There comes a time in every home-based business (hopefully) when expansion is the only option. Here are some pointers for an easier transition…
As everyone with a self-managed home-based business knows, quarterly BAS statements are due today (thank you Mr Costello) and as one home-based business operator told me last Friday: “Don’t tell me about home business, I’ve just spent the last three nights doing our BAS as well as looking after the two kids.”
There comes a time in the lifecycle of a home-based business, however, when it’s time to bring in professional management to win back a little of the life you can only just remember.
It is once you become big enough to carry the cost of expansion, when you need to take on more than the casual worker, and before you take up the challenge of looking to expand outside the home.
If your growth strategy has been to start out from home to save on costs, this may be a natural step. But if you’ve been operating from home as a lifestyle choice, it may not be.
For the home-based business, this means assessing the costs and benefits of working at home and when it’s time to move out from home.
As soon as your family business begins to grow to a stand-alone small business scale, it is important to plan the transition to rental and shared space and to begin to check out when you will need to own premises.
This is the time to revisit both your original business plan, the stories you told your bank manager, and your marketing plans. This means a new structure, new business and marketing plans, and a change in the management and leadership style of the business.
There is always the risk of doing what worked in the past rather than readdressing the changing reality of the market place. Be careful not to let the founder mentality act as a barrier to innovation and the search for new challenges.
If you started your business, developed all processes, forged the customer relationships, and fought hard to secure strong supply lines, you may find the transition difficult to bring in new people for the expansion beyond the home and to delegate responsibility. Even getting a bookkeeper to complete your BAS can be a major step if you’re used to doing it all yourself and are a self-confessed control freak.
As the business begins to take off, and family members are brought into the business, it is essential to confront the management and marketing realities associated with delegation of duties, decisions about alternative investment strategies, risk management and protection against fraud and misallocation of resources and use of external advertising, marketing and distribution channels.
Get together with two or three key family members and friends to make a list of the elements that have helped and hindered your home business performance. Think back to the early days of your business when you were looking for opportunities, seeking new customers, getting the right materials and resources, joining business networks and taking in family members and new workers to grow the business.
If you are starting to feel tired of the BAS and the day-to-day hassle of keeping cash flow ahead of expenditure, it may be time to move on to something new, or even retire. If it’s time in your family lifecycle to win back a little of the independence that motivated you years ago to go – and the business is viable and on-going – you should start to think about succession planning or selling, and start preparing your business for the “changing of the guard”.
Selling the business to someone else requires a detailed plan and careful consideration of the taxation and transition arrangements. Succession planning, and transfer of ownership and control, are closely related to estate planning. Decisions about taxation effects, professional management transfers and becoming a public company require long and detailed consideration by stakeholders and the family.
The key for successful home-based business transitions is to have an “exit strategy” (see the links below for other Smart Company experts for some advice here).
Remember this is your business and also your future, so set yourself some long-term goals and objectives to meet your development needs – and don’t forget to maintain a wide circle of friends outside the business.
Good luck and don’t let the paper work get you down.
>> The Exit section of Growth Resources.
>> Selling Your Business blog, by Andrew Kent.
>> Business For Sale features by Tom McKaskill.
Dr Jane Shelton not only runs a business from home but is doing business research into people working from home. She is managing director of Marshall Place Associates, Melbourne’s independent think tank, and CEO (honourary) for ‘Life. Be in it.’ International. Shelton has a Doctorate in Business Administration at the Australian Graduate School of Entrepreneurship (AGSE) at Swinburne University of Technology after a Master of Arts in Public Policy at Melbourne University and a Bachelor of Business in banking and finance at Monash University.
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