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.
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.