Planning to Start a Home Business? How to Make Sure Your Idea Will Work

March 12th, 2010 |

In this tight economy many people are considering ways to start a small business, especially a home business. If that’s you, there are several things you need to consider before starting your venture.

A number of years ago, Saturday Night Live did a sketch about two guys who started a cellophane tape store in a shopping mall. That’s all they sold — cellophane tape.

Opening Day came and the business partners were excited. They thought about all the money they were going to make. The only person who came into the store wanted to change a dollar bill.

It was easy for the audience to see that the business venture would be a flop. They had to pay a very high rent for the mall location, but they sold a product that was very cheap. There was no way to make the sales be more than the expenses.

An obvious reason for the inevitable business disaster is that a roll of tape lasts a long time in most businesses and homes. If you sell houses or cars, that’s not a problem. But retail stores usually must rely on having repeat customers who buy from them frequently.

The third reason the business was doomed was that you can buy tape in so many places — in the grocery store, the drug store, the big box store and so on. There was no reason for people to go out of their way to buy tape in that one store when they could get in other stores while shopping for other products.

Keep this lesson in mine when you decide to start a small business. You don’t want to waste your time, money, sweat and emotions on a bad idea.

Consider these questions before you invest any of your time and hard-earned money:

Does your business have a clearly defined audience?

Who are your competitors? How many are there?

Can you sell your product or service with enough profit margin to make it worthwhile?

What is your competitive advantage or unique selling proposition?

And finally, do you have enough capital to start and sustain the business in the early stages?

Once you have answered these questions, you will see whether or not you truly have a good idea for a small business or home-based business.

Danek S. Kaus is a business journalist and publicist, and the the author of You Can Be Famous! Insider Secrets to Getting Free Publicity. Read his Blog and learn more about his Services

Setting Up Your Home Based Business (ronmedlin.com)

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