Once I reviewed a particular organization, and when I examined their website the quality was so poor that it looked like a high-school student created it, and actually that was not far from the truth. Spend the extra money to get a professional to produce and manage your website, or take classes to learn how to build a professional website yourself. Your competition is doing it, and you will suffer if you lag behind in this important technology. One misspelled word on your website can cost you clients and dollars.
Make sure you install a credit/debit card payment option on your website. You want customers to have the option to pay on line, which is the way most home-based businesses are paid today. With services like PayPal, Stripe and others, you can receive instant payment, and easily keep up with your sales and expenses.
Selecting the Right Home-Based Business
Some businesses are appropriate for part-time at home, and some are not. Web-based, family-run, single product and hobby-based businesses are the best to run from home. Avoid labor intensive businesses, those that normally run during working hours, and businesses requiring lots of travel.
For Traditional Home-Based Businesses Ask Yourself:
· Should I enlist the support of others or family? You will need the support of friends and family in so many ways when you start your home-based business. When I was starting my businesses, I asked my friends and family to do everything from watching the children on weekends to delivering packages. They were very helpful and they rejoiced in my success. As stated before, some family members may be able to work for you and earn extra income as you grow. Some of the most trustworthy workers are people who have your best interest at heart; although sometimes it’s the opposite, so avoid those who just want a paycheck.
· Do I have the necessary experience? When you start a home-based business, make sure that you can deliver to the customers. I have met so many people who received shabby service from businesses. The business claimed to have the knowledge and experience to meet the needs of customers, but in the end the owner was just practicing or trying to gain experience. Sometimes the business owner was so eager to get the money without having the skill set for the job, that he took it on anyway and delivered poor products and performance.
Once you get a bad reputation it will be hard to reverse that impression, so do not take on jobs unless you already have the skills, or plan to learn and research to get up to speed prior to receiving payment. If you know the learning curve will be long, you need to inform the potential customer and let them decide whether to use your business or find someone with more experience. If you are honest about your skill level, often the customer will see your integrity and hire you, even though you will be learning as you go.
· Do the projects fall within the limits of what I can risk? Sometimes taking on a job will require you to expend funds up front, so you need to be sure that you can take on that job and complete it for a profit. I have seen small home-based business owners so eager to get customers that they didn’t sit down to count the entire cost of the job. In one case the home-based business owner took on a job that required him to pay for all of the materials up front; he ended up losing on that job because his out-of-pocket costs ended up being much more than he anticipated.
I recommend that each home-based business, whether product or service oriented, develop a cost analysis form and complete this form before taking on each job. In completing the cost analysis, the owner will at least know what it will cost up front to complete the job, and then build in a reasonable profit.
· Will this business conflict with my job? If you are still working for someone else when you start your home-based business, make sure that there will not be conflicts with your job. If you are running your business in the evenings and on the weekends, make sure that you are getting enough sleep so that your performance on your regular job will not suffer.
Moonlighting is good only if you are fulfilling your obligations to your job, and coming to work tired and filling up on coffee to stay awake is not your best and can make enemies on your job—especially if they know you are making money in a side business. Make sure that your home business does not require you to regularly miss days at work. Taking on a client who requires you to come to his office on Fridays would not be prudent if you are already required to be on the job on Fridays. If you work part-time and already have Fridays off, this arrangement would not be a problem. As long as you are still working for somebody else, their schedule should be the one to work around, not yours.
· Have I checked local zoning and license rules? Every state, county, or township is different, but each has rules about what you can and can’t do in your home. There are always neighborhood fights about people who have too many cars parked in their driveways and on the street around their home. There are also fights about noise during the day and late at night. In my county, you must complete paperwork asking for permission to have a home-based business; once you pay a fee, the neighborhood will have 30 days to complain about your home-based business. A sign in your front yard announcing a County Commission hearing for your home business notifies the neighbors. Then you must stand before the county commissioners to present your case for your home-based business, and the neighbors can come to present their case for you not to have a home-based business. Some counties don’t require this procedure if you don’t have customers come to your home. However, even if your business is only Internet-based, you need to check with the city or county to make sure you are in compliance.
· Is it possible to meet my financial goals with this business? Ask yourself if this business will produce the resources to increase your income and help get you out of debt, or if this is a fun hobby for your pleasure. People often spend time and money on businesses that will not produce the resources needed. You may love to build model airplanes and put them inside jars, but how much money are you going to make doing that versus the time it takes to put those planes together? Some activities need to stay hobbies! Research your area of business to make sure there is a viable market for your product or services. If not, then you need to find a business that will bring in the revenue you need to thrive.
