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Recent trends show that home-based businesses are becoming the wave of the
future. In the United States alone, home-managed businesses are the
fastest-growing segment of the U.S. economy, with an estimated annual growth
rate of 10%. The drive for economic self-sufficiency has motivated large
numbers of persons to market their skills and talents for profit from
home.
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All around the world, people who want more control over their lives are
starting home businesses. For many, the home office is becoming the location
for a full-time job and the primary source of income. For others, it is a
part-time venture providing for an extra income for the family. People are
opting for a kind of life wherein they can make their own hours, commute to
work in seconds, make their own choices and become their own
bosses.
The rapid pace of technological innovations and developments, particularly
the advent of the Internet, has certainly boosted opportunities for working
at home. Many start on a part-time basis and carefully built these extra
income efforts into full-time, very profitable businesses. Homemakers,
hobbyists, retirees, people interested in a second income, and the disabled
are just a few of the groups attracted to home enterprises. A young mother's
craft business began when she started appliqueing decorations on her
children's clothes. A retired government worker bought 36 beehives and sold
honey to local health food stores and at craft fairs. One woman works from
home designing and selling original patterns for fabric dolls. A journalist
left his full time job to publish a party and event planners guidebook from
the entire first floor of his two-story home. A teacher did typing and
secretarial jobs for her husband and friends until she realized the
potential market and opened a full-time secretarial service from her
apartment.
Others have become home business owners by using their skills in catering,
counseling, teaching, day care, sewing, writing, photography, consulting,
market research, and landscape design. The increasingly service oriented
economy offers a widening spectrum of opportunities for customized and
personalized small business growth.
However, success in small home-based business is not an accident. It
requires both skills in a service or product area and acquisition of
management and attitudinal competencies. There are many common
characteristics and challenges to be considered in launching most home based
businesses, regardless of size. Some tasks are universal to all small
business startups, while others are unique to a home base.
Special planning is required to know all the pertinent legal and tax issues,
proper space utilization and to establish time management discipline.
Inadequate or careless attention to development of a detailed business plan
can be costly for you and your family in terms of lost time, wasted talent
and disappearing dollars.
If the idea of working from home is appealing, but you do not know where to
begin, this feature series is a comprehensive step-by-step guide to help you
achieve success in your home-based endeavor.
Step
1. Decide What Part of the House to Use
Select an
area away from family activity. The perfect space is a separate
room (or perhaps the garage), but any area will do, if it can hold
all the business supplies and equipment, and also provide enough
work space for desks, tables, or counters. (Read
our detailed article on this topic)
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Step
2.
Determine How Much Time You Can Spend on the Business
Many people
start a home business on a part-time basis while raising children
or working outside the home. Others start full-time when family
and finances allow. However you begin, figure out how may hours
per week you can devote to the business Make a weekly chart of
your activities, examine it, and determine where the business
fits. Don't assume you have time and find out later
you don't.
(Read our detailed article on this
topic)
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Step
3. Decide
on the Type of Business
Choosing a
business means finding an area that interests you and in which you
are qualified or can qualify.
Make a list
of things you like to do, your work and volunteer experience, and
items you own that can
be used in a business. Look over this line-up and using ideas from
it, list possible businesses to start. Eliminate any business that
is not appealing or does not fill a need people have.
(Visit
our section on this topic)
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Step
4.
Choose a Legal Form
Choose the
legal form of business that is best for you.
Consult with your lawyer; your accountant and business
advisor to help you decide which business structure best suited to
your situation. To help you decide, you should consider the following: tax
implications, liability issues, plans for business growth,
international exposure, exit strategy, family structure and
involvement in business, relationship with potential partners, and
litigiousness of customers, employees and businesses in your area.
Make sure that you get your choice right from the very
start to avoid many pitfalls.
The three
basic legal forms are sole proprietorship, partnership, and
corporation. The most common is the sole proprietorship. Where the
business is owned by one individual, it is the easiest to start,
and the least complicated to dissolve.
If you are not going to incorporate or use your own name as
part of the company name, you will need to obtain a fictitious
name statement, or what is called DBA – “doing business as.”
(Read
our detailed article on this topic)
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Step
5.
Determine Where the Money Will Come From
Whether you
want capital for start-up costs, short-term operating costs or
long-term strategic development, your first step must be to
accurately estimate the amount of money you need.
There are
three ways to finance start-up costs: use your own money, obtain a
loan, or find investors. If possible, it is better to start small,
use your savings, and not worry about repaying a debt. Also, keep
in mind that since you are a home-based, chances of qualifying for
a loan or finding investors are slim until the success of your
idea is proven.
(Read
our detailed article on this topic)
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