Choosing a Home Business
No matter what kind of home businesses are predicted to be in demand in the near future, there are some questions you should ask yourself when contemplating any business idea. In addition, you need to consider what would happen if you were injured and couldn’t work, and how do you get health insurance? With the enactment of what many people refer to as the Affordable Care Act (ACA) or, colloquially, Obamacare, health insurance will be easier to afford. However, being injured and not bringing in any income could be a problem, if you are the sole money earner. My father operated a home business while I was growing up. When he was seriously injured in a car accident, my mother immediately searched for car accident attorneys to help her win a settlement from the DUI truck driver who caused the accident and the company he worked for. Although her attorney worked on contingency, once the case was settled he took 35% of the settlement as his fee. I thought that seemed an awful lot, but my parents pointed out that the alternative might have been a small amount of settlement money offered by the insurance company without the option of any negotiation. Sure, this might seem to be a worse case scenario, but bad things do happen. During the time my father was unable to work, my mother started an at “home business” doing catering for small local events in order, basically, to support them. Her business turned out to be quite successful. She hired employees and expanded to large weddings and bigger events. Obviously you can’t plan for every contingency, but before starting consider the following:
1) Is there a potential market for my product or service that will eventually produce the profits needed to support the business and myself?
To determine this, you need to conduct some market research — formal (questionnaires, mailings, calls) or informal (discussions with potential customers). A common method of test marketing is to actually start the business on a part-time basis to gauge the response from customers.
2) Will I be “qualified” to run this type of business?
Many successful home businesses were started using entrepreneurs’ previous work experiences, education, and/or training. If you need more skills to carry-out your venture, then you will have to either enroll in classes; work at a job in the industry that interests you; partner with others; or give-up the idea and begin researching alternative business ideas that can use your existing skills.
3) Will I have the finances to start this business?
You must compose — on paper or in your head — a business plan, to help decide how to finance your start-up and meet your living expenses as your business grows. One woman supported herself and her jewelry business (her real passion) by cleaning homes during the week, and selling her unique jewelry at weekend artist shows until her sales enabled her to quit cleaning and go full-time with her creative art.
4) What will make my business unique?
If your business is one-of-a-kind (and preliminary research has already demonstrated a potential market for it), then you should have little difficulty in attracting clients. But if similar businesses exist, then you will have to determine what will set your business apart from competitors. What will persuade people to buy from you … better quality? Pricing? Added services? Other?
Also try to find a business “niche,” that serves customers whose needs are not presently being served. For example, many larger lawn mowing-care services would rather tend corporations’ grounds than townhouse owners’ lawns. Thus, a potential niche exists for the entrepreneur who would enjoy caring for those smaller lots.
5) Will I be able to set the prices for my product or service that will make my business profitable?
If people in your area will not pay your prices, you will have to see if you can still operate your business at a profit by charging less. A better alternative is to look for a way to increase the “value” of your business by adding different or better quality products/services and charging more for that one-of-a-kind or improved product or service. Or perhaps the solution is to market to another nearby geographical area where customers may exist and be willing to pay your prices. For example, one woman who started an errand service could not get customers in her community to pay her rates, so she advertised in a nearby town, consisting primarily of professional working couples who needed her services and they were willing to pay what she charged.
6) Do I know the publications I should read concerning my target customers, my industry, and about business, in general, to keep up with the latest trends, news and to stay competitive?
For example, if you sell toys, read consumer publications targeting parents or grandparents; in your industry, read a toy manufacturer’s or association’s periodical; and for overall business advice, subscribe to a national business publication and/or regularly read the Sunday business section of a major newspaper. Of course, the Internet offers wonderful business information sites with many free e-zines to which you can subscribe! The biggest problem you will have is finding time to read it all!
Statistics reveal a direct correlation between the success of a new business and the amount of preliminary research conducted before its start-up: the better-prepared for a new venture — the more likely you will be to succeed — whether your business idea is one of those designated “hot” or not!