· Will this business be satisfying or nerve-racking? Some people start businesses for the money but burn out in the end. Stress is a killer, physically and mentally, and if you are busy doing a business that you don’t like, you are causing yourself harm. Make sure that the home-based business you select is something that you like, or at least care about; don’t pick a business only for the revenue it will produce.
Common Pitfalls When Starting a Home-Based Business
Here are some of the common pitfalls that stop home-based businesses from succeeding:
· Failure to compartmentalize. When you have a family and a business you must keep them separate, especially if you are living in the same space as your business set-up. When you have an exciting day, operating your business is usually not a problem, but when you have a bad business day, do not bring that into the family time and take it out on your family. A good rule of thumb is to end the business day by 6 pm at the latest and don’t talk about the business past a short dinner discussion. Carrying a business into the home life can ruin the business and the family.
If your children work with you, make sure they also stop working and talking about business at the close of the business day. This routine will teach them how to compartmentalize and keep them from thinking about business nonstop. It is essential for married couples to keep the business separate, especially if only one spouse is working the business; the other spouse may start feeling left out or ignored, and this can kill a marriage. Try to keep a totally separate work area and NEVER bring work into the bedroom. One thing you don’t want to do is make your family life suffer by being on the job all day and being at the business or doing the business all night and on the weekends. You may have to do this for a while in the beginning, but later you should be able to settle back down into having regular family time.
· Failure to limit your liability. When you have a home-based business, it is easy to get trapped in many ways. One way is to over commit your time and resources; if you fail to meet customer deadlines you may end up in a lawsuit. Be careful about hiring day or part-time workers; if they get hurt, they may try to sue you for their injuries. If the workers cause problems with your customers, they may hold you liable for the workers’ errors. Always make sure that you have business insurance and try to get an umbrella insurance policy to cover everything beyond what your home, auto and liability insurance covers. An umbrella policy is usually for $1,000,000 coverage, so that if problems arise they won’t shut down your business.
· Failure to learn zoning and licensing rules. As discussed earlier, you need to find out the zoning and licensing requirements for your home-based business. You don’t want to start up a thriving business and have the county or city come shut it down because you violated some ordinance.
· Failure to take into account physical limits. Sometimes when we get excited we over commit our time. Working around the clock is not only bad for your body, it could cause you great physical harm; after working so long, our minds start to shut down, our work is no longer productive, errors increase, and injuries could occur if your business requires physical activity. Long ago, I had some report deadlines at my CPA firm, and I would go into the basement office and stay all night with old Star Trek episodes to keep me company. My productivity would start to falter around 3 a.m., but I would still work until I was done, which caused me to spend extra time correcting the errors I made due to fatigue. I usually got to bed at 7 a.m., after I left notes for my husband to take the children to school when he got home from the fire station that morning, and I would get up at 9 a.m. to deliver the reports downtown, which was very dangerous. I once ran off the highway because I fell asleep on the way downtown. Thank God the traffic was still bumper-to bumper and I wasn’t traveling at a high rate of speed. I got off at the next exit, parked in a gas station parking lot, let the seat back, and went to sleep. I was a little late delivering the reports, but I was safe and so were the other drivers! Make sure you don’t overload your brain circuits and wear out your body for the sake of the business.
· Failure to practice proper accounting. As we discussed earlier, you should know some accounting so that you pay bills, properly account for income, and take care of all other business obligations. You will not succeed without proper accounting and oversight. Once you choose a business and start operating it, avoid the trap of spending all of the extra money that comes in.
Please don’t fall into the earn/spend cycle with your business! Use all of the extra money for growing the business, savings, and investing. This is your key to financial freedom. Don’t blow it; it is so easy to have a few extra dollars go here and there. Pretty soon there are no extra dollars and all of your efforts have been in vain. Use the new business funds wisely, and you will soon be out of the rat race.
· Failure to know when to fold ’em. Although we put much time and effort into businesses, sometimes they do not succeed. You may love what you are doing, but if it is not producing profits you really need to shut the business down and go back to the drawing board. I know a woman who loved to bake. Instead of just baking at home, she wanted start a business outside the home, so she took out a loan, rented space in a strip mall, bought lots of equipment, and started baking.
