In Part 1 of the Plan Your Finances for Self-Employment series, we covered the importance of knowing how much money you need each month to cover your living expenses. Part 2 of this financial series delved into the importance of acquiring health insurance to protect your family and your finances from unexpected medical emergencies.

Plan Your Finances for Self-Employment, Part 3 will cover how you can establish financial security as you get your business up and running by building up a significant savings.

In most cases, a new business needs a certain amount of capital to get up and running. Many people assume that a home-based business doesn’t involve any real financial investment. Even if you pursue entrepreneurship through an established company like Avon or Mary Kay, or a home-based franchise, there is typically some investment involved. In addition to any initial investment required to get started, you’ll also need to purchase necessities like a desk, computer, printer, software, Internet service, phone service, materials, inventory, etc.

Some entrepreneurs turn to bank loans or credit cards for start up capital, but as Muslims we are expected to avoid riba (interest). You may be able to contact a bank institution that specializes in halal (permissible) financial options for alternative funding solutions. Some business owners find investors willing to provide the necessary financial assistance you need. Others resort to using their own funds to finance the beginning of their venture.

Some people advocate pushing past the fear many typically feel before taking the leap into entrepreneurship. I’m all for facing your fears and going after your goals, but common sense should play a major role in a decision this important. There’s no sense in making things more difficult for yourself than you need to. Not having savings in place could put your business on the path to failure.

Having a sufficient savings in place will provide you and your family with peace and security during those sometimes volatile early days. You’ll be able to sleep well at night and can focus on being creative without worrying about how you’ll pay this month’s power bill or rent.

How much money should you save?

Your number depends on your financial obligations. Are you your family’s only wage earner? Does your spouse cover all of your living expenses? Are you responsible for a certain portion of your household’s income? Revisit you income and expenses analysis to help determine how much you need to set aside in savings. The more you are relied upon to contribute to your household income, the more you’ll need to save. If you are not responsible for covering household expenses, you can get away with saving a smaller amount.

It’s not unusual for entrepreneurs to struggle financially in the beginning. I remember going through quite a few feast or famine cycles myself. It takes time to build up a steady, profitable business. Having savings set aside helps “fill in the gaps” when you need it.

If like me you were unable to physically attend any conferences this year, I have great news! Indiebizchicks.com will be holding the Indie Biz Chicks Conference, a virtual conference,  September 27 & 28. You “attend” by phone (you’ll receive the phone number and access code once you sign up) or by logging in via your computer.

Chrissy Herron, the founder of Indiebizchicks, has assembled aVERY impressive list of speakers who will be covering important topics for female entrepreneurs including:

• Blogging basics
• How to create a WordPress website for your business
• How to write a book in 90 days
• Public relations tips for small businesses
• How to increase productivity and multi-task effectively
• Marketing & branding tips
• And so much more!

For $49 you get complete access to all of the speakers and recordings you can download and listen to as needed. I’ve already signed up and am really looking forward to learning from other successful women in business!

This global economic crisis has had two interesting effects on the small business sector: it’s left many struggling financially to stay afloat, but it’s also spawned a large number of solo entrepreneurs who are using their skills and experience to create an income. Setting up shop in the midst of a global economic crisis isn’t easy, but it’s doable. In fact, smaller, home-based businesses have an advantage over big businesses during financially hard times. It’s much easier for a home-based business to remain small and lean while waiting out market changes. A home business doesn’t have all of the fat the “extra” big businesses have to deal with. This can be an opportunity for you to not only survive this financially challenging time, but possibly flourish. These tips can help:

Take Full Advantage of the Web

The Internet provides an excellent platform to help you launch and operate your business from home successfully. You can easily reach out to a local or global audience, depending on your target market. You can network with others and market your website, products and services. You can use the web to create a web presence and develop your brand.

Keep Marketing Consistently

Marketing is how you let others know about the products or services you sell. If no one knows about them, you won’t have customers, and you won’t make money. Market consistently – even when you’re busy – to keep business flowing for maximum profitability.

Don’t Automatically Lower Your Prices

Make a careful evaluation before you take action. You may need to rethink your pricing structure in order to ensure longevity, but be careful if you do decide to slash pricing. Marketing research has shown price indicates value in the minds of consumers. Some buyers will automatically go with a lower priced option, but many assume higher priced products/services also mean higher quality.

Work Smarter, Not Harder

You can choose many online tools to help streamline business operations like administrative and invoicing duties. You can also utilize tools to automate certain operations, like marketing, and even implement cloud-based applications.

