Home-Based Business For Dummies

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Overview

Starting a home-based business is the easiest, cheapest way to become an entrepreneur. But where do you begin? Relax! This friendly guide shows you the way - from choosing the right business opportunity, to paying your taxes, to dealing with distractions at home.
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Overview

Starting a home-based business is the easiest, cheapest way to become an entrepreneur. But where do you begin? Relax! This friendly guide shows you the way - from choosing the right business opportunity, to paying your taxes, to dealing with distractions at home.
Read More Show Less

Product Details

  • ISBN-13: 9780470538050
  • Publisher: Wiley
  • Publication date: 1/7/2010
  • Series: For Dummies Series
  • Edition number: 3
  • Pages: 384
  • Sales rank: 217,731
  • Product dimensions: 7.30 (w) x 9.20 (h) x 0.90 (d)

Read an Excerpt




Chapter One


Why a Home-Based Business
in the 21st Century?


In This Chapter

* Defining "home-based business"

* Deciding to be on your own

* Assessing your readiness to start a home-based business

* Understanding which business options are open to you


Congratulations! You've decided to start a home-based business. We welcome you as you join with millions of others who have already made a decision to start a home-based business. According to a recent study by Ohio State University, more than five million home-based businesses currently exist in the United States alone, and these companies are being joined by more than 1,500 new business owners every day.

Owning your own home-based business may be the most rewarding experience of your entire life. And not just rewarding in a financial sense (although many home-based businesspeople find the financial rewards to be significant), but rewarding in the sense of doing the work you love and in finally having control over your life.

Of course, every great journey begins with the first step. In this chapter, we first consider what a home-based business is, and then discuss the major types of home-based business. We discuss some of the advantages of owning a home-based business and assess whether you're ready to start one yourself. Finally, we consider how to get in touch with what you really want to do.


TRUE STORIES

Paul and Sarah's journey home

Paul and Sarah began working from home before it was fashionable foranyone other than people in the construction trades, writers, artists, and craftspeople to do so. In fact, the neighbors wondered whether Paul was unemployed (Paul's first home business was doing political and public-affairs consulting).
Sarah actually led the way home, setting up a psychotherapy practice as a way of reducing the stress she felt in her prior government positions, and to actively raise Paul and Sarah's young son. Says Sarah, "I didn't feel I had many choices as a working mother. Juggling a successful career and motherhood meant being exhausted most of the time and not being able to do either job with the dedication I wanted. I was determined, however, to have both a career and a family, so I did my best in a difficult situation." Doing her best meant a trip to the hospital with a stress-related illness where the doctor told her she would die if she didn't change her lifestyle — that was her wake-up call. She left her secure, government job and opened a private psychotherapy practice in her home. In the 25 years since she left her government job, Sarah hasn't regretted her decision for even one day.
For Paul, the decision wasn't an easy one, and it took some time for him to get used to the idea of having a home-based business. Says Paul, "Initially I was hesitant about working from home. I had concerns about the image it might create and worried that I wouldn't get my work done. So when I started my own consulting firm, I opened a downtown office and hired a secretary." As time went on, Paul spent less time at his downtown office, and more time working at home. Eventually, he decided to close the downtown office altogether, and invited his secretary to join him in his home office.
At first Paul and Sarah's businesses were separate, but in 1980 they decided to write a book about working at home. They wished such a book had existed for them when they got started, and more and more people were asking them how they did it, indicating they wanted to work at home, too. That book, Working From Home, is now in its fifth edition, and they've written nine others. For excerpts from those books, as well as daily messages, tips, and support, visit their Web site at http://www.paulandsarah.com.


What Is a Home-Based Business?


A home-based business is, not surprisingly, a business based in your home. Whether you do all the work in your home or on customers' or third-party premises; whether you run a franchise, a direct-sales operation, or a business opportunity (described in this section); if the center of your operations is based in your home, it's a home-based business.