The business wasn’t making money in the first three months, and she should have closed it down at that point because all of her loan funds were gone and sales were not covering the rent, let alone the utilities. She wanted it to work, so she ignored the warning signs and just kept saying that sales would pick up in the summer. She started using funds from her and her husband’s retirement accounts to make ends meet.
Sales didn’t pick up in the summer and she ended up folding when she couldn’t make the rent anymore and her husband refused to let her withdraw any more retirement funds.
Just because you love to do something does not mean it will be successful as a business. Know when to quit.
Internet Home-Based Businesses
The vast majority of home-based businesses are those that sell products and services exclusively over the Internet; businesses that design custom rugs, deliver groceries and other goods for you, and even produce strategic plans for your life all thrive on the Internet, where nobody knows what you look like, nor do they care. The customer wants a product or service, and if you can deliver, satisfied customers will give you repeat business and referrals.
· Internet marketing (IM) is a marketing strategy in which the individual is compensated for the specific products and services sold on line. This strategy can provide compensation to the degree that the individual sells the product or service. A good website and search engine optimization is the key to prospering with Internet marketing.
· Network marketing (NWM) is a marketing strategy in which the sales force is compensated by getting others to join the same business and market the same products. This recruited sales force is referred to as the participant’s payline. The members don’t generate income from multiple levels of the sales of the individuals they recruit, but they may receive bonuses based on the production of the people in their payline.
· Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of the other salespeople they recruit. This recruited sales force is referred to as the participant’s downline and can provide multiple levels of compensation.
Multi-level Marketing Businesses
There is much talk, both positive and negative, about Multi-Level Marketing companies, or MLMs as they are often called, and I have seen so-called professionals look down on people who do MLMs. On the other hand, Donald Trump and Robert Kiyosaki praise them, and network marketing is now taught at Harvard University.
The truth about network marketing is that it will work for you if you work it. People who join MLMs for $500 or less usually join on the spot at some business opportunity meeting because of the speaker’s hype, which does not mean that the business is not good, it means that you need to think about whether this business is for you before you get involved. Don’t feel guilty because a friend or family member is pressuring you to “join their downline”. Research and answer these questions:
· Is this product unique or can it be purchased at the corner store? If this product is not unique, the chance of obtaining regular customers is slim. People are busy and they will buy a similar product at the corner store when they run out, rather than going through the ordering process with you.
· How many customers do I need in order to reach my monthly financial goals? If the product or service will require 1,000 customers per month in order for you to prosper or meet your goals, this may not be the product or service for you. Even if you are told that people in your downline will produce thousands of dollars for you, don’t depend on that. Figure out how many direct/personal customers you will need because your downline may buy into the company on hype and never produce a dollar for you.
· What is the compensation plan and how many times has it changed? I was involved with network marketing companies in the 1990s, earning $3,000 per month in one of them. All of a sudden, the company owners or founders changed the compensation plan so that we either earned less commission, needed to meet more requirements to earn the commissions, or both. Be careful that the company is stable and has had the same or an improved compensation plan for some time.
If the plan has changed frequently in the past, it may change after you start making money; these plans usually change for the benefit of the founders. You don’t want to put your time and energy into an MLM only to be told that there are new requirements for you to make the same amount of money that you had been making. That’s as bad as being on a job.
· Is the person asking you to join this MLM making money? If that person is not making money, that is a strong
indicator of your probable success. Make them show you proof that they are making money because many people will lie about their accomplishments.
· Is the person asking you to join a leader? If that person is a leader, they will probably help you and motivate you to succeed. If that person is not a leader, then you must become a leader for your team.
· How many marketers are there in your area already? When you start doing an MLM business that has been around for a while, you may notice that everyone you ask to join or to be your customer will most likely have already been asked several times by others. There is a company that is currently popular, and I have been asked to get involved by eleven people and counting within the last six months. The more people already in the business, the harder it will be for you to gain customers or get others to join you.
Those are only a few of the questions that you need to ask yourself before joining an MLM so that you can be on the winning track and not just spinning your wheels.
You really need to assess your personality, skills, schedule, and needs before choosing what you will do to increase your income. Go to the local library for books on home-based businesses; there are several books that will give you ideas. The Internet is full of ideas, along with business magazines. Take your time, and you’ll come up with a good business for yourself.
To recap starting home-based businesses:
· If possible, specialize in a single product or service.
How to Escape the Rat Race Page 7