Thinking
About Starting a Home Business?
How Involved Do I Want to Be?
You will need to determine the level of
involvement that you want in your home business – do you want
to do it as a hobby to make some extra money? Do you want to devote a
specific amount of time (part-time) while you continue to work at a
full-time job or do you want to quit your job and work from home?
The latter, while it sounds so great, to be
realistic, is something that might be a long range target, unless you
have a way to support yourself and your business for what may be years,
until you reach the level of success that would sustain you.
It's a good idea to look at any undertaking in
stages – for example, the short term goal would be to have
the home business up and running in 3-months; the mid-range goal would
be to break even within 12 months, and in profit at 18-months; the
long-range goal is to quit the day job at 36 months and work from home!
Of course, since 'nothing is constant except change', go back at
half-way points and review the feasibility of your targets, and push
your time line forward or backward depending on your level of success
at that point.
Finding
a Niche
You would think you would be most successful
finding a niche in something that you are interested in. There is a
theory that you will do best at something you like. This is undoubtedly
true. Do you have a hobby that you love enough that you would like
doing it as a job?
However, there is another theory and it is from
people who have actually turned a hobby into a part-time home business
and then into a successful mega-corporation. They say you should find
the market FIRST and then get the product that they want, and provide
it to them! This makes a lot of sense.
If you are really lucky, you will be able to do
both – that is if you like what most people like! A home
business like this would work, for instance for something to do with
sports, health, or cooking, that the average person is interested in or
concerned with. Quite a few are interested in their children and their
pets. Be specific – is it how to train pets, how to ensure
their health, choosing the right pet, specific breeds, etc.
Another area to look at is, for example if your
hobby is making jewelry. You could have a home
business selling your creations, and then as you grow your
business, you might expand into supplies and tools for making jewelry,
or start a 'mall' where other artists could also feature their work.
The latter would work to your benefit in many
ways, besides the obvious commissions on sales, or even 'rent' for the
space – it could be used to increase the traffic to your
site, so that someone looking for a specific artist, may view your
product while they are there and make a purchase directly from you, as
well.
Affiliate
Programs
A great way to get your feet wet in a home
business, especially if you are not sure what you want to do yet,
and/or don't have ANY start-up capital to speak of, is affiliate
marketing. This is an ingenious way to start a home business, and is
great for the company as well as the affiliate, as it serves a need for
both sides with little commitment or investment on either part.
There are companies that you pay a membership* to
belong, and a great many that are absolutely free to join. The company
runs the main web site and does customer service, technical support,
has the inventory, runs the payment gateway, processes the order, ships
it and does the accounting.
*There are some that charge a rather large
membership fee, and these should be avoided. This doesn't make sense.
At what other job do you pay people so that you can work for them?
However, if the company does give you software or other tools, and you
can afford it, you may justify it that way. The vast majority of
affiliate programs have multiple levels of membership with
corresponding levels of commissions, etc.
You will want to do research thoroughly before
making any commitment of your time and money. First of all, you want to
search on the company name and find out if there are any negative
records on the company.
However, keep in mind that some folks have
unrealistic expectations and/or don't actually expect to do any work,
and then when they fail, they blame the company. You will find postings
from present and former affiliates, as well as legal sites that track
complaints specifically for home businesses.
The affiliate is given an 'affiliate link', which,
if your business is online, is a URL that identifies their member
number. The company may link this URL to the main web site, and/or have
what are called 'splash pages', which are one page 'sites' that have an
extensive sales letter and an order link.
They also may supply banners, email documents,
text ads, etc., that the affiliate may use to promote the company.
The affiliate is not an employee of the company,
and as such is not paid a salary or wage. At their own expense, they
will market and advertise their affiliate URL through a variety of
methods, ranging from online to offline- e.g., classified ads,
newsletters, ezines, email campaigns, online traffic programs and
banners, and/or offline brochures, flyers, etc.
When the affiliate is successful in compelling a
prospective customer to click the affiliate link, and to purchase the
service or product from the company/website using that link, then the
company pays the affiliate a commission. Some commissions are as high
as 75%!
Additionally, there is nothing to say you can't
belong to as many different affiliate programs as you can handle; and
nothing to say that at any point you couldn't drop the ones that aren't
working for you and concentrate on the ones that are.
A few examples of companies that might use
affiliate programs are satellite TV companies, telecommunications
companies, training programs, product vendors of many varieties, and
software developers. There are numerous others you could discover if
you were to shop around.
One could even use affiliate programs as a
short-term method to make money that would be then invested into the
home business of your dreams. The investment in marketing and
advertising is really the only expense you would incur doing this.
However, there is a phenomenon called the 'super
affiliate'. Super affiliates do this as a full-time job, eventually,
and some have become millionaires over time, starting their own
affiliate programs.
The
Difference Between
"Work-at-Home" and "Home Business"
Did you know there is a difference? Well, there
is. "Work-at-Home" denotes something that you can just sit down and do,
maybe for a small fee or other charge. Examples of this would be when
you do paid surveys, mystery shopping, etc. With some of those, you buy
a database that has companies that will pay, with either cash or prize,
for your opinion.
These are fun to do - even without the money. I
would like someone to care about my opinion - and who knows, maybe some
companies make improvements based on the answers!
