Eighteen months ago, Daniel A. Shlifer parlayed a job as a professional speaker's "go-fer" into a home-based business offering support services for speakers and others. Now his Longboat Key, Fla.-based business has so much work he subcontracts out some of it so he can still jet ski and watch dolphins frolic in the Gulf of Mexico.
Sara K. Schneider, a former consultant who's now a performing artist and author, works from her Chicago home as an organizational-learning consultant who uses the rehearsal as a metaphor to get people to collaborate in their thinking, planning and working. She been so successful she's able to make a living and support her continued interests in the theater.
Nine years ago, Rose Anne Raphael's boyfriend noticed her employer was billing clients seven times as much as Ms. Raphael was earning. "I was getting paid $17 an hour and the company was billing clients at $125 an hour for my work. My boyfriend threw up his hands and said, 'You aren't getting paid enough.' That's when I thought I had the opportunity to become self-employed," says Ms. Raphael. She's been running a public-relations firm out of a one-bedroom apartment in Berkeley, Calif., ever since.
Her net income has more than quadrupled and with a more flexible work-at-home schedule, she can take choral singing lessons during the day, when her energy is highest. For Ms. Raphael, who already knew the ins and outs of PR, it was "a lot easier to start working at home on a business model you've already established."
Surviving the transition from a 9-to-5 job to a home-based business often means trading in the employer but not the work, especially if you enjoy what you do for a living. If your home-based business is a labor of love, chances are you'll perform well. The better you perform, the greater the likelihood you'll succeed.
"If you're in an area of business you like and you get paid well for it, that will give you some indication if you'll be successful," says San Diego-based Peter Economy, a home-based business expert for AllBusiness.com and co-author of "Home Based Business for Dummies" (Hungry Minds Inc., 2000).
While enjoying a home-based business is important to your success, it's not the only survival tool you'll need, says Mr. Economy. Successful home-based business owners typically share common traits, behaviors, skills and approaches to business that give them an edge over those who fail. While some traits are particular to working at home, most of them are required for any successful business, large or small, at home or away.
Don't Quit Your Day Job
It's feasible and can be exhilarating to begin a home-based business by changing careers and starting a venture from scratch. But check your aptitude to determine if you can make a go of the new business before quitting your job.
"Some people fantasize about wanting to be their own boss, but that's not going to get you the success you want. It's not Fantasy Land. Know what you want to do and don't play around," says Mr. Economy.
That could mean going back to school or otherwise boning up on the new profession and then working at it part time until your cash-flow balance tips in favor of your new career path. When the moonlighting bears fruit, then you can quit your day job. "Until you actually get your foot in the water you can't tell how hot or cold it is," Mr. Economy says.
Often it's easier to segue from your current position into a similar job at home. With little if any learning curve, the new business lifts off faster, and you'll be more efficient and effective because you already know the tricks of the trade.
You also can tap your existing network of business clients and, where appropriate, existing customers. "My first client was Kaufman and Broad Corp. (now known as KB Home). I had been working with them at the agency, and I continued to do pretty much what I was doing, writing advertorial copy," says Ms. Raphael. "The Kaufman and Broad client had a connection at Gymboree and the rest of my work all came through similar referrals through word of mouth."
Thrive in Solitude
Ms. Raphael discovered, however, that working alone isn't always easy. The freedom you may seek from the corporate world can become a prison of solitude, long hours and lost leisure time. Without the cues of the corporate workplace to remind you, you may fall into working long hours and neglecting your physical and mental health to get the job done.
"I should have started working out earlier in my career. I gained a lot of weight. You tend to get more sedentary. You have the entrepreneurial spirit and you want to succeed, and you wind up putting 150% into it," says Ms. Raphael.
Guard against this trap by giving yourself a break -- often. Use voice mail to help curb an always-on approach to work, maintain a social life and engage in hobbies and outside interests. If the going gets rough, get some help.
"I tried to design a business where I would be at home and in a beautiful area where I can go fishing, ride my jet skis and enjoy what this place has to offer," said Mr. Shlifer, who has the Gulf of Mexico as a backyard. "I have 14 clients I juggle at one time, but I have people who can work when I get overloaded. The dolphins come in every day and I'll drop everything and run out to play with them."