There are two major types of home-based businesses: businesses you start from scratch and businesses you can buy. This latter category of home-based business is further split into three types: franchises, direct selling, and business opportunities. Whether you prefer to march to your own drummer or get a business-in-a-box depends on your personal preferences: whether you like to create systems (or follow those of others) and how much structure you like.


TIP

The advantage of a business you start from scratch is that it can be molded to your preferences and existing and emerging markets, and thus provides a boundless variety of possibilities. Businesses started from scratch account for the majority of viable, full-time businesses — in other words, they tend to be more successful over the long run than businesses you can buy. (In their book Finding Your Perfect Work, Paul and Sarah provide an appendix with characteristics of over 1,500 self-employment careers with hundreds of examples in the book of unique businesses that people have carved out for themselves.)

Each type of home business that you can buy, on the other hand, has its own spin. Here are examples of the three different types:

* Franchise: A franchise is an agreement in which one business grants another business the right to distribute its products or services. Some common home-based franchises include the following:
· American Leak Detection (water/gas leak detection)
· Merry Maids (cleaning service)
· Kinderdance International (teaching dance to preschoolers)
· Pet-Tenders (pet sitting)
· ServiceMaster (cleaning service)
· Terminix Termite and Pest Control (pest control)
* Direct selling: Direct selling involves selling consumer products or services in a person-to-person manner, away from a fixed retail location. You can find two main types of direct-selling opportunities:
· Single-level marketing: Single-level marketing is making money by buying products from a parent company, and then selling those products directly to customers.
· Multi-level marketing: Multi-level marketing involves making money through single-level marketing and by sponsoring new direct sellers.
Some common home-based direct-selling opportunities include the following:
· Amway Corporation (household cleaning products)
· Discovery Toys, Inc. (toys)
· Longaberger Company (baskets)
· Mary Kay, Inc. (cosmetics)
· Nikken, Inc. (wellness technology)
* Business opportunities: An idea, product, system, or service that someone else has developed and offers to sell to others to help them start their own similar business. (One way to think of a business opportunity is that it's any business concept you can buy from someone else that's not direct-selling or a franchise.) Your customers and clients pay you directly when you deliver a product or service to them. Here are several examples of business opportunities that can easily be run out of one's home:
· Balloon Wrap, Inc. (balloon gift wrap)
· Cardservice International (transaction service provider)
· Dino Jump USA, Inc. (children's amusements)
· Home Video Studio, Inc. (video studio)
· National Debt Recovery (collection service)
· Rhino Linings USA, Inc. (truck bed liners)


TRUE STORIES

Peter's personal journey to independence

When Peter graduated from Stanford University with majors in human biology and economics, he had no idea what he wanted to do for work, aside from some vague notion that he should "get into business." He worked a number of jobs, starting in the federal government as a contract negotiator, and then moving into the private sector for many years as an administrative manager before ending up back in local government. As the years wore on, working for others became less and less palatable to him, and becoming his own boss became a seductive proposition. In 1990, Peter was fortunate to be approached by his good friend Bob Nelson to write a book on the topic of negotiation. Although Peter had no real desire to write a book, a bit of gentle persuasion (and the promise of a $2,500 advance!) helped bring him around. This first book, Negotiating to Win, started him on a new career as a business writer.
In time, Peter was able to seriously consider devoting himself fully to starting a home-based business as a professional writer. In 1997, he got the kick in the pants he needed to make the move when he was told that, due to funding cuts, he would be laid off from his local government job. And although a week later his employer found additional funds and asked him to stay, he already had one foot out the door and there was no turning back.
Today, Peter runs his own home-based writing business. He works harder than he ever has before, but has the satisfaction of knowing that every bit of work he does has a direct payoff for him and his family—not some distant company owners or shareholders. He spends far more time with his wife and kids than he ever did before, and the commute to his office has been reduced from half an hour each way to about 30 seconds. Is he happy? Yes. Would he go back to working a regular nine-to-five job? Not on your life!
Do you have specific questions or comments for Peter? He'd love to hear from you. Write him at bizzwriter@stanfordalumni. org or visit his Web site at http://www. petereconomy.com.


