From the October 2000 issue of Entrepreneur

If you have questions, chances are, startup business gurus Paul and Sarah Edwards, authors of The Practical Dreamer's Handbook (JP Tarcher), have your answers. The Edwardses answer thousands of letters each year and many more questions in their seminars and other special appearances. For our readers, we asked them the mother of all questions: What are the 15 questions you hear most, and what are the answers to them?

Decide Your Business and Fees

1. I have a PC, a scanner, a printer and a home office-how can I make money at home?

In hundreds of ways, ranging from providing office support services and designing Web sites to pet-sitting and running a personal chef business. After all, you have the tools necessary for almost any business today.

To narrow the field and find your perfect business, you must answer three major questions: (1) What motivates you? (2) What skills do you have or are you willing to learn? (3) Which of your skills will people pay for?

2. How do I determine whether there's a market for (fill in the blank)?

Contrary to popular opinion, most true entrepreneurs aren't big risk-takers. They want to know what people will pay for before they risk time and money putting their ideas on the market. The two best ways to determine market viability are to ask prospective customers and to contact others in the field. While local entrepreneurs may regard you as a potential competitor and be reluctant to share market information, you can find contacts on the Web on "online forums," dedicated Web sites found through search engines and newsgroups via dejanews.com. Also, industry trade associations sometimes research the market and publish the results in newsletters and special reports.

3. How much should I charge?

The price you charge for your product or service should reflect four elements: (1) your salary, including "benefits" such as health insurance, (2) ongoing costs of being in business, i.e., your business overhead, (3) your direct costs (materials, travel expenses, etc.), and (4) a profit with which you can build your business. Your price needs to be high enough to cover those elements, but not high enough to turn off people otherwise willing to do business with you. Starting out, you may wish to base your price on the median of your competitors' prices or at a point just below the going rate.

Legal And Zoning Issues

4. What do I need to do legally to start a business?

If you start at home, as two out of three new businesses do, the legal steps are usually fewer and easier than if you were to start a store or office-based business. You need to:

A. Check the availability of any business name you'll be using other than your own name, without any additions (& Associates, Co., etc.). If your prospective business name is still available, you can protect it in a number of ways: by getting a fictitious name filing, by incorporating, by getting a trademark or a service mark, or by completing a combination of these tasks.

B. Obtain any required licenses. These include a local business license and, for some businesses, a state or federal license.

C. If you have employees, are a partnership or are incorporated, you need to obtain an employer's ID number with IRS Form SS-4.

D. If you're not going to be operating as a sole proprietor (filing a Schedule C with your tax return), you need to decide whether you will incorporate, form an LLC or file a statement of partnership.

E. If what you plan on doing will require you to collect sales tax, obtain a seller's permit, also known as Certificate of Authority or Resale Certificate. Non-homebased businesses also have to deal with leases and occupancy permits.

5. What can I do if my home isn't already zoned for business?

Don't rely on word-of-mouth to determine whether you can or can't work at home. You should read for yourself the zoning, homeowner association restrictions and, for condominiums, the Covenants, Conditions and Restrictions (CC&Rs) that cover your home. If you're still unclear, get an attorney to interpret the rules.

If you do have a zoning problem, consider applying for a variance or conditional use permit. Some industrious homebased business owners have lobbied to get zoning ordinances rewritten by their city councils. Conflicts with private homeowner restrictions are more difficult to change, as they require the consent of a majority of other home-owners. Some people who do their actual work at home (and have neighbors who don't mind businesses next door to their homes) make their legal addresses their private mailing addresses.

Motivate Yourself To Make Money

6. How long will it take for me to turn a profit?

That depends on how ready you are, and how ready the market is, for your business. If you open for business on your first day and have contacts or, even better, contracts with a former employer, you may be near break-even almost immediately. If you're inventing a new product or have to educate people about their need for what you offer, reaching that break-even point can take years.

To produce income quickly, your number-one job will be to spend your time marketing your business. One of the major mistakes people make is to put up Web sites, send out direct mailings or advertise and then wait to see what happens. As we describe in Getting Business to Come to You (JP Tarcher), your best bet is to have a "5-5-5 plan," which means using five marketing methods, initiating five activities and following through on five things every day. Whenever you're not doing work that produces income, your work is to do things that lead to work that will produce income.