"Home Business" on the other hand
usually means you are actually starting your own business working from
home. If this is an "online home business", it can include having a
domain name, a website, marketing programs, link programs, advertising
programs, etc. There is more than a small investment of time and money.
However, this doesn't mean, if you don't have a
lot of money or a lot of time, that you can't start a home business.
The beauty of working for yourself is you can do as little or as much
as you want to!
You can go at your own rate of speed! Unless you
do have a lot of money, however, I wouldn't advise quitting your day
job right off the bat (as great as that sounds!).
The first rule of thumb with either "work at home"
or "home business" is to completely obliterate in your mind any hype of
getting rich overnight, driving expensive cars, and sitting around all
day by your new pool. On the other hand, there is no reason to mistrust
every single opportunity because so many are deceptive and misleading
in this regard.
Unfortunately, with the 'work at home variety',
there are many scams and 'bait and switch' schemes. Remember to do your
due diligence before making a decision on working for a company.
Remember, if it sounds too good to be true, it probably is.
There is no reason, with either option, that you
can't make money, either part-time or full-time. However, with "Home
Business", just like any business, there are going to be expenses. This
is a fact of life. If you are serious and determined about wanting your
own business, however, you will find a way, one way or another to do
whatever you have to do. It's as simple as that!
If you stick to it, you will do it! At least in
the USA, your business expenses are tax deductible if you itemize your
taxes.
In every case, there are plenty of free and
inexpensive resources to use for marketing and advertising your home
business while you 'get your feet wet'. These are classified ad sites,
safelists, traffic programs, search engine submission, reciprocal
linking, etc.
The idea is to get going with whatever you've got.
Save your pennies, and when you get affiliate commissions, referral
fees, sales commissions, reinvest it in more effective advertising.
Maybe even do work-at-home jobs to generate cash for investment in an
eventual home business opportunity!
The
Advantages of a Home Business
There are many! Let's start
with the basics. First of all, on a 'part-time' basis, it would be nice
to generate some extra income, wouldn't it? While having a 'day job',
it is very, very difficult to then run to a 'part-time' job. If you
have a home business, the work can be done at your convenience, a few
hours a night, and on the weekends.
On a 'full-time' basis, a home
business has many more benefits – First of all, time
– you will have more time at home with your family, you won't
be spending stressful time commuting; Second of all, you will be saving
on expenses - for gas, bridge tolls, parking, car maintenance, lunches,
snacks, dry cleaning, professional wardrobe, etc.
Seriously, add up what you
spend just to get to and from work – right there, you are
starting to see how to have some extra money in your pocket.
Additionally, when you itemize
deductions for a home business, you can deduct a percentage of rent for
your office space - as long as this space is only used for your
business. It can be square feet in a common area, but some advise if it
is a room with a door, that this is best.
You can also take a percentage
of your phone, electric, and computer services and maintenance.
Computer maintenance includes software applications, such as spyware,
virus protection, etc. Computer services include web hosting, domain
name registration fees, tech support, etc.
You can also deduct
prescriptions and money spent for medical care or insurance. You can
deduct fees for your car, such as registration and license fees. You do
not need to use your car in your business to the extent that a
traveling salesperson would, but even if you use the car to purchase
office supplies, etc., this is legitimate.
Another car related deduction
tip is that if you have your logo or advertising for your home business
on your car, there is a greater advantage. Of course, bridge tolls and
gasoline used in the course of your business are also deductions. If
you take any courses or pay for marketing or other business related
seminars, in print or other media, these are deductible as well.
The IRS has a great web site
where you can download forms, schedules and instructions, so you know
to dot your I's and cross your T's (and to be sure you are getting
adequate and fair service from your tax preparer).
Having said that, I strongly
caution you to have documentation for every deduction you take and to
discuss any 'gray areas' that you don't understand clearly, with a
professional tax advisor. They may not ask to see your 'proof' but the
IRS might.
The laws change, but as of
last year's tax laws (2004), the word was that the IRS will allow you
to deduct losses - that is, if your expenses out pace your income as
they usually will in a start-up, for 3 years. If after 3 years you are
still not in profit, I believe they will call your business a 'hobby',
and as such, you would not be entitled to deduct losses/expenses.
Be sure not to abuse the
privilege, as you don't want to pay a fine or penalty. Once a small
business or home business does anything
irregular or questionable and it comes to their attention, they may be
audited for many years to come. This can be a real pain, to be sure.
Another advantage to mention
is that, these days, working for yourself is so much more logical than
devoting your life to a corporation that is growing wealthy from your
efforts, while giving you a pittance.
Of course, they do provide
immense benefits as far as group insurance rates, etc., and this is
something you have to take into consideration before you quit.
I am quite sure you know of at
least one person who has been 'laid off' due to outsourcing,
off-shoring, or workforce reduction. Unfortunately, that could be you,
next.
You just never know
– so it is always a good idea to have something going for you
as a hedge against the unexpected!
...and finally, there is a
great deal of gratification in having your own business. It means you
are a 'cut above the rest'.
That is, you are not just
functioning to survive, as is the plight of the average person, but you
are going that extra mile to create something that could have lasting
value, and that will make you proud of yourself!
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