This article was written by Mike Capsuto, SCORE Orange County Business Mentor
The only place success comes before work is in the dictionary. Vidal Sassoon
A previous article defined a home based business. This article seeks to set the course for selecting the right home based business.
Information in this article is provided for general educational use only. No responsibility is assumed for any problems associated with the use of its content. One should seek the advice of their financial and legal counsel in every step of purchasing a home based business.
People quit or change jobs seeking the right fit. They may have taken a job for the wrong reasons - more money, prestige, they were unemployed or other personal reasons. They became frustrated, bored, and lost interest. Similar consequences can happen when purchasing a home based business. Seven often overlooked factors that need to be critically evaluated before starting the voyage to buying a home based business.
Most successful businesses are run by personality and talent. The first factor is to determine the right type of business that best matches these two characteristics. If the nature of the business does not match up there is the risk of losing the business, together with all the money and effort invested, including the frustration and loss of self-confidence.
There are 9 key types of personalities. Each personality type is characterized by specific patterns of thought, speaking style, feelings, emotions, sensations, and belief systems. Understanding each will help you find the right business. Briefly they are:
• Adviser/Counselor: has significant experience and knowledge that others are willing to pay for.
• Builder/Creator: excels at making things, whether it's paintings, wedding cakes, or skyscrapers.
• Caregiver/Maintainer: capable of providing consistent, reliable, nurturing care to others.
• Communicator/Trainer: exceptionally good with words, whether written or verbal and excels at communicating complex ideas to others.
• Entertainer/Host: thrives on being with or in front of other people.
• Investor/Owner: good with numbers, good with money, willing to take calculated risks.
• Organizer/Administrator: keeps things running like clockwork. They excel at managing multiple tasks, details and deadlines.
• Seller/Broker: every industry needs the services of competent salespeople.
• Technologist/Engineer: the person who designs, makes, sells or services all those gadgets the rest of us need but can't figure out.
There are several free or low cost e-type tests on the internet. One is “Rhonda Abrams E-type personality test”. A similar test can be found at www.humanmetrics.com. Not only will these tests provide an indication of your personality type but also suggest certain businesses that might be the best fit. A five minute test can help set you in the right direction.
The second factor before making a decision is to evaluate your home environment and be able to make adjustments where needed.
• Is your home set up to accommodate visitors? Customers, clients, salespeople, and delivery carriers may occasionally need to meet with you. If your home is not a good place are there other locations such as their place of business, restaurant, or coffee shop to meet with them. For bigger meetings are there conference rooms locally available that you can use at little or no cost?
• Check your local regulations and insurance. Is your home zoned for business? Will your insurance company cover any accidents that might occur on your premises or with your vehicle? Determine if product liability or workman's compensation insurance is required.
• Additional printers, scanners, fax machines, and more file cabinets may have to be added as your business expands. Will your office allow for this expansion?
• Will you be able to answer phone calls, emails, and faxes from customers, clients and suppliers that are located in different time zones? Will travel be a problem?
• How will your family adjust to the office? Will you be able to have a dedicated space, with no intrusions? Will you be able to keep your business phone and equipment off limits to others?
• Can you keep your business and personal life separate? Can you work if the dog needs to be walked, the kids need to be driven to their activities, or tasks around the house required to be done? Will there be resentment if you're home and not spending time with your family?
If serious doubts about your home environment exist, correct them before making any commitment to purchase a home based business.
The third factor requires the careful evaluation of your marketing skills. Buying an established home based business does not imply that the marketing is done and all that one needs to do is to sit back and reap the benefits. Marketing requires more than a website, being on Facebook or other social media. Business conditions are constantly evolving. Your business has to evolve with it - finding new customers, reselling to previous customers and moving your products or services into new markets. Marketing consists of constantly reviewing the overall marketing message, targeting the right audience, having the proper promotional channels and measurement tools to determine the effectiveness of your strategy.
An integral part of marketing is having good written and oral communication skills. This is a fourth factor. All businesses rely on communicating with people through newsletters, reports, telephone calls, emails, resolving customer complaints or promoting products or services in person. Good communication skills are based on understanding people, listening effectively to their needs, and building rapport with current and potential customers or clients. Strong marketing and communication skills are both necessary to maintain business longevity.
Do you have an aversion to risk? This is the fifth factor that requires evaluation. Buying an established home based business has less risk than starting a new one. However, there are still risks involved. You may no longer have a steady pay check. Business may be cyclic. You will be risking your own funds and possibly loans from family and friends in addition to any guarantees or collateral at risk with institutional lenders. Dealing with constant risk can lead to stress affecting ones physical health and family life. Knowing the level of risk that one wants to take can help find the right business.
A sixth important factor is to evaluate is your knowledge of accounting and finance. You must have basic understanding of accounting, interpreting and analyzing of financial statements, developing cash flow projections, budgeting and taxes. These are the tools that help control the business instead of the business controlling you. There are many free or low cost classes available through local SCORE chapters and through government agencies to help increase your knowledge in these important areas.
The seventh key factor is the need to evaluate your technical savvy. Most home based businesses rely heavily on their computer system to communicate with their customers and vendors as well as performing administrative and managerial functions. One needs to have minimum technical knowledge regarding writing and editing text, adding graphics, creating labels as well as the technical knowledge of uploading files into the server, booting your computer and fixing computer system and application errors. If you don’t know how to solve the problem have a technical person familiar with your system and software that you can contact.
Take the time to critically evaluate all these factors. The success and longevity of any business is based on having your heart in your business and your business in your heart.