ASK PAUL & SARAH


Should I start a billing and invoicing business?


Q: I'm considering starting a sideline billing and invoicing business. Do you consider this a viable business in view of the fact that more businesses are purchasing computer equipment and would be able to do this function themselves?
A: The issue for people who need billing and invoicing services is time, not technology. We find that this business works best when it's targeted to professionals whose success depends on billing their own time and who need an employee to do these financial and administrative tasks.
Medical billing services have been among the most popular home businesses in the '90s, but they have become saturated in some areas of the country. In addition, managed care has decreased the number of claims being filed by physicians. But opportunities for this service are opening to a wide range of other health care practitioners in addition to MDs, such as dentists, chiropractors, home nursing services, occupational therapists, optometrists, and psychotherapists.
Explore the need for such services in your community and while you're exploring, check out another alternative: medical claims assistance. Whereas billing services work with the health care professional, claims assistance professionals, often called CAPs, are hired by patients whose doctors don't file private insurance claims, to file and follow up on those claims.
Resources for finding out more about these two fields include the following:
* The National Electronic Billers Association (NEBA), 1730 South Amphlett Boulevard, Ste. 217, San Mateo, CA 94402. Phone: 650-359-4419. Web site: http:// nebazone.com. They have a home study course and certification program.
* The Alliance of Claims Assistance Professionals, 731 South Naperville Road, Wheaton, IL 60187. Phone: 630-588-1260. Web site: http://www.claims.org.


Interested in finding out the names of more companies and how to get in touch with them? Drop by Paul and Sarah's Web site at http: //www. paulandsarah.com or check out their book Home Businesses You Can Buy. In addition, Entrepreneur magazine (at http://www.entrepreneurmag.com) and gosmallbiz.com also have extensive information on business opportunities you can buy. You can also do a search for companies on the Web.


TIP

Check out Chapter 2 for detailed information on the many different kinds of home-based businesses!


Why Be OYO?


OYO means on your own. Should you be OYO? If so, why?

When you start a home-based business, you're leaving behind the relative comfort and security of a regular career or 9-to-5 job, and venturing out on your own. How far out you venture on your own depends on the kind of home-based business you get involved in. Many franchises provide extensive support and training, for example, and franchisees (someone like you) are able to seek advice from experienced franchisees or from the franchisor (the party selling a franchise opportunity) when and if it's necessary. This support can be invaluable if you're new to the world of home-based business.

At the other end of the spectrum, some business opportunities offer little or no support whatsoever. If you're a dealer in synthetic motor oil, for example, you may be lucky to get the huge, multinational conglomerate that manufactures the oil to return your calls, much less send you some product brochures. Training or extensive, hands-on support if you run into the inevitable snags? Nope — that's not going to happen.


REMEMBER

Admittedly, starting a home-based business isn't for everyone. In fact, for some individuals, it can be a big mistake. If, however, you have an entrepreneurial spirit and you thrive on being independent and being in charge of your life, a home-based business may be just the thing for you.

Give the idea of being on your own serious consideration for the following reasons:


* You're the boss. For many owners of home-based businesses, just this is reason enough to justify making the move out of the 9-to-5.
* You get all the benefits of your hard work. When you make a profit, it's all yours. No one else is going to try to take it away from you (except, perhaps, the tax man — see Chapter 8).
* You have the flexibility to work when and where you want. Are you a night owl? Perhaps your most productive times don't coincide with the standard 9-to-5 work schedule that most regular businesses require their employees to adhere to. And you may find that — because interruptions from co-workers are no longer an issue and the days of endless meetings are left far behind — you're much more productive working in your workshop than in a regular office. With your own home-based business, you're the one who decides when and where you work.
* You get to choose your clients and customers. While the customer may always be right, that doesn't mean that you have to put up with customers who mistreat you or give you more headaches than they're worth. When you own your own business, you can fire the clients you don't want to work with. Sounds like fun, doesn't it? (Believe us, it is!)
* You can put as much or as little time into your business as you like. Do you only want to work for a few hours a day or week? No problem. Ready for a full-time schedule or even more? Great! The more effort you put into your business, the more money you can make. You get to decide how much money you want to make, and then you can work the kind of schedule that will help you meet your goal.

