Sunday, July 15, 2007

Home Business Profits

Like any business, your home business depends on profits in order to be successful. Of course, the overhead is not going to be as high for an at home business as it would be if you had quack business but there are still some expenses that must be overcome before your business can claim a profit. Some expenses that you incure in a home business include taxes, insurance, electricity, phone, internet service and all of the office supplies that you use in the daily operation of your business such as printer supplies and software for your computer.

Even if you do not use your computer for your business, there will be other expenses connected to its daily operation. On the other hand, if you have a job such as a day care center in your home, the expenses are going to be much higher because you have other types of expenses like, licensing, food, exterminating, fire inspections, training and much more. You may be able to offset it by raising your rates but you still have to remain competitive or you will lose the children you have, which will really cut into your profit margin. You have to be able to set your pricing so that you make a profit but not so high that you price yourself right out of business.

That brings us to the point of this article. Goal setting is an important part of increasing your profits. It means that you develop a plan that will allow you to increase your profits without substantially raising your prices. What you want to do is make a list of all of your expenses and see if there are places where you can make cuts in order to reduce your expenses. Profit involves the difference between income and expenses, so to create a higher profit margin, you have to increase income or decrease expenses.

If your prices are lower than others in the same market as your business, you may get by with raising prices so that you are more in line with what everyone else in your area is charging. On the other end of the scope, if you are already charging prices in line with others in the same industry, the only way to increase profit is to lower expenses. Another way to increase income without raising prices is to increase your customer base.

Of course, if you already have all the work you can handle, this is not feasible unless you are able to outsource some of the work to others, thus still generating some additional income for yourself. After all, you are not going to pay someone the same amount that you are being paid. This is a very common practice in freelance writing and is an efficient way to take on more work and increase income without raising prices.

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