In a recent Inc. magazine’s annual list of the top 500 fastest-growing private companies, a staggering 61% of the listed companies were *started at home* and 16% were initially capitalized with less than $1,000. If that’s not inspiring, I don’t know what is. It just goes to show you how much an entrepreneur can accomplish with an idea whose time has come.
Of course, good ideas are not enough to turn a $1,000 investment into a million-dollar enterprise. It takes good financial management — salesmanship — marketing skills — and a little bit of luck — to grow your home business to the point where it’s ready to take public.
Do you have what it takes?
According to the Women’s Online Business Center of the U.S. Small Business Administration, these are some of the most common roadblocks to small business success in the startup phase:
Dramatic change in day to day life.
There is an adjustment from being an employee to being an entrepreneur. Don’t be surprised if you find yourself putting in many more hours than you ever did at a conventional job. The biggest casualty may be your sleep: Many parents work into the wee hours of the morning, others wake up before dawn to get some work in before the kids are up.
Balancing career and home.
Time is the enemy of every home-based business owner who is also responsible for the upkeep of a house and the well-being of his or her family. Both are full-time jobs. You may not be able to grow your home business as quickly as you would if you were childless. Your home may not be spic and span. On the other hand, you may not have chosen this great entrepreneurial adventure if you did not have a burning desire to be home with your kids… and your life would certainly not be as rich.
Business skills undeveloped.
There is a learning curve involved in any new undertaking. You will make mistakes. Learn from them and do better.
Focus on sales, marketing: records, finances neglected.
If you are not using a financial program like Quicken or QuickBooks, buy one… NOW! It will save you a lot of heartache, time and *money*. If you do have financial software and can never find time to use it, hire a bookkeeper or accountant. You will not be sorry.
Insufficient time to do it all.
Just as you budget your finances, you should also create one for your time. Make a list of all your tasks (both business and personal) and note which ones you must do yourself, which can be postponed or performed less often, and what can reasonably be delegated to a spouse or kids or outsourced. Then, instead of trying to do it all, focus on doing what’s possible.
Cash flow unpredictable.
There are no easy answers for this one. There are reasons why risk-averse people tend not to become entrepreneurs, and this is a big one. There will be months, especially in the first couple of years, when you will need to tap into your personal assets (92% of the CEO’s of this year’s Inc. 500 did so!). Larger companies obtain bank loans and lines of credit to help them through these periods. Most female home-based entrepreneurs rely on their credit cards (78%, according to the National Foundation of Women Business Owners). If you take this route, do so with caution.
Responsible for all decision making.
Most home-based businesses are sole proprietorships, which can put you in an idea vacuum. Gone are the days when you could brainstorm with the colleague in the next cubicle. If you have a spouse with a good head for business, you may wish to use him or her for a sounding board (many work-at-home experts suggest that vesting your partner in your venture can help ease some of the tensions that arise in a relationship when you are starting a new business). These days, many work-at-home parents form networks with colleagues they meet online on message boards and discussion groups. You’ll find dozens of terrific boards at:
Don’t set yourself up for early disappointment by expecting immediate success, or that attaining success will make conducting your business much easier. As your business grows the issues you need to deal with — like hiring employees — will bring you new challenges. If you can accept them and enjoy the ride, these challenges will bring you benefits you never imagined. Who knows? Someday when I get my annual Inc. list, I may be reading about *you*!
About the Author:
- Book: The Last Chance Millionaire
- 12-Step Template to Write an Effective Sales Letter
- Pros and Cons of Financing a Business
- The Enthusiastic Employee: 16 Myths on Employee and Performance Management
- How to Raise Money to Finance a Franchise