These reasons to be on your own are just the tip of the iceberg. When you add it all up, you're left with one fundamental reason for owning your own home-based business: freedom.


REMEMBER

You have only one life to live. If you're tired of working for someone else, being second-guessed by your boss, or having your creativity stifled; if you're full of great ideas — ideas you know will lead you to success if you have the opportunity to put them into practice; if you long for something better, we have a message for you: There is something better. It's called a home-based business. And when you find the business that's right for you, it can change your life and the lives of those around you.

(Continues...)

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Table of Contents

Introduction 1
About This Book 1
How This Book Is Organized 2
Icons Used in This Book 3
Where to Go from Here 4
Part I Beginning at the Beginning 5
Chapter 1 What You Need to Know about Home-Based Business 7
Home-Based Business Defined 8
The Basics of Home-Based Business 9
The Good News and the Bad 14
Chapter 2 Mirror, Mirror on the Wall, What's the Best Business of All? 21
Starting Something from Scratch 22
Buying a Business 26
Identifying Which Option Is Best for You 41
Finding Your Niche by Specializing 42
Chapter 3 Hot Opportunities Now and for the Future 45
1 The Maturing Population 45
2 Great Migration South and to Smaller Places 48
3 Universal Connectivity: the Electronic Environment 49
4 Economic Globalization 50
5 Increasing Numbers of Self-Employed 52
6 Living off the Grid 53
7 Rising Physical and Property Security Needs 54
8 Education for Youth and Adults 55
9 Health Care: Up in Demand and Cost 56
10 Luxuries as Necessities 59
Where You Can Learn about More Home Businesses 61
Chapter 4 Marketing 101: Getting Customers 65
Identifying Your Best Customers 65
Tapping Into Your Customers' Needs 67
Marketing: Different Roads to Meeting Your Goals 71
Developing a Marketing Plan - Now! 83
Chapter 5 Making the Web Work for You 87
Bidding for Work 87
Getting Listed in Directories 90
Networking the Internet Way 93
Using Your Web Site to Attract Customers and Clients 96
Building and Maintaining Your Web Site 99
Part II Managing Your Money 105
Chapter 6 Making the Transition to Working for Yourself 107
Transitioning into Your Home-Based Business 108
Six Ways to Get the Cash Flowing 120
Sixteen Sources of Startup Funds 123
Putting Together a Business Plan 126
Knowing When to Move On 128
Chapter 7 Keeping Track of Your Money 131
Organizing Your Finances 131
Setting Up a Business Account 133
Accepting Credit Card Sales 134
Choosing the Best Bookkeeping System for Your Business 138
Finding Happiness in Positive Cash Flow 144
Getting a Loan 151
Chapter 8 The Price Is Right: Deciding How Much to Charge 157
Figuring Out What Your Prices Must Cover 158
Sizing Up Your Potential Customers and What They Will Pay 163
Researching Your Competition 164
Pricing Strategies That Deliver Sales 166
Chapter 9 Getting Health Insurance and Planning for Your Retirement 175
Providing Your Own Benefits 176
Choosing Your Health Care Coverage 177
Considering the Need for Other Benefits 186
Chapter 10 Getting a Grip on Taxes and Deductions 191
Understanding Which Taxes to Pay - and When to Pay Them 192
Taking a Look at the Home-Office Deduction 205
Reviewing Other Important Tax Deductions 207
Discovering Sometimes-Overlooked Ways to Save On Your Taxes 208
Uncovering the Ins and Outs of Sales Tax 210
Part III Avoiding Problems 213
Chapter 11 Legal Do's and Don'ts 215
Understanding the Forms (Legal Structures) of Businesses 216
Name Registration 222
Trademarks, Copyrights, and Patents 225
Zoning, Licensing, and Permits 228
Tax Requirements 232
Chapter 12 Using Outside Resources and Experts 235
Establishing Trade Accounts 236
Using Support Services 237
