The Truth About Starting a Home-Based Business

The sales pitches can be very enticing:
Work at home for as little as three hours a day!
Make money in your “spare” time!
Have the life you’ve always dreamed of by working at home!

Who wouldn’t want to run a business based out of their home after hearing sales pitches like this? But before you tell your boss where to go, know this: starting a home-based business takes dedication, research, loads of time, money and a fair amount of cocky attitude. Sounds like work, doesn’t it? It is! But if you are serious about starting a home-based business, here is the truth about what it takes, how much it costs and who is trying to scam you.

Home-Based Business Facts

• In 2005, there were 25.8 million small businesses. Of that number, 18-38 million were home-based businesses, depending on who compiled the statistics.
• Also in 2005, 671,800 small business opened their doors, and 544,800 closed their doors.
• About 70% of home-based businesses will last over a three-year period, compared to 29% of other business ventures, according to the Home-Based Business Institute.
• In 2000 nearly 20,000 people grossed more than $1 million operating a home-based business.

Choosing the Right Business for You

Some of you may have a particular talent or skill that is perfect for launching a home-based business: writer, legal consultant, caterer, accountant, etc. Some of you are not so lucky. You may want to start a business, but are not sure what business to pick or where to start. For those of you in this boat, here are a few tips:

• Choose something that you will happily be able to do day in and day out.
• Don’t pick something just because it is the newest trend or you heard that a friend is making lots of money at it. This is something that will take up lots of your time and probably some of your money, too.
• Think about your skills and your interests. Then do some searching online or at the library for home-based business ideas and see if one leaps out at you. Love animals? What about a grooming business or pet sitting? Trained as an administrative assistant? Offer your skills as a virtual secretary or local consultant. You get the idea!
• Imagine yourself getting up early to do this. Imagine yourself doing this as your crying two-year old tugs at your pj’s. Imagine telling all your friends and relatives that this is what you do for a living. Does it still sound enticing?

Avoiding Scams

The most important thing you need to remember about scams is this: If it seems too good to be true, it is. If you come across an opportunity that makes you the least bit nervous, research it thoroughly. Make sure the company has a legitimate phone, email, mailing address and website. Don’t pay for information from a company offering work-at-home job opportunities. Would you hand an interviewer $50 if you were interviewing for a job? If you do need to pay for anything, at least use a credit card-that way you’re protected if you need to get your money back. Just remember that legitimate companies won’t ask you for money to “make sure you’re serious.”

Some common work-at-home scams include:

• Envelope stuffing
• Making crafts at home
• Multi-level marketing (MLM)
• Medical Billing
• Typing or sending emails from home

If you come across anything that feels like a scam, it probably is. Don’t waste your time, or your money, on something that makes you feel uncomfortable.

What You Need to Know Before Starting Your Business

1. Do your research. Yes, this will be like doing a high-school term paper. You will need to read articles and books, and possibly even talk to people who are running a business similar to the one you envision. Know what start-up costs are involved, how much time you need to devote to building your business, how many other business in the area are like yours, and how much marketing you will need to do. Think about all of these things before you open your business so you won’t find yourself closing it a year later.

2. Write a business plan. It doesn’t need to be extremely detailed, but it does need to be written. If you are asking for any sort of financing for your business, the lender will require a business plan. Get a business plan book, or visit a local organization that offers help to small businesses in your area. (See resources)

3. Get help. There is a mountain of information available to you if you know where to look. Start by looking online, in the library, at the bookstore, or at your local university. Check with your Chamber of Commerce. Ask friends or acquaintances who have started their own businesses. You can even find start-up kits, grants, loans, free or low-cost classes, or online courses. The more knowledge you have, the more successful your business is likely to be.

4. Know the law. You will have to know the rules and regulations in your area for starting a business. You can do the legwork yourself, or hire an attorney specializing in business law to help you. What will you need to know?

• What type of business will you operate? (sole proprietorship? Corporation?) Make sure you know the pluses and minuses of each type.
• What are the zoning laws in your area?
• What will you name your business? Do you need a DBA (doing business as) statement from your town or county?
• How will you do your banking? (Hint: open a new account. It’s always better to keep your business and personal transactions separate.)
• For a checklist of other important considerations, see the resources at the end of this article.

How to Make Your Business Successful

1. Have a strong, well thought out business plan.
2. Research your business idea.
3. Know the laws and regulations regarding your business in your town.
4. Market your business. Market some more. Keep marketing, even when you don’t think you need to. Then, when you’re finished, market again!