One thing Americans have found out over the last 30 years is that the paternal corporate benefactor with lifetime employment is gone and is never coming back. More people are starting full- or part-time businesses from their homes in order to ensure a steady cash stream.
If you do a Google search for the words "home-based business," you'll get nearly 3 million responses. According to the Small Business Administration, there are more than 17 million home-based businesses, and 93% have no employees. This fact doesn't surprise me, because the vast majority of home-based businesses are consulting/professional services and people selling products over the Internet. eBay has had a tremendous impact on the home-based business market.
If you are thinking of developing a home-based business, try the following five-step process:
Step 1: Crack the Books
Start by reading about the process of starting your business. There are a lot of great books on the subject of starting a home-based business, but I recommend starting with one of the following:
- The Everything Home-Based Business Book: Start and Run Your Own Money-Making Venture, by Yvonne Jeffery and Sherri Linsenbach
- Best Home Businesses for People 50+, by Sarah Edwards and Paul Edwards
- Getting Rich in Your Underwear: How to Start and Run a Profitable Home-Based Business, by Peter Hupalo
Step 2: Surf the Web
After reading a few books to learn about various business models and to get sense of what it takes to start a business in your home, review the following Web sites for additional information and for contacts and services to consider using:
- Soho Online: This is an organization that assists home-based professionals with ideas for how to build and market their businesses.
- SBA.gov: This is a great site that provides a variety of research and information on starting a home-based business, including local, state and federal taxes and zoning and other regulations.
- at-HomeWorks.com: This site is focused on the 3.5 million women in the U.S. who run businesses out of their homes, according to the Small Business Administration.
- EzineArticles.com: A great source for articles on home-based businesses.
Step 3: Develop a Business Plan
Even if you are not raising money, you should develop a business plan to understand the hurdles and obstacles that you need to overcome. Develop the plan using PowerPoint, which will force you to be short and concise. Here is what the plan should focus on:
: Describe the business you plan to start, wheither it's making doll furniture or developing business plans. Try to limit the description to no more than two sentences.
Size of potential market
: If you go to
, you can obtain information on the number of people and businesses that could potentially buy your product or service. Let's say you are selling lawn services; you can find out how many homes are in your county and the average income of the people in the county to see if there is a market.
: This describes how you plan to position your business and the marketing tactics you plan to use. If you are a party planner, you might focus on girls ages 4 to 10. Your marketing tactics to raise your visibility may be posters in the supermarket and fliers on windshields of cars.
: This is a descriptiong of how you plan to sell your product or service. Is the process hiring someone to make calls for you or leveraging a network of contacts for referrals? A flow chart might help.
: Contact local chambers of commerce and conduct Internet searches to see how many people are offering a similar product or service.
: Try to list why you are different and better. You may not be or your product/service may not require it. If you are a financial planner, for example, it's very hard to demonstrate a competitive advantage, because competitors offer similar products.
: Create a simple spreadsheet showing the price of your product or service with some guesses as to how many you think you can sell, and match it against the real cash costs for buying computers, phone and Internet service and so on.
Step 4: Talk to Potential Customers
Start by doing some basic analysis by asking the following questions:
- Is this a product or service that you are interested in or are currently buying?
- If you are buying it now, whom do you buy it from, and at what cost?
- Would you consider buying from me?
The answers to the questions will give you some insight into whether your idea has any merit before you invest too much time and effort.
Step 5: Go for It!
Finally, figure out what you can financially afford to lose that won't affect your lifestyle or put your family in debt, and give it a try. I have run more than 20 businesses, and the only true way you know if a business has legs is if you try it.
Marc Kramer, a serial entrepreneur, is the author of five books and is an instructor at the University of Pennsylvania's Wharton's Global Consulting Practicum, where he serves as Country Manager for Chile.