QUESTION: What's the
most critical factor in surviving my first year owning a homebased
business?
ANSWER: By far, the first
year is the year when most home business owners decide to call it
quits. A number of academics have pointed to the lack of adequate
financing as the most frequent cause of businesses going under, but
we believe even money problems are avoidable if you have a sound
entry plan. Adequately research the business you've chosen
before you begin so you can anticipate most of the problems
you'll face.
If you learn, for example, that everyone who's started your
type of business has taken two to three years to generate enough
income to cover business and living expenses, you probably need to
make some adjustments. Keep your job and start your business on the
side, get a part-time job, lean on your spouse's income, or
figure out some other way to cover your expenses while you build
your business. Help boost initial cash flow by convincing your
employer to be your first customer, lining up customers before you
quit your day job, or teaming up with existing businesses to handle
their overflow.
Content Continues Below
Since most new businesses are hungry for customers, do whatever
you can in advance to learn how to find them or help them find you
quickly. Describe your business so people understand what you
offer, and choose a business name that piques their interest. Try
out your business concept and name a few times, and see how people
react; make modifications if you're not getting the response
you need. When you've come up with a business name that pricks
up people's ears, be sure you procure the matching domain name
for your Web site right away.
Here's a factor that's often overlooked: Finding the
right combination of what to offer and how to price it, describe it
and also market it is a trial-and-error process. So, the question
for you is, should you wait to do this in the first year of your
business and risk becoming a statistic, or should you start now and
do it before you actually quit your day job?
To be prepared, read and use articles and online resources such
as Entrepreneur.com and the SBA's Web site, www.sba.gov. But also keep
in mind the most important lesson you'll learn isn't
written down; it comes from the experience of trying, testing and
experimenting with your ideas.
Paul and Sarah Edwards' latest book is Why Aren't
You Your Own Boss? Leaping Over the Obstacles That Stand Between
You and Your Dream. Send questions to them at www.workingfromhome.com.
Originally published in the June 2003 issue of Entrepreneur's StartUps