Working at home has more and different distractions than working at an office. At an office you only have to worry about coworkers and customers interrupting you. At home you have family, roommates, pets, tv, books, video games, movies, the refrigerator and the couch to contend with as well.

Working at home can ruin your life/work balance. There is the ever present option of working. At 9pm this thought will occur – I could be working right now instead of watching this movie.

A home office is a tax deduction as long as you regularly use the office, use it exclusively for business and it is the principle place of business. You can write off your mortgage/rent, utilities, supplies, equipment and so on.

FIND THE BEST SPOT IN YOUR HOUSE
The best spot for a home office is a separate room in a quiet part of the house that has a door that shuts. You want to be able to create a sanctuary where can work without being bothered or distracted. If you don’t have a spare room you can use, physically partition off part of a room with blinds or room dividers.

This room is now your office and sanctuary. Treat it as a holy place that is not to be violated by others. Put up a sign that indicates when you are working and make it clear that you are only to be disturbed if the house is burning down.

Only use your office for work. Don’t play video games on your work computer. Every time you sit down, there will be temptation. Avoid temptation and distractions by only using your office for work.

WHAT YOU’LL NEED
Computer Equipment – What you need will vary greatly depending on your business. If you are just checking email, invoices and using spreadsheets then get the cheapest computer available. Designers, video editors and musicians will need something more robust. There is no bigger waste of money than a $2,000 MacBook Pro that is just used to check email and Facebook.

High-speed Internet – If you don’t have good Internet speed – upload and download – you’re going to be extremely frustrated.

Furniture – You will probably need at least a desk, chair and a place to store your files. Make sure you get a good, comfortable chair. Fatigue and many back and neck problems are caused by poorly made chairs. You can usually get free office furniture in good shape from craiglist.org or freecycle.org.

Headphones – If you can’t find quiet, create it. A pair of noise-canceling headphones can help you ignore those who don’t respect your need for quiet.

Business Phone – Have a separate phone line for your business. This makes it easy for customers to reach you. It also allows you to keep a better life/work balance by letting you leave the phone in the office during off hours.

USE A ROUTINE
Having a routine helps establish boundaries. Set your business hours. Tell everyone you know that these are your set business hours. Ask them to respect that time. Your friends and family should not contact you during these hours unless it is an emergency. You clients shouldn’t contact you outside of these hours unless it is an emergency.

Having a routine mentally prepares you to work. Do the same things every morning when you get ready. Act like you are going to a job. Take a shower, get dressed and eat breakfast. I take a walk around my neighborhood in the morning before working. When I get back to the house, I’m at work. When I’m done working I take another walk around the neighborhood. When I get back to the house I’m at home. It helps me establish boundaries between work and just being at home.

THANKS FOR READING
Thank you for reading Running A Home Office. I hope you found it helpful and informative. You can follow me on twitter.com/richardbeu.

HOURLY VS PER PROJECT
Charge by the hour for small, simple or repetitive tasks. Website maintenance, consulting, marketing and data analysis fall into this category for me. Usually I am contracted to provide a certain amount of hours of a service. It is a pretty simple way of doing business.

Charge by the project for large projects. The price quoted for the project should not change unless the scope of the project changes. For large projects I must know how long it will take me to complete and the value that will be created so I can accurately gauge how much to charge for the project. This comes from experience and time-sheets from previous projects.

For products like paintings or curtains, the price would be calculated a little bit differently. The cost of materials plus 10% plus the number of hours worked times your hourly rate would get you your minimum price for that object. Let’s look at how much to charge for a painting. $10 for canvas + $15 for stretcher bars + $.50 for staples + $1 for primer + $5 worth of paint = $31.50. $31.50 x 110% = $34.65 for materials. Now the painting took you 20 hours to complete and your hourly rate is $30. Your cost for labor is $600. Labor + Materials = $634.65. $634.65 is the minimum amount your should charge for your painting.

DETERMINING YOUR HOURLY RATE
To know what to properly charge clients, you must know your hourly rate. An hourly rate should be based on business costs, personal costs and desired savings divided by billable hours. Multiply your result by 1.3 to plan for emergencies and unexpected expenses.

