Managing Your Home Based Online Business – 6
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Article Title: Managing Your Home Based Online Business – 6
Author: Roy Thomsitt
Word Count: 1003
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Your Home Business Purchasing
In the previous five articles, I've mentioned some of the key
elements of managing your online business when you are working
at home. Working at home in your own business does not mean
there are no management responsibilities, as you are now the
manager of all the different "departments" in the business. It
is your business now, so you get all the benefits of good
management, and all the consequences of bad management. The
buck stops with you, though if things go wrong, you may be
tempted to blame others. But when you are the CEO, the
responsibility for the well being of the business is yours.
Apart from everything else, you are also the CEO.
There are three "departmental" elements of management that I
have not covered yet: purchasing, and, if appropriate, research
and development, and production. I will not delve into
production or research and development, as I suspect few of you
will have a need for these. However, working in any home based
business will certainly have a purchasing input. Whatever you
are doing, you will spend money. The better you manage that
spending, the better your profit and loss results will be, and
that is true whether you're working in an office or at home. A
large business will probably have a professional purchasing
manager, watched closely by the finance director and CEO. If
you are working alone at home, you are that purchasing manager.
However, the finance director and CEO parts of you need to watch
out for what's going on. You need to give yourself a tough time
in justifying your expenditure.
Why Do You Need to Manage Your Purchasing?
This is really a statement of the obvious. To be profitable,
you need your revenue to be above your expenditure. Your
expenditure is made up of purchases, whether for internet
access, power, ebooks, advertising, or printer cartridges. The
more efficiently you can manage that expenditure, the better
for your bottom line.
Spending money is easy. It is one of the easiest things in the
world to do. Spending it well and in a business like fashion is
very different, and not anywhere near so easy.
Where and how can you go wrong with your purchasing if it is
not managed properly? Here are just a few examples:
• There will be numerous temptations every day to spend money,
supposedly to improve your business. If you succumb to all
those temptations quickly, you could very soon be cash poor. If
you are an impulsive buyer, this could be a dangerous area for
you and your business.
• You may be paying too much for a product or service. That
directly affects your profitability.
• You may end up buying inadequate products or services,
damaging the growth potential of the business and affecting
• You may miss superior products or services that, although
more expensive than their competitors, will improve your bottom
line by being more productive.
How Do You Manage Your Purchasing?
Much of the management of your purchasing is about self control
and common sense. The financial director part of you has to
apply discipline, and the CEO part of you has to watch over
conflicts between purchasing and financial control. You, as the
purchasing manager, need to:
• Be aware of your weaknesses, especially if you can be an
impulsive spender. Be honest with yourself here. I am sure most
of us have impulsive tendencies. They are not always a bad
thing, but you do need to be aware of and manage them.
• Stand back from the situation and take a detached view of
your purchases. This way you can fulfil your roles as CEO and
financial director, as well as purchasing manager.
• Have a purchasing budget, and review it regularly. Stick to
it unless it is really necessary to change it.
• Have a decision making process that brings you to the best
decisions over what you buy, who you buy it from, and what you
are prepared to pay for it.
• Challenge yourself for every purchase, whether it's for
software, new computer, joining an online program, buying an
ebook, or many other things.
• Research your market for whatever it is you are intending to
buy, and keep a record of suppliers, prices and product
specifications so that you can compare them now or later.
• Delay any purchase after first consideration, then go back to
it. For example, a few months back I had a long list of ebooks,
software aids, and marketing aids I wanted to purchase.
Thankfully, my budget did not allow me to buy all. I could have
transferred money from elsewhere to buy everything on the list,
but I stuck to the month's budget. When I went back to the list
a couple of months later, I found that I no longer wanted or
needed to buy all but one of the remaining items.
• Review once, review twice and maybe three times. Then buy if
you really think such a decision is justified, and not a
product of impulse or panic.
• Keep cool when you are about to spend money. Purchasing is a
cool discipline, as is much of running a business, whether your
business is at home or elsewhere.
• Have a review process for suppliers, services and products.
Try to track the effectiveness of your purchases, so that you
know whether to use the same supplier and/or product and/or
The above are just a few ideas for improving your approach to
purchasing. The underlying principles, though, are no different
to how you should approach your domestic buying in the local
shops. Business purchasing may have a scientific veneer, but at
its most basic is the same as buying your weekly groceries.
About The Author: Roy Thomsitt is the owner of the home online
business website www.change-direction.com
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