The concept of a Home Based Business has been around since the dawn of time and they are now more popular than ever before.
This is mainly because of:
1. people want more control over their income
2. the possibility of lower overheads/business costs
3. freedom of choice with regard to lifestyle.
There are many different types of Home Based Business and we will discuss a few of them here.
When you’re operating a Home Based Business you’re basically going to do one of two things: sell a product or sell a service (if you’re smart you will combine both into one business!)
Sell a Product
Product – your choices are to make/source your own or sell someone else’s product. This could be anything from food, clothing, flowers, gifts, games, toys, art, plants, or craft, to name just a few.
You could make your own products – many successful businesses started out as a simple cottage industry at home. Visit local markets, search online, read local newspapers and/or industry magazines for ideas.
Or you can source the products either locally or from overseas. Attend a trade show for your industry, read industry magazines. It is probably easier to become a distributor than to import a product yourself, but again it depends on your experience in the field.
Sell a Service
Service – use an existing skill you have, or learn something new. Think carefully if you enjoy this activity, is your skill level sufficient, can you expand your knowledge or skill level. Is there another skill you can add that will make you more valuable to your customers?
Service can include anything you can do for someone else and is only limited by your imagination. Some examples are, gardening, accounting, consulting in many different areas, business coach, personal training, house cleaning, computer technician, interior decorator, architect, pet minding/walking – the list is endless and don’t be put off by the fact that someone else may already be doing it – you could do it better or simply be better at finding customers or provide superior customer service. So, where could this all go wrong?
Now, the Hard Part
One of the biggest problems with starting your own product or service home based business from scratch is that you also need to be good at all the other aspects of the business – you are effectively a “one man band” (of course you can outsource – but this can be expensive for a fledgling business). The main thing you need to be able to do is MARKET your business – you could be the world’s best accountant but if no-one knows you exist it will do you no good at all! So marketing, sales, administration, bookkeeping are just some of the skills you will need.
So, consider this when looking at starting this type of business as you can have the perfect business up and running and find yourself with no customers. This is where many small businesses fail. Now, you may also be good at these tasks or have the money to outsource – just make sure you include it in your Business Plan and Budget.
So, What’s An Easier Option For A “One Man Band” Business?
There are many other business models that you can consider that will offer much more support to you.
Franchising – this is a good way to buy a ready made business that comes complete with instructions! You will usually have great support from the franchisor in regards to setup, advertising and management. The downside is that Franchises are usually VERY expensive to invest in – a McDonalds license for example will set you back over a million dollars! Yes, there are cheaper franchises around, but really anything less than $100,000 is probably not going to generate a huge income.
Direct Selling Organisations
Direct Selling is a method where products are sold outside of a traditional retail setting. The three main types of Direct Selling are Party Plan, Network Marketing and Door-to-Door Sales.
Most Direct Selling Organisations have one thing in common – they are Multi-Level-Marketing (MLM) businesses. They will have different compensation and marketing plans, different reward structures and methods of operation, each will have one main focus, but they will all have common aspects of their business models.
DSO’s will all generally require you to “join” the company, some will have a minimum amount of product you need to purchase over a period of time, most will require you to recruit or sponsor people into your business, for some this will even be a minimum requirement, and for some there will be an ongoing membership fee.
They all differ in the way their compensation plan works and you need to study this carefully. There will be things such as, product commissions on products you sell and also sales from your team, bonuses for achieving certain sales or recruiting targets, incentives which may include national or international sales conferences (either paid or not). Beware of what you are paying for, firstly in joining fees, product purchases (initial and ongoing) and other equipment needed to run the business plus rewards for your team and/or customers that may come out of your pocket!
It can be very hard to make money in a traditional MLM company: many people drop out without having made any money or even having lost money (or end up with a whole lot of the company’s product)!
(You will find a more detailed breakdown of Direct Selling Organisations in the next section of this series.)
So, do your research, look closely at different types of business. Think about your skills and maybe more importantly, what you enjoy doing. Write a list of businesses that you think may interest you, then write a list of pro’s and con’s for each type and see what you come up with. You make just find the beginnings of your success right there on that page!