Your hourly rate should be revisited frequently because costs, tax rates and circumstances can change rapidly. All data should represent your current monthly expenses. I have filled in data for a hypothetical company. Remember that all figures are monthly.

Business Costs – We need to calculate your cost of doing business.
Office Rent – $475
Travelling expenses from meetings and conferences – $100
Computers, printers and software – $100
Furniture – $0
Office supplies – $10
Communication (phones, faxes and the internet) – $100
Legal and accounting fees – $100
Ads and promotions – $100
Health, liability and business insurance – $400
Other – $50
TOTAL = $1335

Personal Costs – We need to calculate what your lifestyle costs.
Rent/Mortgage – $425
Utilities – $150
Food/Alcohol – $300
Entertainment – $100
Retirement/Savings – $1500
Transportation (Car, Bike, subway…) – $150
Gifts – $100
Clothing – $20
Other – $100
TOTAL = $2845

Total Costs – Add personal and business costs together to get your total cost.
Total Cost = $4180

Billable Hours – We now need to figure out how many hours you can bill.
Weekly Work Days – 5
Hours Worked Daily – 8
Vacation, Sick and Personal Days – 2
Holidays – 2
Monthly Hours Worked – 144
Billable Percentage – 60%
TOTAL = 86.4 Billable Hours

Hourly Rate – Divide your total cost by your billable hours to get your minimum hourly rate. Multiply your result by 130% to get your preferred hourly rate.
$4180/86.4 = $48.38 per hour
$48.38 x 130% = $62.89 per hour

Lets round $62.89 up to $65 per hour. Now you have your hourly rate to use when calculating your prices.

THANKS FOR READING
Thank you for reading Pricing Your Services. I hope you found it helpful and informative. You can follow me on twitter.com/richardbeu.

WHAT GOES INTO A BUSINESS GUESS

Business plans are really just guesses. When starting out, any business plan will prove to be inaccurate. Problems will come up that you never considered. The 1, 3 and 5 year projections you came up with will not even be close. You don’t know where your business will end up. It’s all guess work.

However, you should still come up with a business plan of sorts. What I’m going to call a Business Guess. The purpose of creating a business guess is to think about what you are doing in a logical manner. Understand where you are now. Decide where you want the business to go. Figure out how to get there. Correct course early and often.

Business Explanation – State what your business does.

Example – Acme Generic Web Design generates ideas, writes competitive analyses, creates digital product strategies, plans content, constructs information architectures, devises wire frames, designs websites and logos, develops code, integrates content management systems, optimizes for search engines, conducts user testing, tests for quality assurance, maintains websites, marketing through social media, analyzes website stats, consults businesses and writes.

Current Status – You can’t get where you want to go if you don’t know where you are. Examine the current state of your business. Write out your financial, website and product/service data. Make sure your data is up to date. You should update all your data every month to measure progress.

• Example:
  New Clients – 2
• New Client Earnings – $3,000
• Repeat Clients – 2
• Repeat Client Earnings – $2,200
• Earnings – $5,200
• Expenses – $1,000
• Net – $4,200
• New Website Visitors – 516
• Repeat Website Visitors – 167
• Leads – Newsletter Sign ups/Contact Form Submissions – 25
• Conversion Rate (Visitor to Lead ratio) – 1 in 27.32
• Close Rate (Lead to Client ratio)Leads – 1in 12.5
• Hours Worked – 172
• Billable Hours – 104
• Employees – 0
• Services Offered – Business Consulting, Digital Product Strategy, Content Planning, Content Creation, Interactive Design, Visual Design, Website Development, Content Management Systems, Search Engine Optimization, User Testing, Quality Assurance, Maintenance, Social Media Marketing and Website Analytics.
• Services Sold – Website Maintenance, interactive design, website development, social media marketing, search engine optimization and a content management system.

Where Do You Want To Be? – Where do you want your business to be in one month? Write down your goals for each piece of data you are tracking.

