Indirect Expenses.

Indirect expenses that may be partially deductible because of the business include maintenance, insurance, utilities, and depreciation. Generally, business owners may not deduct these expenses. Businesses, on the other hand, may deduct these expenses. And expenses that benefit the entire business may be partially deductible, subject to some limitations. The limitations do not apply to expenses that are deductible by all business owners, such as mortgage interest, real estate taxes, casualty losses, etc. These expenses remain fully deductible for business owners who operate out of their home. However, these deductions must be divided between business use and personal use if one qualifies for the office deduction. For example, if one uses 20 percent of his business, 20 percent of his mortgage interest may be a business expense deduction.

Direct Expenses.

Expenses that benefit only the area used exclusively for business are fully deductible. For example, the costs of painting the office room are fully deductible against the business income and against income from other sources.

The deductibility of these expenses is limited by the percentage of the home one use for business and the deduction limit. For example, if one uses 20 percent of his home as an office, he may deduct 20 percent of the costs of maintenance, insurance, utilities and depreciation. This deduction is limited further by the deduction limit.

Marketing is the process of determining the customers want or need and providing it at a profit to the seller. Marketing includes all activities involved in getting goods and services from the producer to the customer, including market research, advertising, promotion, pricing, customer relations, and professional image.

Successful businesses "target their markets." They aim their product message toward a certain "type" of person. All advertising, promotions, and public relations are devoted to attracting that type. A classic error commonly made when starting a business is trying to make the business appeal to everyone to be all things to all people. Typically, new businesses think appealing to the widest range of consumers assures success.

The first step in targeting the market is to know the product and its potential audience. Nothing can kill a business faster than marketing the wrong product to the wrong target audience. Some examples are marketing career clothing to women who do not work or sewing pageant gowns in an area where no one competes in pageants. Successful marketing is a combination of aiming the right product at the right market.

The basic principles of targeting the market are simple. And successful marketing consists of the following:

Researching, analyzing, and evaluating the potential market.

Relating and communicating the products or services to a target audience.

Efficiently producing and delivering marketable products or services.

Once one has decided on a product or service, what you are good at, and what he would like to do, analyze the market:

Do they match the benefits he has to offer?

What benefits are they looking for?

What are their income levels?

Where are they located?

What price will they pay?

Who are his potential customers?

How can he reach them?

Are their needs being met successfully by an existing business?

How many different types of potential customers does one have?

Why will they buy what he has for sale?

One aspect of determining the market for the product or service is to identify his competition, if any. Are similar products or services already being offered? Compare the quality, features, and value of your product or service to the competitions.

Identify the attributes one should emphasize to create a unique need or to be most appealing to the customer. He may have to offer special services, such as delivery, to increase the appeal of the product.

Determine what share of the market is realistic for him to reach. And determine if there is room for him and his competitors, as well as the potential for expanding the market.

If there is no competition, find out whether his product or service can be promoted successfully to create a demand for it.

Marketing is a continuous process, and one should not neglect it once his business is launched. He needs to be aware of trends and changes in his market so he can respond to them. If his product or service is not selling, consider changing it, the price, the name, or its function. One may also want to change the materials he uses, the customers he sells to, and his advertising methods. He may need to update his skills. Remember, perseverance and flexibility can keep him in business when his competitors fail. If one establishes the fact that people need and will pay for his product or service, if he identifies the appropriate market, and if he appeals to those customers' particular needs, then he should have a successful business.