Many find that the flexibility of being their own boss lends itself perfectly to life as a stay at home mum. According to the Office of National Statistics, the number of women becoming self-employed significantly increased in 2014, with an extra 77,000 women choosing to work for themselves.
On the face of it, working from home may seem like an ideal option for mothers with a passion for business, but it’s not all plain sailing for mumpreneurs. Controlling the accounts, marketing and overseeing the day-today management of a business can all take their toll – particularly when all this needs to be done alongside raising a family.
All this is too much to cover in one post, so in this article, we’ll concentrate on the financial elements of successfully setting up and running a start-up company. To do this, we’ve enlisted the help of Monica Costa, editor of London Mums Magazine, Linda Ladley, owner of training and development company, Bridging the Gap 2 Ltd, and Jessamine Hislop-Newton, founder of Little Pickles Markets and we’ll be talking about:
- Business planning
- Constant evaluation
- Progression and growth
In the early days, it’s important to set time aside to make plans for your business. You may have high hopes for your businesses’ future, but without forward planning and financial backing, you could struggle to get things off the ground.
Linda Ladley, who set up Bridging the Gap 2 at the same time as raising her children, says: “Firstly I didn’t really understand ‘business planning’ and even today I can’t say that I’m great at it. I jumped straight in with both feet as I didn’t want to lose valuable time at getting started and trying to earn some money. I hadn’t really thought about how much I’d need to earn to survive and whether the figures would be realistic. I also hadn’t thought enough about profit margins or direct and non-direct costs”.
Whether you want 2015 to be the year that you increase your profits, start a new product range or improve cash flow control, by writing your intentions down and creating an actionable plan, you can make your business goals more achievable.
Once you’ve started your plan of action, you need to think about your budget and assess your finances in great detail. No one’s business is an overnight success, but by thinking about your goals early on and considering how much money you’ll need to get where you want to be, you can start to prepare for business growth.
Many mumpreneurs start off with a very small budget. Mum of five, Jessamine Hislop-Newton, who created Little Pickles Markets in 2010, explains the importance of separating the essentials from the non-essentials so that you can ensure steady growth.
Jess says: “I started my business with only £200. Since this is all that I could spare from our family budget, I could not afford everything at once and as a result, I had to prioritise. I wanted a shiny all singing, all dancing website, professionally designed logo and artwork, banners, uniform etc. But I had to do it all step by step, gradually expanding as I made money from each market.”
Monica agrees that budgeting can be a stumbling block, suggesting that mums tap into networks to find answers to their queries. She says: “Not all mums have the confidence or the experience to go to ‘Dragons’ Den’ so they prefer relying on groups of fellow mumpreneurs, such as the London Mums’ network, to receive mentoring and practical training.
“Very often after finding the initial funds to start up (for product development or service offering) from private shareholders (usually friends and family), London mumpreneurs don’t know how to market their products or services. This is where it gets really tough as marketing budgets can be easily burnt if you don’t know where to start. Distribution, channel strategy and Public Relations are the areas that are often the most difficult to manage.”
Not only will you have to consider how your finances can help you to achieve your targets, you’ll also need to think about the practical constraints too. What do you need to do to achieve your goals? Perhaps you need to focus on publicity, building a brand, or to freshen up your offering.
Download the business planning document below to create a list of tasks and mini targets that you can tick off as your achieve each one.
What should you charge?
The amount you charge customers for your product or service obviously has a strong impact on how much money you make and how quickly you can progress and reach your targets.
Your pricing is integral to business success. Too high and you risk losing potential customers, too low and you’re selling yourself short.
It’s not unusual to feel conflicted when deciding how much to charge for your product or services. By researching your industry in great detail you can often get a good indication of how much you should charge based on your competitor’s prices.
Linda recommends getting to know your business inside out. She says: “Get to grips with your numbers. Know what you’re charging, how much you are making and how much one hour of your time is worth. Be willing to say ‘no’ or walk away when the numbers don’t stack up. Don’t be drawn into something that becomes more of a hobby than a business”.
When considering pricing, it could help to ask yourself the following questions:
- Is there a genuine need for my product/service?
- What is unique about it?
- How much are my competitors charging?
- Who am I targeting with my product?
Jess says: “Poor market research can be a real stumbling block, make sure you know the area and if your product or service is needed in a specific area”.
Even after you’ve created your initial plan, running a business requires constant planning, evaluation and reflection.
