Your Wish Is Granted

This story appears in the January 1998 issue of Startups. Subscribe »

Somehow the image of Martha Egges, a homebased business owner from Middleton, Wisconsin, knocking on the padlocked, riveted, ironclad door of big government seemed ludicrous. Which is why Egges was skeptical about her chances of Uncle Sam actually handing her any money to develop her idea for virtual reality software that would allow researchers to collaborate electronically. When her sister, an engineer in Boulder, Colorado, told her about an associate who'd gotten a government grant to develop his product, Egges says her first reaction was, "That can't be right."

Shortly after that, she attended a meeting describing the government's Small Business Innovation Research (SBIR) program, and Egges was on her way down the red-tape carpet leading to the government grant gala. She started networking with other small-business owners who had successfully received SBIR grants, attended regional programs explaining government opportunities, got on the mailing lists of government agencies looking for SBIR partners and attended national SBIR conferences for small businesses.

Immersed in the politics of politics, Egges soon realized three things:

1. The government was actually there to help her. "Even though you, as the entrepreneur, have to do the lion's share of the work, there are actually a lot of free or low-cost government resources to help you pull together a proposal, which is the only real tool you have to win this kind of grant," Egges says.

2. The government's looking for a few good ideas, not at the size or location of a business. The fact that her company, Network Technologies & Applications Inc., was homebased "never came up in the process," Egges says.

3. The rumors of hard work and red tape are all true. "It's a very competitive process, and it required a lot of background work," says Egges. "People are probably intimidated by the amount of effort it takes to put together a proposal. There's a stringent administrative review of your proposal before it even gets to the technical review. We were initially thinking it was more than we could take on."

But take it on she did. And when Egges heard that NASA's Jet Propulsion Laboratory in Pasadena, California, had bestowed her with a grant for $69,000, her initial reaction was "disbelief and jubilation."

Now Egges is hooked. "In some ways, it's a very difficult process, but there are many unexpected opportunities that come up as a result of going through it," she says. "You develop a much larger network and identify research partnerships that, in our case, led to other opportunities and other sources of funding."

For Egges, the door to government now has a welcome mat on its step. She plans to continue pursuing government grants as a regular part of her business and currently has her eye on a few prospects, including the National Institute of Standards & Technology-sponsored Advanced Technology Program, which would provide millions of investment dollars. The experience "opened doors in many areas, not just in government but also in the private sector," says Egges. "As soon as we start talking about research ideas, people are suddenly intrigued."

Risking Business

By Janean Chun

According to a recent survey by the Independent Insurance Agents of America Inc. (IIAA), homebased business owners are among the most underinsured of all business owners. Survey results show that more than 60 percent of in-home businesses are not properly insured. "It's been evident to us for a while that this was a sector of the community that was at risk," says Amy Gergely, consumer communications advocate for the IIAA. "Homebased business owners who are pretty savvy when it comes to other financial matters still remain uninsured."

Indeed, 44 percent of respondents said they didn't purchase business insurance because they thought they were already covered. Another 10.9 percent said they thought their business was too small, while 10.7 percent didn't have the time to look for a policy. Only 9.2 percent thought coverage was too expensive or said they didn't have the money (Gergely says a business policy can cost as little as $150 a year), and 6.2 percent were unaware they needed insurance.

Why would homebased business owners think they're exempt from needing insurance? "I wouldn't call it a mental block," says Gergely. "I'd call it a misunderstanding."

Which still doesn't explain the high number of renegade homebased business owners. Fifty-six percent neglected to purchase insurance even after they experienced a loss. "What they're not considering is that next time, it might be a big deal."

Reversal Of Fortune

By Janean Chun

Among the sweet victories in the federal government's balanced budget deal was a particularly tasty portion for homebased business owners. One of the provisions overturned the Supreme Court's Soliman decision of almost two years ago, restoring the home office deduction for business owners who perform daily administrative or management functions in their homes. Though the deduction won't actually kick in until December 31, 1998, Rep. Jim Talent (R-MO), chair of the House Small Business Committee, called its inclusion in the budget a victory for homebased business owners. "[This budget] is part of the changing approach of government," he says. "We've been saying we're going to reward ingenuity, and then we turn around and have tax laws that penalize [homebased business owners]. But this law changes that. The message we're trying to send is one of support rather than one of suspicion."

Not that the hypocrisy has evaporated--it's just starting to work to homebased business owners' advantage. "Several years ago, we wouldn't have gotten these little changes," says Talent. "But I think people are sensitized to it now, and a lot of that is due to the lobbying of small business. By the end of it, I think everybody was not only willing to put [the provision] in, but they all wanted to boast about how important they thought it was. That really shows you we won the debate as well as the legislative battle."

Eyes On The Prize

By Janean Chun

Business trendies have become preoccupied with thinking their way out of the box; homebased business owners, on the other hand, are trying to think their way in. Dun & Bradstreet's (D&B) Business Solutions in a Box is just one of the prizes luring home office owners to compete in the Homebased Entrepreneur Challenge, a new contest sponsored by D&B and Entrepreneur's Home Office magazine. Top awards include a cash prize of $10,000, an IBM laptop computer, Proven Edge Professional Edition Software and Business Solutions in a Box, which includes personalized problem solvers ranging from insurance and financial services to marketing and risk management. George Martin, executive vice president of mass marketing for D&B, calls Business Solutions in a Box "an enabling program."

How do you qualify for the goodies? Simple. Just gripe to us. In 100 words or less, describe your business challenge, headache, nightmare, roadblock or black cloud. We may be able to help. "We want to help businesses resolve their problems earlier and more quickly," says Martin, "by tapping into our huge database and our years of experience."

Two monthly winners--from November 1997 through March 1998--will receive Business Solutions in a Box and a one-year subscription to this magazine. All entries must be received by March 31, 1998. See official rules on page 125. For more information or to have an entry form sent to you, call (800) 357-7299, ext. 420.

Book Review

Going Solo

By Debra Phillips

Being a successful homebased consultant is the dream of many an entrepreneur--and for good reason. Yet even as the demand for expertise in any number of fields grows, that doesn't mean it's an easy path to prosperity for those wishing to counsel others on everything from computers to advertising. If it were easy, everybody would do it, right?

Well, no, but William J. Bond's Going Solo: Developing a Home-Based Consulting Business from the Ground Up (McGraw-Hill, $29.95 cloth) makes the road less bumpy. "You can sell your valuable experience and knowledge for excellent fees," Bond says.

Although targeted to those in the early stages of their homebased consultancies, Going Solo can easily serve as a refresher course for those who find their businesses stalled--or themselves uninspired. Reorganize your home office, for instance. Reassess your client-winning skills. Along with Bond's words of optimism, such back-to-basics activities couldn't help but make the road you're navigating a little smoother.

contact Sources

House Small Business Committee, (202) 225-5821, http://www.house.gov/smbiz

Independent Insurance Agents of America, (800) 221-7917, http://www.iiaa.org

Network Technologies & Applications Inc., (608) 233-7991, http://www.dataflows.com