Q: I am a 34-year-old woman with a 10-year-old daughter. I would like to supplement my income by having a homebased business, but the businesses I've come across all require sizeable start-up costs. Are there any service businesses, such as typing or answering e-mails, that would pay a decent salary? My current profession is a claims adjuster for a major insurance company. However, I would like to work from home and earn a decent salary. Any advice on where to start looking for ideas?

A: It's good that you're currently bringing in a steady paycheck, because you'll probably want to hold on to your job for now and start your business part time. Although you'll likely be burning the candle at both ends, working your day job and then working some more at home, earning a "decent salary" from your homebased business probably won't be feasible for at least a year or two, possibly even longer. But supplementing your income is a good short-term goal.

That said, it looks like you're fishing for some ideas of low-cost businesses to start. I could tick off hundreds of ideas for service businesses that can be run from home, but you'll be far more successful if you can find a need and fulfill it by utilizing your existing talents and interests. In other words, there needs to be a balance between what you can offer and what people want or need. You've indicated an interest in word processing or answering e-mails, so now ask yourself:

Who will my customers be?
Why will they want to use my service?
How often will they use the service?
Who will my competitors be, and what are they charging?
What will I charge to make a profit?

If there is a lot of competition, you'll need to position your service properly--that is, develop a market niche. For instance, if it's word processing you want to do, could you target busy college students who don't have time to type up their term papers? Do a little market research--otherwise, you might wind up in an oversaturated market. Visit local colleges and poll students--maybe even set up informal focus groups. Try to think of other people who might use your service, and conduct market research with them as well.

Another consideration is whether to start a business from scratch, buy a franchise or business opportunity, or buy an existing business. Entrepreneurs on a budget often choose to start on their own--solo start-ups generally require less initial capital than franchises or business opportunities. Plus, for the type of business you're interested in, your equipment needs will be minimal--probably a PC with Internet access, basic software, a business phone line, business cards and the like will be enough to get started.

Keep in mind, your work isn't done once you've decided on a business to start. You'll need to decide on a business structure--sole proprietorship, partnership or corporation, with variations therein. If you start on your own, you might choose a sole proprietorship; it's the least complicated and least expensive, and you can always switch to another structure if you add partners or employees later.

You'll also need to obtain the proper licenses and permits from local and state authorities as well as consult your local zoning board to discuss any zoning restrictions. Consult with an attorney and an accountant if you need assistance. And don't forget to talk to your insurance agent--your homeowner's or renter's policy won't necessarily cover your business, so make sure you're covered.

One final piece of advice: Make sure you discuss your new venture with your daughter. You'll be putting in long hours and perhaps won't have as much free time for her, so open lines of communication are very important, as are specific boundaries between work and home. Devote a room or a corner to your business, and make it your own.

Karen E. Spaeder is managing editor ofBizStartUps.com(formerly Entrepreneur's Start-Ups magazine) andHomeOfficeMag.comas well as Entrepreneur magazine.


The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.