I only went full-time on our business after the first two years, and I felt as if it was the right thing to do and the business could provide enough to support us.
If you quit your job and start a business, it can be very stressful if you don't make money initially (and it's very rare that you will). You need to be able to cope with a few years of little to no income, or have a second job to support the setup process.
It's more important to lay a solid foundation than it is to quit the day job.
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Sirena Bergman
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