Pay Attention to Customer Service

I often say that customer service is a dying art. That’s what it feels like to me in most cases. So when I encounter a business that treats me like they appreciate my business, I am very impressed and also very likely to do business with that company again. Show your customers you appreciate them by offering a discount the next time they shop with you, something for free or a referral incentive.

Have you made any changes to your business to help weather the sluggish economy?

As soon as you decide to go start your own home-based business, you have big plans for its direction and future. It’s only natural, right? I mean you have to take time to  write your business and marketing plans. Planning is an important phase in building your business, but don’t get caught up in the planning trap where you make lots of big plans, and yet nothing ever gets off the ground.

I have a tendency to be a perpetual planner – nothing gets me going like a vision and the task of planning to make it a reality. Unfortunately this is where I sometimes get stuck. I like researching and making list. And if I’m being perfectly honest, the planning stage is also safe and comfortable. I don’t have to put my neck on the line and have my plans blow up in my face.

As the saying goes, “nothing ventured nothing gained,” so here are  a few techniques that have helped me push past planning toward actualizing my plans:

Plan with purpose

I always start planning with an end goal in mind. I always start the planning process by making lists of anything and every thing I need and need to do. I love making lists, but I could seriously stay caught up in just this task alone and get absolutely nothing of consequence accomplished.
Break your planning down into simple stages. For example, if you’re planning to set up a website for your business, maybe break it down into stages starting with securing the domain name, with the next stage securing hosting, and then the next stage might be setting up your websit using a do-it-yourself platform or hiring a web designer to do it for you.

Establish actionable steps to get you there

Once you have a plan in place, you’ll need to detail the strategy that will help you achieve the end result you’re striving for.  Without a strategy, a plan is useless.
Let’s say you plan to sell your apparel to young, trendy, Muslim teenage girls. You need a strategy in place that shows how you’ll introduce them to your products. You might spend more time on Twitter and Facebook interacting with Muslim teen girls, visit  popular online forums where they’re known to hang out or place ads in ezines and print magazines they like to read.

Set a deadline

Deadlines are great motivators when you need a push to get something done. Sometimes we  procrastinate without some pressure to see a project through. Think carefully about everything that’s involved with a project to make sure you give yourself plenty of time. Set realistic deadlines, otherwise you may as well skip this step.

Regardless of where you are with your home business, make a practice of creating plans with a strategy in place to help you reach your goals successfully.

Muslimahs Working at Home was created to provide women with a financial alternative to earning an income outside of the home. Our objective is to share resources and tools necessary to operate a successful, home-based business.

That old saying is true: “it takes money to make money.” Some business models require more start up funds than others. I started my own business on a shoestring budget, but there were certainly expenses I have to cover during the first few months.
Whether you need a sizable investment, or are operating on a tight budget (like me), you need an estimate of how much money you’ll need to get started and carry you through those first few months.

One time costs

You’ll need money to cover one time expenses like the co of a business license, incorporation fees, and any essential equipment (E.g. computer, printer, website design, display materials for trade shows, etc.).

Ongoing costs

Examples of on-going costs are things like web hosting, monthly fees for an autoresponder service, inventory, insurance, utilities (phone/fax line, and a portion of other utilities if you have a separate office space).
Ongoing costs are usually in one of two categories: fixed and variable costs. Fixed ongoing costs include expenses you are always responsible for – phone/fax, insurance, utilities, etc. Variable ongoing expenses change from day to day, week to week, month to month and so on. Examples include shipping or printing costs, costs associated with a particular product or service, outsourcing fees, etc.
A successful home business needs access to enough seed money that it can grow and become profitable.

Muslimahs Working at Home was created to provide women with a financial alternative to earning an income outside of the home. Our objective is to share resources and tools needed to operate a successful, home-based business.

Suban’Allah, I survived a weekend of nursing two sick children back to health. Both are doing much better today – my oldest had a tough time last Thursday, so I’m keeping her home today, just as a precaution. Meanwhile, I really need to get back on schedule with packing since we’ll be moving out of state in less than two months! Not to mention I’m traveling out of town this Wednesday, so I have to finish up the laundry and prepare a few meals to leave behind for my husband and kids while I’m away. Honestly, the life of a Muslimah working at home is NEVER dull, masha’Allah.
I’m really excited about some up and coming projects that I’ve been working on. You may recall last fall I mentioned that I was working on an ebook to help Muslimah’s interested in working for themselves take the first important steps toward turning that dream into reality. Unfortunately my father’s unexpectedly experienced health crisis required my attention and I had to put the project on hold. I have started working on the book again, and plan to expand it to include a workbook insha’Allah. This ebook will be free and I look forward to having it ready by June, insha’Allah.