Acme Generic Web Design wants to keep the same amount of new clients coming in while increasing the amount of work from repeat and ongoing clients. The reason for this is that repeat and ongoing clients have a lower cost associated with them due to less meetings, research and administrative time. This is reflected in the increase in billable hours worked.

Acme always want to increase their website traffic, conversion rate and close rate by a little bit each month.

Acme also wants to sell consulting services because consulting is more profitable than website design or development. Acme is compensated for all time spent consulting, but they might underestimate the amount of time need to complete a design task.

• Example:
  New Clients – 2
• New Client Earnings – $3,000
• Repeat Clients – 3
• Repeat Client Earnings – $3,200
• Earnings – $6,200
• Expenses – $1,000
• Net – $5,200
• New Website Visitors – 550
• Repeat Website Visitors – 200
• Leads – Newsletter Sign ups/Contact Form Submissions – 30
• Conversion Rate (Visitor to Lead ratio) – 1 in 25
• Close Rate (Lead to Client ratio)Leads – 1in 10
• Hours Worked – 172
• Billable Hours – 124
• Employees – 0
• Services Offered – Business Consulting, Digital Product Strategy, Content Planning, Content Creation, Interactive Design, Visual Design, Website Development, Content Management Systems, Search Engine Optimization, User Testing, Quality Assurance, Maintenance, Social Media Marketing and Website Analytics.
• Services Sold – Business Consulting, Digital Product Strategy, Website Maintenance, interactive design, website development, social media marketing, search engine optimization and a content management system.

How will you get there? – List out actionable steps to get your business where you want it to be.

Example – Increasing the amount of work from repeat and ongoing clients – Acme will now provide a free detailed ongoing marketing plan for each website that Acme completes. Acme will also provide marketing plans for the last five websites that they have completed. The marketing plans will provide clients with a detailed explanation of and plan for website maintenance, SEO and social media marketing. Hopefully some previous clients and current clients will see the need for and purchase these services.

Increase Website Traffic – Acme will write one extra blog post this month and post it on all social media to gain extra traffic.

Increase Conversion Rate – Change location of the newsletter sign up form to be more noticeable.

Increase Close Rate – Make the next issue of the newsletter more educational and useful for the reader. This will help establish Acme as more of an expert in website design and hopefully lead to more clients.

THANKS FOR READING
Thank you for reading Business Guesses. I hope you found it helpful and informative. You can follow me on twitter.com/richardbeu.

• Sole Proprietorship – A sole proprietor is someone who owns an unincorporated business by himself or herself. They are easy to form. Usually you need only file with your city or county clerk’s office. You don’t have to do a separate tax return for the business and you don’t have to prepare a balance sheet for the business. The reason I don’t recommend starting a sole proprietorship is that you are open to unlimited liability. This means that if something happens to your business, they can seize your personal assets.
• Limited Liability Company – The LLC is designed to provide limited liability, favorable taxation, flexible ownership structure and reduced legal formalities. The primary advantage of an LLC is the limitation of liability. LLC owners are liable for the debts of the LLC only up to the amount that they contributed to it. I have an LLC and I highly recommend using an LLC as your legal structure.
• Partnership – A partnership is the business relationship existing between two or more people. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business. Partners are personally liable for all business debts and obligations. You will need a partnership agreement to lay out responsibilities, allocation of profits and losses, management duties, authority and how to dissolve the partnership should that become necessary. You should never have a 50/50 partnership. You need to have one person with final decision making power. Otherwise you will come to decision bottle necks and you won’t get anything done.
• Corporation – In forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. In order to start a corporation you need to appoint a board of directors, find an available name, file articles of incorporation, create bylaws and issue stock certificates. I don’t recommend starting a corporation because the level of complexity is completely unnecessary.
• S Corporation – S corporations are corporations that provides the limited liability of a corporate shareholder while enjoying the simpler tax filings of a sole proprietorship . I don’t recommend starting a s corporation because the level of complexity is completely unnecessary.
• Note: I am not a lawyer. I am an entrepreneur giving advice from personal experience.

THANKS FOR READING
Thank you for reading Legal Structures. I hope you found it helpful and informative. You can follow me on twitter.com/richardbeu.