January 2010

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Tips for starting a home business

January, 2010

In these tough economic times, many people are taking a hard look at employment alternatives — some, because they've lost their seemingly stable jobs in the corporate world; others, because they dream of striking out on their own. In addition, as the Internet gains in popularity and employees discover the advantages of telecommuting, home-based alternatives are becoming increasingly attractive.
If such an alternative appeals to you, don't quit your day job just yet. Take time to fully investigate the pluses, minuses, and ramifications of starting a company in your home. Here are five questions to consider.

  • Is there a market for your product or service? Just because your co-workers or relatives rave about your new business idea, don't assume that everyone shares their enthusiasm. If you really expect the business to thrive, cast a skeptical eye on your potential product or service. Investigate the market, both locally and outside your geographic region, and ask whether people will pay their hard-earned money to buy your stuff.
  • Are you excited about the business idea? To be successful, you'll need to dedicate yourself to the business day in and day out. If, deep down, you aren't enthusiastic about the firm's product or service, you may find it difficult to weather the storms that confront every business.
  • Is it a good fit? If you don't like working with the public, a retail business probably doesn't make sense for you. Or perhaps your home-based business will require hours in front of a computer. If your forte is face-to-face interaction with people, you may need to rethink your strategy.
  • How will you allocate time for the business? For many people, a home-based business begins as a part-time venture. Do you have the discipline to stick to a work schedule after hours?
  • How will you finance start-up costs? As a general rule, you should have funds set aside to cover at least six months of operating expenses before opening the doors to your new venture. Without an adequate financial buffer, you may spend many unproductive hours just trying to keep the business afloat.
  • How will you structure your business? Even home business owners need to take business entity structure into account.  Taking steps to protect your personal assets is important.  When first starting out, you may want to consider forming a Limited Liability Company (LLC) for the pass through tax benefits coupled with liability protection.

For those willing to take the plunge, a home-based business can provide great satisfaction. But as with any business venture, it pays to do your homework.

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