One of the biggest mistakes that an aspiring home based business owner can make is to start too big, too fast. I have started, failed, and succeeded at a few home based businesses, and I know that it takes a great deal of work to actually make one of them succeed. The main reason is that you are trying to run a business out of your house! This is not exactly the perfect business model, but it can be done, and I know people that do it with great success and actually make a profit. But, there is one philosophy about home based businesses that you must understand before diving into them. You must start small, and grow the business as the sales grow.
Fund Your Business With Cash
Because so many of these types of businesses fail, I always recommend funding them with cash. Choose a home based business that does not require much start-up cost. The cheapest home based businesses to start are service oriented businesses. Providing a service such as a home computer repair, home organizer, or a virtual assistant are very cheap to start. Typically, all you need is a computer, business cards, and a website. Most people start home based businesses because they want to make some extra money or they want to be able to take care of their kids while bringing in extra income for the family. The last thing that you want to do is go into debt on an unproven business model with tons of competition. I’ve seen statistics that one in four homes have a business being run out of it today. I’m not trying to discourage you from starting a business, I’m discouraging you from taking out a loan to start a business with expectations of side income at best. If the business blows up to be a huge success, then you’ll be in that much of a better situation to grow it. If you’re starting a business with inventory or something that you make, invest as much money as the market demands. Don’t buy 10,000 items at a discount until you know you can sell 10,000 of those items. Cash flow your inventory. When you sell 10, buy ten more, and when you sell 10 really quickly, buy 20 more and so on.
Start Small, and Finish Big.
This is the key concept to grasp. Start as a small operation with low overhead fees (fees associated with the cost of doing business). Do all of the legwork by yourself at first. Then, when you’re bringing in enough profit to justify hiring someone, find a reliable high school student or an elderly person you can trust to help you out during the day. Eventually, you would like to set up your operation where you can focus on growing the business rather than doing the little busy work that consumes all of your time. Biting off more than you can chew in the beginning will prove to be a disaster if you don’t take one step at a time.
Keep Your Marketing Costs Low
You can market your business for next to nothing nowadays given the advances on the internet with social networking, Craigslist, and other free resources for marketing your business on the web. A great book to read for ways to market for next to nothing is Guerrilla Marketing by Jay Levinson. One of the best ways to build a client base is to hold a free seminar to get the word out about your product or service. Find a local church or professional organization that can help you find a venue to hold it for free for 1 to 2 hours.
Home based businesses are a great option for those that want to stay at home with their kids or those looking to make extra income on the side. Just remember that it’s not the same as buying or starting a brick-and-mortar type business. Cash flowing the endeavor and slowly growing the business one step at a time will produce better results than looking for quick results and quick profits.