7. How do I stay motivated to do what needs to be done when I don't want to do it?

The first question you need to answer is whether you really want to be in the industry you're in. If you hate most of the work you're doing or simply dislike being self-employed, you need to make some serious changes.

If you truly like most of your work, you have a lot of options. Some people find partners who can do what they themselves dislike doing; however, experience teaches that partnerships formed because one person hates to do something are risky. You may be able to delegate aspects of your work to someone you can hire or barter with. These can be indoor skills, like managing the money, or outside skills, like generating business. Also, consider whether your spouse has the complementary skills necessary to help.

If none of the options involving other business partners appeal to you, motivate yourself by focusing not on your hatred of these tasks but on what you'll gain by getting them done. Break up more odious tasks into smaller pieces and intersperse them with things you like doing.

8. I'd like to be self-employed but don't really consider myself an entrepreneur at heart. Can I make it on my own?

Many self-employed people aren't truly entrepreneurs. They love the work they do or the reason they're self-employed, not the business of business. We've found so many of these individuals that we coined the term "propreneur" to describe them.

Propreneurs still need to learn and practice business skills, particularly how to get business and manage their finances, but they can earn good livings as self-employed individuals. Generally speaking, if you can be a valued and trusted employee for someone else and if you find the business that's just right for you, you can be a good employee for yourself.

9. I want to start my own business, but I'm worried about paying the bills once I get started. I hate my job but need my paycheck. What can I do to protect myself?

Probably the most important thing you can do is to keep income coming in. While some people function best when pressed by a sense of emergency, most of us do best when we have a sense of security.

Sometimes a job you despise becomes bearable once you start your business on a part-time basis-when you know that lackluster, 9-to-5 job can be the route to your freedom. Perhaps you can reduce the hours or days you work, substituting work you love for time on the job you hate. Or consider quitting your job and taking temp or contract work to produce ongoing income while you use the extra hours you free up to build your business.

Maintain a Professional Business

10. Will I be taken seriously as a professional if I operate my business from home?

Absolutely-as long as your Web site, letterhead, other print materials and your telephone manner all communicate professionalism. Most important is your own attitude. If you're confident about working from home, others are apt to pick up on that optimism. They'll also pick up on any insecurity you have. You don't usually have to tell people where you work, as in your home or a building-a city or area is sufficient.

11. I'd love to work for myself but don't like to sell. Is there any hope for me?

People often associate selling with cold calls, high-pressure sales or method approaches taught by sales gurus-the sort of tactics you'd likely experience if you were buying a car. In reality, successful people find ways to market themselves that are molded to their personalities. Some are good at one-on-one contact, so they network in organizations; others aren't and may develop a few key referral relationships that can keep them busy. With conceivably dozens of ways of marketing your business, your task is to seek out those that complement you and your business in the best way.

12. Can you really make money stuffing envelopes?

We've been asked this hundreds of times every year for almost 20 years, and the answer is still a resounding no. All of the plans we've seen for stuffing envelopes work something like this: you place material into envelopes that explains to other people how they can send money to find out how to make money stuffing similar envelopes. Automated machinery and workshops do all the real work of the envelope-stuffing business.

13. Does every business really need a Web site?

We say yes, even for local service businesses, because many (very soon, most) consumers look on the Web before they look in the Yellow Pages. So even if your Web site is only an "electronic brochure" that tells people about you and what you do, having a Web site is in the best interest of your business.

Find A Niche Toward Success

14. How do I find a niche so I can distinguish myself from everyone else offering what I do?

A niche or specialization is based on specific types of customers, techniques or approaches, pricing strategies, geographic areas, business hours, the kinds of problems you address or a combination of these. The Web enables specializations to be viable in the face of traditional restrictions. For example, we met two South Dakota women from a sparsely populated county who earn good livings making specialized clothing for people with physical infirmities and then offering those products nationwide over the Internet.

15. How do you start a business?

In the United States, you can virtually declare yourself to be in business and you are. Some occupations and professions, like private detective investigation and investment counseling, require state or federal licenses before an interested entrepreneur can begin. But to start a successful business, you're best off if you spend six or more months researching the business, finding out whether there's a market, figuring out the right prices, learning business skills and making contacts for generating business. Laying an adequate foundation early on can double your chances of doing well.


Paul and Sarah Edwards are Entrepreneur's "What's Your Problem?" columnists.