This project deadline will coincide with the completion of another important project I’m working on as well, insha’Allah. I am planning the redesign of this blog so that it is much more streamline, user-friendly and provides you with as much information as possible to start, and/or operate your own home business successfully, insha’Allah. I’m currently working with a Muslimah-owned, full-service, website development firm www.paramaya.net to make this happen.

I look forward to providing you with useful resources and online tools, instruction video and webinars. I’ll also provide affordable, one-on-one coaching for those seeking more personal guidance, inspiration and accountability and help you establish and implement your work at home mission, vision, mission, strategy, objectives and goals. Please stay tuned – I will keep you updated on my progress, insha’Allah.

Muslimahs Working at Home was created to provide women with a financial alternative to earning an income outside of the home. Our objective is to share resources and tools needed to operate a successful, home-based business.

I’m a bit of a control freak. It’s true. Ideally I’d like to have a hand in every single aspect of my business, but as it expands I‘m learning the very quickly that I’m not really Superwoman. I can’t do it all on my own, and it’s counterproductive from me to continue pretending that I can.
One of my business goals is to work smarter in 2011 which is why I’ve settled on the decision to start outsourcing some of administrative tasks to a professional virtual assistant. I’m in the middle of moving right now (complete chaos!), but just as soon as we’re settled I plan to hire a small team of individuals to help out with this blog and my other two businesses. My first objective, however, will be hiring a virtual assistant (BTW – When I’m ready to hire I will post all of the information here).
The benefits of outsourcing can’t be ignored. Hiring a professional to handle tasks like managing email/voicemail, research, website/blog maintenance, ghostwriting or website development could wind up being the most cost effective decision in the end because it allows you to work on the more profitable aspects of your home-based business. Time is money after all. It also means you’re not left wearing all of the hats of responsibility, so in a sense it helps reduce feelings of overwhelm.
Here’s an interesting article discussing outsourcing for startups.

Do you outsource areas of your business to other professionals?

Muslimahs Working at Home was created to provide women with a financial alternative to earning an income outside of the home. Our objective is to share resources and tools needed to operate a successful, home-based business.

The economy’s in a slump, so you’ve decided to take matters into your own hands. You’ve started earning extra money working, full-time or on the side, as a virtual assistant, bookkeeper, graphic/website designer, sewing/altering clothes, creating/selling crafts, etc. You’re pleasantly surprised to find a demand for your product or service. You weren’t expecting things to take off quite so quickly.
Things are going well; you’re earning money and new business is flowing.  Your home business seems to be successful. So is a business plan really necessary?
Some small business owners believe business plans are only necessary if you plan to secure funding in the form of a loan from a lending institution or an investor. But there are other reasons home-based business owners should consider writing a business plan:

• You’re planning to take on a partner and need to define the roles and agreements
• Changing courses – making major changes in your business to make corrective changes
• You’re planning an expansion of your business
• You’re selling your business

Even if your business unexpectedly blossomed from an urgent need to earn money from a hobby, talent or skill, a business plan can provide the vision to keep you on a focused path.
Forget everything you thought you knew at the proper format of a business plan. Sure business plans created for the purpose of seeking funding need to follow a more comprehensive format; but otherwise your plan can simply include the details that are most important to you. Your plan can even be a one page long outline if you like. The basic elements can include:

• Introduction: A summary of your business, the products or services you provide, the start-up capital that will be involved.
• Products or services: List the product(s) and services(s) you plan to provide. Spend time researching your competitors so that you have an idea of how what you offer compares.
• Market analysis: Is there a demand for what you’re offering?  Who are to targeting your products or services to? You can also conduct your own research using surveys and include the results in this section
• Marketing/sales strategies: You will you deliver messages about your product or service to your target audience? What methods will you use to promote your business? How will you monitor and measure the effectiveness of the methods you choose?
• Business Structure: What business structure will you choose to operate your business under? A sole-proprietorship, partnership, LLC, S-corporation, etc.

Home-based businesses can benefit from outlining even a very simple plan. A plan encourages you to think about your short-term and long-term goals and the steps necessary to reach them.

photo credit: Generationbass.com

Muslimahs Working at Home was created to provide women with a financial alternative to earning an income outside of the home. Our objective is to share resources and tools needed to operate a successful, home-based business.