From the April 2002 issue of Startups

It may be too early to say how many homebased businesses have been started since the attacks of September 11, but one thing is for sure: The technological advancements of the past decade have certainly made starting a homebased business easier than ever. At the same time, many of those businesses are in danger of failing due to bad planning and bad ideas. "People were so eager to jump in and start homebased businesses [after the attacks], and I really caution people [against] thinking it will take less work than it did working for a company," says Maria T. Bailey, founder of BlueSuitMom.com, a site that caters to working mothers; radio host of Mom Talk Radio; and author of The Women's Home-Based Business Book of Answers. "People underestimate the amount of work it takes to actually launch a homebased business."

The faltering economy was the catalyst for Donna Crafton and her partner, Jennifer Hofmeister, to start PRima Donna PR Inc. in Golden, Colorado, last August, but the terrorist attacks stopped the business in its tracks. As the holidays rolled around, Crafton found herself on a tight budget, so she decided to make scarves to give as Christmas gifts to her friends. A night on the town wearing one of her scarves in upscale Cherry Creek, Colorado, changed her destiny: She was stopped repeatedly by women wanting to know where she had purchased her scarf. After researching production costs and getting feedback from an informal focus group, Crafton launched Fizz by Prima Donna a mere two weeks later, just in time for the holidays. She now expects sales of more than $100,000 this year.

The lesson to be learned? When one door closes, another one opens, even in this tough economy. If one thing isn't working out, try another, but make sure you do your research before embarking on any entrepreneurial venture. Look at what's going on in the economy, and let that guide you in deciding how to proceed-or not proceed-with your business idea. Crafton was well-prepared: "In my research, I found that when the economy is down, women still spend money on accessories," says Crafton, "because rather than buying a whole outfit, accessories become a nice way to make something new again."

The irony is that since January, Crafton's PR business, which focuses on technology clients, has taken off, leaving her with two successful homebased businesses. "I've had to go and source manufacturers because I can't keep up with the demand," says Crafton, who splits her time between both businesses.

Whatever your business idea, remember that what hasn't changed amid this new wave of entrepreneurship is the need to adhere to basic business principles of generating revenues and covering your costs. Julian Lange, professor of entrepreneurship at Babson College, puts it simply: "You need to [earn] profits, so you need sales."