Success Factors for a Home-based Business

by Jack Cronin

There are several advantages to working from your home including flexible working hours, low overhead, and more available time to work while other people are commuting to their jobs. Obviously the allure of one or more of these can be more than enough for many of us to give working from home a try. There are however several “secrets” to improving the odds of your home based business becoming a success.

The first secret is somewhat obvious. Find an opportunity with a low initial investment. Being in business means making at least enough profit to pay ourselves a reasonable hourly wage. Ultimately I’m sure we’d all like to make a very good hourly wage. Starting a new business usually means needing to build a clientele which takes time. The burden of having to make a major investment can be a huge financial drain, especially for a new business. Whenever possible minimize you initial costs.

Another somewhat obvious secret is to have your product command a reasonable profit margin. Many factors can impact the price/profit of our product. Good old supply and demand always factor into this equation. The more competitive products on the market, the more likely you will have to set a more attractive price (read lower) to attract customers from the competition. Of course the lower your price, the less your profit. Try choosing a product where there won’t be so much competition that you will be forced to lower your price.

A third secret to success is to have a business that has the benefit of multiple sources of income. OK that sure sounds great but how do you actually put this secret into practice? Probably the easiest way to add an income stream is to not only sell your product or service on a retail level, but sell it on the wholesale level too! Let’s take a common example. Assume you are very artistic and you design a new craft type of product. Many people will only consider selling their product retail, meaning that they will sell each item one by one to their friends, neighbors, co-workers, etc. Well why not consider doing some wholesale selling too? Have some local shops take the items on a consignment basis or better yet just sell them a larger quantity at a lower unit price. Another good choice is to use the internet. Try selling some product on one of the on-line auction sites like E-bay. Again you are in business to maximize your hourly pay. If you can sell a lot of product with less effort, you can make more money than selling fewer at a higher unit price over a longer time period.

The final secret to a successful home based business is to create passive income streams. Once again this sounds like a great idea, but how can you actually put that into practice? First, what is a passive income stream? I define passive income as something you invest your time in once and then continue to collect income without much (or any) additional investment of time on your part. Continuing with the example from above, rather than making the actual product or craft yourself, you could make a “kit” with all the materials and instructions and then sell the kit. Most of your effort would be creating the kit and writing the step-by-step instructions. On an ongoing basis, this is a lot less work than making each piece yourself.

I have used one common example throughout this article to clarify each point. There are opportunities available for home based businesses which include aspects of each of these secrets. I personally know of one business that offers five different income streams. You don’t necessarily have to “create” your own blueprint for success. Many potentially successful opportunities already exist.