Decode Studios Blog » Blog Archive » Home based Entrepreneurs part 1

Home based Entrepreneurs part 1

05 January 2010 | Business, Top Tips | Tags: Business, Startup

I recently came across this article by Gary Roe at Young Entepreneur:

A recent survey conducted by Emergent Research has done a great job of documenting the remarkably robust financial impact that home-based businesses have on our economy.

An entrepreneur can make it anywhere, and these days you don’t need a big office or a regular table at a fancy restaurant. Running a home based business has never been more possible or potentially lucrative.

Though entrepreneurs have been fundamental to the United States economy for as long as the nation has existed, there is a certain perception of an entrepreneur as someone who makes large deals over firm handshakes. Perhaps their days are filled with meetings and lunches. Yet, home based entrepreneurs are more common than most people may realize. With the wide spread availability of cheap technology which renders worldwide connection easier than ever before, the home based entrepreneur is an ever increasing and ever more profitable trend.

Results of the study reveal the following

Home based entrepreneurs frequently employ others to help them manage their business. The study showed that home based entrepreneurs employ more U.S. workers than those firms backed by venture-capital. Half of all home based entrepreneurs surveyed had a staff, with 39% reporting 2 to 5 five employees on the payroll.

Only 20% of those home business surveyed had been operating for under 5 years while, rather surprisingly, over half had been in business for a decade and a half or longer.

There are over six and half million businesses which fit the description of “run by a home based entrepreneur,” that are providing at least half their household’s income. 75% of those entrepreneurs surveyed consider their home based business as their full time job. 35% are currently generating an excess of $125,000 in annual revenue.

So, how did these 4,875,000 entrepreneurs manage to set up their own home business and make it sucessful enough to be their ‘full time job’? Well, here’s our top tips on how to create a sucessful home business:

1. Have a Plan

It get’s said a lot but, the best way to start a home business is to Plan, plan, plan and then go ahead and plan some more. It is of the utmost importance that you have properly thought out your business plan and have a clear idea where your heading. This time before you set out and make any investment of with time and money is necessary for ironing out any problems and avoiding hitting brick walls in your business development.

You must know exactly what steps you are going to take, in what order, how you are going to take them and also how feasible they are. When starting a home business it is very easy to overlook factors such as time and competition.

Check out our post on Planning to get some helpful tips which you could use when creating your business model

2. Be Realistic

Are people really going to want to buy your rhubarb scented pens? Or your knitted table tennis ball holders? Are people going to want your toaster delivery service? Think of the competition for your services and products and why people would choose your product over a long established company.

You have to be realistic with yourself and think ‘is this product/service feasible?’. How many times do you watch dragons den thinking “what planet is that guy on? Why would you buy that?” Make sure you’re not one of them. If no-one has made it or provided it before, stop and ask yourself, why?

However, at the same time, don’t limit yourself. Home Businesses are not just crafts and local services. If you can’t think of a good reason why your product or service isn’t in the market, keep going.

3. Get exposure

One of the best ways for a new company to advertise is not through expensive scams or ‘1^st Page of Google Guaranteed!!’ programs. They don’t work. The 2 most effective advertising and marketing are actually free.

Social Media

Facebook, Twitter, Blogs, Forums, LinkedIn, MySpace. These are your best friends. Never ever underestimate the importance of social media. Set aside a part of your day to write blog posts, tweet and reply to messages, update statuses and most importantly – generate conversations. There is more to Social Media than just having ‘1000 followers’ it is the conversion and interaction with these followers which is important.

[coming soon: how to use social media to your advantage]

Word of Mouth

This is key. As a fledgling business, the majority of your customer will come from word-of-mouth recommendations. A good question asked by fellow blogger Jim is ‘Is your product worth talking about?’ it sounds harsh but it’s true. Is there something ‘Remarkable’ about your product that makes people want to talk about it?

4. Finances

This should be part of of your plan, but deserves a second mention. Create a Financial Budget and stick to it like glue. Don’t expect to always make a profit in the first year. The saying “Don’t Quit Your Day Job” seems appropriate, but also ” Don’t Re-Mortgage your House” and “Don’t Auction off Your Children”. It will often take 2 to 5 years before a business starts making a profit, don’t make the mistake of overestimating your predicted income.

Also, keep all finances for you business separate to your personal finances. As soon as the two begin to mixs, that’s when problems arise. Know your finances back to front and upside-down, know what your initial costs will be, know how much your services will cost, estimate your customers and always account for unforeseeable costs. Another Reference to Dragon’s Den comes to mind: Of the entrepreneurs when they have no idea how much they’ve spent and end up looking unprofessional, foolish and lose out. Know your finances, and make sure they add up.

5. Professional

When dealing with customers be professional and go the extra mile. By doing this, you’ll create a good reputation for your business and create more word of mouth advertising. i.e. If something is being shipped, make sure it’s wrapped neatly, if you are providing a service – present yourself well and ensure things are neat and clean. First impressions are important. [coming soon: 'How to be Professional' and 'Meeting With Clients']