Finding Good Lawyers, Accountants, and Other Professionals 240
Cashing In on Barter 249
Chapter 13 Eluding Scams, Rip-Offs, and Other Headaches 251
Sniffing Out the Scams 252
Places to Check 257
Finally, Be Wary of ... 258
A Final Word 258
Part IV Making It Work: Moving Ahead 261
Chapter 14 Staying on Track with a Serious Business Attitude 263
It All Begins with a Serious Business Attitude 264
Separating Your Work from Your Personal Life 268
Avoiding Interruptions and Distractions 270
Routines Rule 274
An Organized Home Office Is a Happy Home Office 276
Chapter 15 Coexisting with Kids, Relatives, Neighbors, and Pets 281
What to Expect from Your Kids 282
What to Expect from Relatives, Friends, and Neighbors 285
What to Expect When Working with Pets 286
Workaholics, Unite! (It's Time to Get a Life!) 287
Teaming Up with a Spouse or Other Loved One 289
Chapter 16 Don't Just Stand There, Grow 295
Becoming a Success 296
Identifying the Upside and Downside of Growth 297
Bringing In Partners 302
Cashing Out and Other Exit Strategies 304
Part V The Part of Tens 309
Chapter 17 Ten Tips to Succeed in Your Home-Based Business 311
Do What You Love 312
Treat Your Business Like a Business 312
Become an Expert 313
Don't Be Shy 313
Charge What You're Worth 314
Avoid Unnecessary Expenses 314
Manage Your Cash Flow 315
Keep Your Day Job 315
Build a Solid Customer Base 316
Ask for Referrals 316
Chapter 18 Ten Things to Avoid 319
Don't Turn Your Bedroom into Your Office 319
Don't Use Your Office as a Family Entertainment Center 320
Don't Work Morning, Noon, and Night 320
Don't Allow Paperwork and Office Equipment to Take Over Your Home 321
Don't Let Housework or Hobbies Distract You from Getting Your Work Done 321
Don't Fill Your Cabinets and Refrigerator with Junk Food 322
Don't Expect Business to Come to You 322
Don't Expect to Be an Overnight Success 323
Don't Give In When Someone Tries to Occupy Your Precious Working Time 323
Don't Expect to Work Effectively with Children Underfoot 324
Chapter 19 Ten Myths about Working from Home 325
You Have to Be a Salesperson to Be Successful 325
You Can't Work with Kids at Home 326
You'll Get Rich Quick 327
You Can't Make Any Money 327
Home-Based Businesses Aren't Real Businesses 328
Home-Based Businesses Are Cheap 328
There's No Going Back 329
If You're at Home, You Must Not Be Working 329
You Can Write Off Everything 330
You Can Run around in Your Pajamas All Day Long 331
Chapter 20 Ten Things to Do if Times Get Tough 333
Save for a Rainy Day 333
Manage Your Cash Flow 334
Keep in Touch with Your Customers 335
Push Your Clients to Pay Their Bills 335
Minimize Expenses 336
Offer a Special Promotion 336
Subcontract for Others 337
Volunteer 337
Moonlight 338
Refuse to Give Up! 338
Index 339
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Sort by: Showing all of 4 Customer Reviews
  • Anonymous

    Posted November 15, 2011

    Not the information I was looking for

    I'm on page 153, and I've just gotten beyond the far too extensive 'how to choose a home-based business' info. I was hoping for more information on how to file an LLC, how to hire and pay employees, filing taxes, marketing...how to run a business. Instead at least half of this book concentrates on whether you should choose an MLM, doing sales, buying a existing business, etc. If you already have a business in mind (or started), this is not the book for you. If you don't know what you want to do but know you want to start a business, this is what you're after.

    6 out of 6 people found this review helpful.

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    Posted July 3, 2011

    No text was provided for this review.

  • Anonymous

    Posted October 15, 2011

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    Posted March 9, 2011

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