KEYS TO A SUCCESSFUL HOME-BASED BUSINESS
A home-based business is any enterprise for which the principal administrative and managerial activities take place within an individual’s personal residence. People start home-based business ventures for a wide variety of reasons. For example, some people are forced to leave the corporate world as a result of downsizing or early retirement, while others leave voluntarily out of a desire to be their own boss, to avoid the hassles associated with commuting, or to facilitate caring for children or elderly relatives.
Whatever the reason, home-based businesses have become a significant trend over the years. Once viewed as a way for an unemployed person to make some money until a “real” job came along, home-based businesses are now taken much more seriously. Today, home-based businesses run the gamut from consulting firms and advertising agencies to photography studios and freelance writing services.
The main driving force behind the growth of home-based businesses is the increasing capability of computer and communications technology. Powerful yet affordable home computer systems equipped with modems allow people to send and receive messages, transfer data, and conduct research from their homes, largely eliminating the need to commute to a place of employment.
Similarly, sophisticated software programs offering applications in desktop publishing, database management, financial management, and word processing enable one individual to do the work formerly handled by an entire support staff.
In addition, the widespread use of websites, social media platforms, smart phones, voice mail systems and toll free telephone numbers has enhanced the ability of home-based business owners to remain connected to the outside business world. In all, rapid improvements in technology have enabled large numbers of home-based business people to earn the same income they could at a regular job while also gaining a number of life-style benefits.
Another important factor in the growth of home-based businesses is the transformation of the world economy from a product orientation to a service orientation. Since service businesses generally have no need to store inventory or run production machinery, they are less disruptive and more adaptable to a neighborhood environment.
Running a business out of the house offers a number of advantages, including time savings, control over working hours, and conditions, independence, and flexibility. Starting a home-based business is relatively cheaper than starting a business in rented facilities. In addition to saving money on overhead expenses, commuting costs, and wardrobe expenditures, many home-based business owners can deduct a portion of their rent or mortgage interest from their personal income taxes.
There are also several disadvantages to home-based businesses, however, including uncertain income, reduced benefits, isolation, and distractions. In addition, home-based business owners, like other self-employed individuals, must be able to handle all sorts of business related tasks, like bookkeeping, billing, marketing and sales, and tax compliance. Still, home-based businesses do tend to be more successful than other types of small business ventures.
Requirements for a successful Business Venture
Successful home-based owners are generally good at what they do and enjoy doing it. It is also helpful to be independent, self-sufficient, and flexible. Other keys to success include being able to sell oneself and the business, and staying on top of personal and business finances. Since it is often difficult to associate being at home with working, home-based business people must be able to maintain boundaries between their personal and professional lives. In addition, they require a great deal of self-discipline to overcome the sense of isolation, frequent distractions, and lack of motivation and concentration that commonly affect those working from home.
Formal planning can help ease the transition for a person starting a home-based business. By being aware of the potential pitfalls and creating a plan to overcome them, a home-based business owner can significantly increase his or her chances for success. The main planning tool recommended by experts is a business plan. A formal business plan, which is generally created in anticipation of starting a new business venture, includes a description of the business; a statement of purpose; information about the business’s structure, organization, and management; a marketing plan; and a financial plan.
The process of gathering information and writing a business plan helps the entrepreneur take objective, critical look at the business idea and its chances for success. A home-base business may be related to an individual’s previous occupation, but may also be based on a hobby or the discovery of a unique business opportunity. In any case, the idea should be evaluated with an eye toward market potential and competition.
Once the business is up and running, the business plan sets forth goals and standards for management and serves as an operational tool to measure progress. Although there many ways to starting a home-based business – including “moonlighting” while employed full-time, working part-time for an employer and part-time at home, and just taking the plunge – planning is important for all of them.
After creating a plan for the home-based business, the entrepreneur is ready to put the plan in action. One of the earliest steps involves preparing family members and enlisting their support. The loss of a reliable source of income may cause some anxiety or resentment among other members of the household. In addition, the creation of a home office will probably necessitate changes in family members’ schedules or lifestyle. Dealing with such issues in advance can help avoid problems later.
Another important step is to establish an area of the home as a business office. The most important considerations when choosing a location for a home office are that it allows the entrepreneur room to work comfortably and efficiently without too many distractions. The office should be as physically separate from the living area of the home as possible, and should project an air of professionalism to potential visitors as well as to its occupant.
Other steps in the process of forming a home-based business include selecting a legal structure, filing a fictitious name or “ doing business as” statement , and obtaining any needed permits or licenses. The entrepreneur should also evaluate the risks associated with the business venture and make any necessary arrangements for health, life, liability, property, or business interruption insurance. Since it is sometimes difficult for a home-based business to be taken seriously by customers or creditors, it may be helpful to communicate a professional image through stationery and business cards, a separate phone line answered with a formal greeting, and distinct working hours.