So What’s Your Idea?
You’ve got this far. It’s time to ask yourself: what exactly do you plan to do? What’s your big home business idea – and, more importantly, how is it going to make you any money? There are quite a few ways to figure out whether your idea is a good one or a bad one. Basically, it all comes down to the practicalities of the thing.
Do You Have the Time?
There are only so many hours in a day, and you want to save some of them for yourself. If you’re planning on, for example, making small products and selling them, will you really have enough time to take orders, make them, pack them up and post them? If you’re not careful, you can find yourself doing tedious work all day and all night for $2 per hour.
Remember that time is money: the only way to make the income you want is set an hourly rate you’re happy with, and then work out pricing as your rate plus expenses. If you don’t have enough time to do the work, then increase the rate or hire someone who does. It’s simple supply and demand.
Do You Have the Qualifications?
One of the traps that people most often fall into is wanting to take a skill they have and turn it into a business, without realising that their customers will expect them to have formal qualifications. Sure, you were a full-time mother for years, but people would still like you to have a child-care qualification. This goes double if you plan to become some kind of therapist – if you don’t have the qualifications, how are people supposed to know that you’re not just making it up as you go along?
What’s more, qualifications serve to create scarcity in the market. A business will do better if only qualified people can provide its services than if any joker can. That’s why people like doctors and dentists command such high wages: they have to study for years to get their skills, which creates scarcity in the marketplace.
If you already have the skills, you should find it easy to pass the tests – and who knows, you might learn something new. Enrol on an evening course at your local college (try to avoid ‘distance learning’, as the prices are usually stupidly high compared to what you get out of it). It can be good fun, and you’ll probably end up with some good contacts in your chosen industry. Many people have started better home businesses by creating a ‘network’ of others they know doing the same business in the local area. This lets everyone specialise in their best area.
If you’re planning to have deliveries to your house and then send items out to people, you need to think it through very carefully. Do you really have enough space to act as a warehouse? Will you be cutting the size
Do You Have the Space?
of your home in half for the sake of your business? It’s also worth considering whether you can really let big delivery lorries drive up into your road without doing some damage – there’s nothing worse than getting your first delivery and finding that the lorry didn’t fit in your street and the boxes don’t fit in your house.
The best way to solve this problem is to make sure that your home business doesn’t require any inventory. Home businesses where you provide a service – whether it’s over the phone, on the Internet or in person – almost always work out better than ones that involve you packing and posting things.
Of course, even for more service-oriented businesses, space can still be a problem: if you plan to be a fitness trainer from home, make sure you have somewhere to put all that fitness equipment!
Money, Money, Money.
Consider the kind of expense you’d need to go to when you start your business, as well as the day-to-day running costs. Then, and this is the vital part, work out the maximum number of customers you think you could deal with, and cut it in half (you won’t actually get that many customers, at least to begin with). Work out how much you’d have to charge each of those customers to break even for your first year. If the price comes out far too high, then it’s time to think again.