Linda says: “I hadn’t thought about planning out my year and marketing initiatives and just went with the flow.”
Managing cash flow
When setting up your own business, cash flow is vital in order to thrive and progress. Without it, businesses can struggle to meet customer demand, pay suppliers and make investments.
Cash flow management can be a challenge for any business – and it’s no different for mumpreneurs who are juggling their business with other responsibilities. It’s a good idea to keep on top of your incomings and outgoings with a cash flow forecast like the one below.
Jess recommends keeping everything as organised as possible so that you know what you have coming in and going out of your account.
She says: “Looking back I think a clear free financial planner and plan of my business goals for the first year or so would have really helped me. I also wish I’d established a clear payment policy for our sellers so that my time wouldn’t be wasted by those who didn’t show up on market day”.
She adds: “Keep clear records of your spending, as it can quickly become a huge job to go back through all of your invoices and receipts, so make sure you set aside an hour or so every 2 weeks to do your accounts”.
Progression and growth
It can be exciting to watch your company grow over time while learning new things along the way. As more people start to hear about what you have to offer, you’re likely to come across more opportunities for progression.
Finding new business
Customers won’t necessarily flock to you, you may have to make considerable efforts to make yourself known. Here are a few ways in which you can find new business and in turn increase your profits.
- Know your customer
By having a good idea of your target market you can think about what it is they’re after and what you can do to help them to achieve their own goals. By providing them with a quality product or service, and using your knowledge to advertise in the right places, you can gradually build your customer base. Jess says: “Don’t be scared to ask for customer feedback, even though it is sometimes not nice to receive criticism it is essential for you to move on and learn from your mistakes.”
- Give incentives to existing customers
Offer customer discounts when they recommend a friend. You could also offer new discounts to new customers in order to catch their attention and entice them over to your business.
Jess recommends staying in touch with your customers if they’re happy for you to contact them. She says: “Gain and keep customers’ contact details, make sure you regularly remind them about your products and services.”
You should also use your existing customers for reviews and referrals. If you’ve got a good product that your customers are happy with, their endorsements from them are very simple but effective way of generating free publicity.
- Build an online presence
When it comes to increasing awareness of your brand without blowing your budget, the providing it’s done well, there are few more effective ways of attracting new customers than using social media.
Don’t just use your social accounts to push your brand, spend time interacting with your target audience and building a relationship with them. Jess recommends extensively researching the types of marketing available to ensure you’re getting good value for money. She says: “I found it difficult to know whether media advertising would be a worthwhile investment. Sadly I ended up out of pocket”.
When new business does come your way, it’s understandably an exciting time. But no matter what the opportunity, it’s important to consider financial constraints to ensure that you can meet the demands placed upon you.
“I am personally a bit risk-adverse and have never overstretched myself financially. For example, in terms of funding the print magazine, I have always relied on advertising and only increased the number of pages or issues when funds were secured.
“Budgeting is fairly easy in publishing when you know your fixed costs (design, printing, editorial). But innovation is eventually what drives your growth. Competition is fierce and you need to renew your proposition from time to time to be able to stay on top. Monitoring your competition is essential to that purpose.”
It’s not uncommon for new businesses to find themselves facing a surge in sales as their popularity begins to rise. But a sudden growth in orders can actually cause more harm than good. If a business doesn’t have enough money or resources to service the demand, it can struggle with cash flow. Cash flow problems can prove a nightmare for budding mumpreneurs and can stifle their growth.
To prevent this happening to you, it’s important to try to build a strong safety net of cash to fall back on in the event of an opportunity that you can’t refuse. When you have built up sufficient cash in your business current account to cover your day to day running costs, you should also consider maximising on your cash by saving any surplus in a business savings account.
Building up a strong financial support system for when you need to expand or cover known future expenses (such as tax bills) is a good discipline to get into. What’s more - business savings accounts will provide a welcome boost from interest, but it’s important to shop around as rates differ between providers and on the accounts they offer.
Information published in this website is intended to provide information only. The reader should independently verify the accuracy and relevance of any information provided here, before relying upon it or using it for any reason.
Any one that uses the information published in this site does so entirely at their own risk. In relying upon the information, the visitor indemnifies Aldermore against any claims or legal proceedings that may arise from that use.
The content published on this website is intended to provide information only. The reader should seek advice from experts on the subject matter and independently verify the accuracy and relevance of any information provided here before relying upon it or using it for any reason. You can view our terms and conditions here.