Conversely, it's just as easy to miss corporate cues that trigger motivation. If you aren't a self-starter you can quickly find yourself behind the eight ball, says work-at-home guru Paul Edwards of Pine Mountain Club, Calif.
"That's true of anyone starting a business. You have to have the 'completion gene.' You have to be a self-starter, but you also have to have persistence to see it through. If you miss deadlines by two weeks, you aren't going to have that client for long," says Mr. Edwards, a co-author of "Home-Based Business for Dummies" with his wife, Sarah, and Mr. Economy.
Set goals, get organized, build a routine, review your priorities at the beginning of each day and avoid distractions. Ms. Schneider suggests arranging to talk with a friend or coach about your progress, or lack thereof, much as you would with a co-worker the next cubicle over in a corporate office.
"It's really good to have someone around who can say, 'Hey, wait a minute. Weren't you supposed to get that done last month?' " says Ms. Schneider.
Managing time for both work and play is crucial to help prevent time lost to physical or mental illness -- and the resulting interruptions in your cash flow. There are no sick, vacation or holiday pay benefits for most home-based businesses. "If I don't work, I don't get paid," says Mr. Economy.
As self-employed workers, home-based business owners not only don't get paid time off, they also have extra financial burdens corporate employees don't have. They must foot the bill for fringe benefits, including health and life insurance, retirement savings, childcare and other perks that most corporate employers provide.
Home-based business owners enjoy some special tax breaks, but they don't cover the extra cost of the benefits and the so-called self-employment tax. As a self-employed worker you must pay all your Social Security and Medicare taxes, which amount to about 15% of your income -- in addition to local and federal income taxes. When you work for a company, the cost of Social Security and Medicare taxes is split 50-50 between you and the company.
And don't count on borrowing money (unless you grab a loan while you're still a corporate employee) to help cover the extra expense. Unless self-employed workers can show at least a two-year track record of successful business operations, many lenders don't want to risk loaning to them.
Some home-business owners are covered for health and other fringe benefits through a working spouse's plan. But Ms. Schneider doesn't have a spouse who's a corporate employee, nor is she a member of a professional group offering benefits.
"I hadn't totally processed that 15% self-employment tax, and my health insurance rose by 50% for a plan I don't really want, but it's the only choice at the moment. At certain times I think a job would make a lot of this easier," she says.
Clearly, you must have a viable business that allows you to charge adequately for your goods or services to provide for the extra costs of being self-employed. "You're going to have to figure covering the cost of those things in terms of what you charge your clients," says Mr. Edwards. "A frequent mistake that people make is figuring out what they make per hour based on their corporate pay, but they leave out the 25% to 50% more in the value of fringe benefits."
Additional considerations for home-based business owners include:
Setting up a shop. Home offices are free and convenient, and they allow you to spend more time with loved ones, but if you don't carve out a dedicated workspace in your home, you'll defeat your purpose.
Whenever possible, choose a room away from distractions and your home's major traffic areas. You should be able to close and lock the door to gain total privacy. Consider using a "Do Not Disturb" sign.
"I have two dogs and sometimes when the phone rings the dogs go crazy. You want to project that you're a professional service in a real office," says Mr. Shlifer.
Plugging in. Basic indispensable tools of any trade today include fast Internet service, an e-mail account, high-speed desktop computer and appropriate software, printer, fax machine and copier. They help make you more efficient and give you leverage similar to a larger corporation. Include their cost among your start-up expenses.
If you're on the go or want to occasionally work alfresco, consider mobile technology -- a cell phone, lap top and personal digital assistant or hand-held computer -- to keep you connected and working when you're away from the office.
"I do a lot of my work on the road, at the coffeehouse, at the bookstore. Sometimes I have a much more productive workday with others milling around," says Ms. Schneider.
Selling yourself. Your home-based business may not need a business plan, which is typically reserved for companies seeking venture capital or loans. However, if you have business goals, you'll enhance your chances of reaching them by writing a marketing plan.
It should include your business objectives or goals, an analysis of your market demographics and competitors, appropriate marketing strategies to reach your goals, and income and expense projections for your efforts.
"One of the biggest mistakes people make is thinking they'll get rich quick. Unless your business is playing the lottery you aren't going to get rich quick," says Mr. Economy. "You have to build it up from scratch and it takes a plan of action, a roadmap of where you want to go and how you're going to get there."
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