According to the Small Business Association (SBA) more than half of all United States businesses are home-based.
Well-known successful businesses such as Dell Computers, Ford Motor Company, Hewlett Packard and the popular online retail giant Amazon.com all were started out of their founders’ homes.
Today’s uncertain economic market is driving more individuals to consider this option as the means to expand their career and earning potentials. For others it can be the only option after they have found themselves out of work following their employer’s downsizing.
Some are attracted by the benefits of setting their own schedules, being their own bosses and taking full responsibility for their financial destinies, rather than putting their fates in someone else’s hands.
With so much upside potential, you may be wondering how to get started in this high growth opportunity.
In this article we explore what it takes to begin your own home-based business.
A Preliminary Checklist
The most logical place to start in your decision to work out of your home is deciding whether you have what it takes. Most small businesses fail within their first 5 years. Those that survive this period share core characteristics such as perseverance, dedication, a successful plan and the ability to adapt to changing circumstances.
Consider how you would respond to the items on this entrepreneur checklist:
- Can you separate your private life from your business life?
- Will you have dedicated space and resources for your business?
- Do you have the means to weather 6 months of living without a paycheck?
- Can you connect with people who will help you succeed?
- Do you know who your customers are and how you will reach them?
- Can you learn from your mistakes and effectively handle criticism?
While less than optimal answers to these questions should not be cause to altogether abandon the idea of working for yourself, you should take note of these areas as requiring developmental effort moving forward.
Test Your Idea
A prominent venture capitalist urges entrepreneurs he meets to have a proof of concept plan beginning with day one of their startup. Proof of concept goes beyond a prototype. It includes a marketing plan that can be tested on a small scale and adjusted and fine-tuned in response to its success. Success in this case is determined by finding that balance where effort spent to reach customers produces some form of promising results.
An area where many startups with great ideas fail is in creating a prototype and believing that there is investor money and/or customers waiting for their invention. To some extent that’s not altogether unreasonable. But what separates an inventor from an entrepreneur is knowing where these customers are and how to reach them And, if you’re pursing any type of institutional financing, you’ve got to demonstrate that this is just the tip of the iceberg in terms of demand and be prepared to demonstrate that it’s lack of marketing dollars that is holding your business back.
The success of your business is so dependent on positive results at this stage that it’s impossible to move forwards without success in this area.
Know Factors Affecting Your Cash Flow
You’ve got to know your business’ sales cycle. It’s critical for certain seasonal products that they are offered when there is demand. Retailers have to mark down Easter and Christmas items well below their cost just to avoid having to pay for their out-of-season storage.
There may be other factors that affect your business. It’s imperative to have advance knowledge of whether your business will have to compete with college student interns over the summer months or your solar-powered widgets will sell enough to make ends meet during the winter.
Understanding your business’ cycle will allow you to build marketing plans and expense schedules to ensure that your home-based business has enough cash to meet your company’s expenses and your living needs throughout the year.
Licenses and Permits
Building a catering or day care business without permits is a sure way to have your business shut down due to factors that were manageable beforehand.
Contact your local city hall and get all of the regulatory information. In certain venues a fire department inspection is a prerequisite to getting a permit to operate a professional services business that requires customer traffic through your home.
You’ll most likely do most of your marketing using online services and tools. Having a website that projects the right image for your home-based business’ brand is absolutely essential. If you don’t possess the expertise you’ll need to hire a web designer and find a service that meets your budgetary and technical requirements.
A popular and affordable web content management system (CMS) such as Joomla web hosting will provide your business with a rich set of design options and a pool of web knowledgeable technical resources who can assist with customizing and maintaining your company’s website. Another advantage of such a service is that there are many low cost and even free Joomla web hosting providers.
Final Thoughts… Persevere
Starting a home-based business can be one of the most financially and personally rewarding decisions that you will ever make. No matter how great your concept is, how thoroughly your business plan has been tested and how much demand exists for your business’ offerings, there will be dark periods when you may experience tremendous doubts about continuing your company’s operations. With how prevalent these experiences are among every highly successful business, that you will experience them if you are fortunate to remain in business long enough, is a given.
One thing you can do is to make sure that you learn whatever lessons you need to during these times and are able to step back and get the big picture of what your long-term objectives are. After you’ve double and triple checked your business plans and firmly believe that you are on the right track, consider that your biggest home-based business challenge at this stage will be your ability to persevere through these times, growing as an entrepreneur in the process.