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This all gets back to uniqueness. If you can't compete on uniqueness, you must compete on price (or convenience). If you're forced to compete on price alone, that just drives down your profit margin. Not smart business.
=> You must be able to price competitively yet profitably. The price you set for your product or service must allow you to compete effectively with other businesses in your market, it must be acceptable to consumers and it must return you a fair profit. If any one of these three is off, move on.
=> Your business must fit with your lifestyle. If you're a parent of young children and you primarily want to start a business from home so you can stay home with them, a real estate brokerage business that requires you to be out and about meeting with prospective clients is obviously not going to work.
You'll instead need to choose a business that can be conducted entirely (or near enough entirely) from within four walls of your home office. Similarly, if your business idea would involve having clients come to your home, you're not going to want an unruly 3 year old underfoot as you're trying to conduct business.
=> Your financial resources must be sufficient to launch and carry business until it becomes profitable. No business is profitable from day one, of course. But some are quicker to break even than others. If your business requires a considerable initial capital outlay to start - computer, printer and software for a web design business, for example - it will take you longer to break even than if only prerequisite was knowledge inside your own head, such as working from home as an attorney.
If your financial situation is such that you can't afford to quit your day job until your business is paying its way, this, too, will mean it will take longer to break even than if you're able to devote every waking hour to your business. Just do what you have to do. That's all any of us can do.
Step 6 : Business Plan
Once you've gone through above process and identified what appears to be right business for you, final "gut check" is to write a business plan for your business, much as you would for a presentation to a bank for financing. Include sections for strengths, weaknesses, opportunities and threats, and set goals for what your business needs to achieve for you, by when, and how you are going to get there.
There are plenty of good resources online about how to prepare a thorough business plan. A great place to start is at About.com (http://www.about.com). Just type "business plans" into search box.
Although it may seem like a waste of time and effort to complete a business plan if you don't intend to seek outside financing, taking time and exercising discipline needed to really focus your mind on important issues facing your business, you will be forced to take a long hard look at your idea through very objective and realistic eyes.
If your idea passes business plan test, then you can be reasonably confident that this is right business for you. If you come away from this exercise feeling hesitant, uncertain and unsure, either do more research (if reason for your hesitancy and uncertainty is lack of information) or discard idea (if it's because you don't think your idea is going to fly). If this happens, just keep repeating Steps 5 and 6 until you end up with an idea and a business plan that you're confident is going to work!
Although it's frustrating to wait once you've made up your mind to start a business from home, this really is one situation where tortoise wins race. By taking a methodical, systematic and disciplined approach to identifying right home business for you, you give your business best possible chance for long-term survival, hopefully avoiding some very expensive mistakes along way.
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Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for work-from-home entrepreneur. http://www.ahbbo.com
Elena Fawkner is editor of A Home-Based Business Online ... practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com