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By Phil Holland, Founder, My Own

Home Based Business Starting out as a home based business offers some special benefits to entrepreneurs. Operating from a spare bedroom or a garage, a business can be run with a minimum of investment and exited with a minimum of obligations and risks. The Internet and computer technologies now offer home based entrepreneurs the same tools for communications, accounting and marketing as are employed by multi-national competitors.

There are two approaches to starting a home based business: as a moonlighter or as a full-time entrepreneur. Fortunately, many home based businesses can be operated on a moonlight basis. Starting a moonlight business (without quitting your job) has the powerful advantage of not burning your bridges of income and benefits provided by your job. Once you have established a foothold and your business is flourishing, you can quit your job and expand from the already proven home-based start. If your business doesn't work out, your job provides a fall-back to income and benefits. But moonlighting imposes some conflict of interest rules:

  • Do not compete with your employer.
  • Do not use time on the job nor job facilities for your own business.
  • The moonlight business must lend itself to being compartmentalized well away from the job.

If you are planning to quit your job in order to start a home based business, it is important that you patiently take the time to have plans in place before you quit. Too often entrepreneurial zeal will precipitate a job resignation before preparations have been fully accomplished. The important functions that should be in place before quitting the job include deciding on a business, gaining hands-on experience in the business, having adequate accounting knowledge, setting up accounting software, constructing a Web site, personally writing a business plan and preparing a one year cash flow projection.

You can gain a powerful competitive advantage in a home based business by taking an "all-in-the-family" approach. Here are some reasons why a family run business offers special benefits:

  • Common goals pull the family together.
  • You can utilize individual and collective family skills.
  • If you are still working at a job, family members can work during hours you're on the regular job.
  • Conflict-of-interest accusations at work can be defused: "It's my wife's business!"
  • It is a better solution to "working wives": why not work as a team at home?
  • The kids learn the benefits of entrepreneurship.
  • The business is set up with pre established lines of authority and responsibility.
  • Both spouses can exercise individual business capabilities.
  • When all else fails (including your job) a family working together is the best survival unit.

Picking the right home based business is the single most important decision you will make. The world doesn't need new ways to do things as much as better ways to do them. Sometimes choices can be made automatically by preestablished goals or existing know-how (think Mrs. Field's Cookies). Here are some overall issues to keep in mind:

  • Specialists do better than non-specialists. Dedication to a single product or service will inevitably result in a high level of competence.
  • Can you enlist the support of others to carry it off?
  • Do you have the necessary expertise?
  • Does it fall within the limits of what you are willing to risk?
  • If I you plan to moonlight, will it conflict with your job?
  • The most humble business can be enormously satisfying.
  • Discreetly check out local zoning and business license requirements.

Ming Friedman is a great example of a successful home based business owner. Operating out of her house, Ming imports fancy linen tablecloths and sells them to party rental firms. Ming doesn't need a store, a warehouse, a factory or marketing organization. She has her products manufactured in China, uses her garage for storage, has a terrific web site for marketing and hires FedEx for shipping. (video clip of Ming describing some of the interesting aspects of her home operation.)

There's a final reason to consider a home based business: its open to all walks of life, from high school students to the growing population of what-do-we-do-now retirees. According to AARP, almost 90 million Americans are now over 50 and of these, 47 million are using computers to go online to bank, search, read and buy. While retirement is not a period of life during which the family jewels should be put at risk, the wisdom and experience of maturity dovetails perfectly with the structured prudence required to successfully operate a home based business. For many retired people, working in a home business becomes the solution in curing debilitating idleness and unproductively. It's simply too good to be wasted entirely on the young!

Top Ten Do's and Don'ts for a Home Based Business

  1. Specialize in a single product or service.
  2. Get your family involved with your business.
  3. Go to work first for someone in your intended business.
  4. Install a credit card purchasing function on your Web site.
  5. Prepare a written business plan before you start.
  6. Prepare a 12-month cash flow projection before you start.
  7. Take classes on your shortcomings such as accounting or the Internet
  8. Start small to gain credentials and experience.
  9. Begin building your search engine placement rankings.
  10. Start a tax-deferred retirement plan.
  1. Quit your job. If you must quit, see Don't #2
  2. Quit your job until all preparations are complete.
  3. Compete with your employer.
  4. Conduct business on your employer's time.
  5. Sign any agreements without your lawyer's review.
  6. Initiate importing without expert advice and representation.
  7. Be in a rush to get started: use a start-up check-off list.
  8. Incur unreasonable liabilities in financial obligations and dealings.
  9. Think it's too late to start.
  10. Overlook business insurance and health insurance.
Before undertaking a home based business, it is important to have a reasonable level of understanding in all the basic business disciplines.
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