According the US Census Bureau, 13.4 million people work from home now. That’s an increase of 41% over the last decade. This significant rise in the number of people who want to work from home and own their own home-based business a direct result of technological advancements but it’s also an indication that people are looking for ways to make more money, achieve a better balance in their lives and spend more quality time with family.
Having the desire to launch your own home-based business is easy, but starting out on your own can be a bit daunting. The good news is that you can significantly increase your odds of success by making sure that you have three key things in place before you get started:
Having a mentor
to show you the ropes and guide you through your business start-up can be a valuable asset for new business owners. Researching and establishing a new business can be time consuming not to mention confusing without the guidance of “someone who’s been there”. Seek out an expert who can give you the support you need.
Plan: Operating systems
are key for businesses to run smoothly. Liability issues, a marketing plan, invoicing, customer service, etc. all need to be outlined so you can use your time efficiently and present a professional image to prospective clients. Be sure to have a plan for how your business will operate on a day-to-day basis (not to mention how it will make money!) before you start.
Discipline: Unlike traditional offices, there may be a lot of distractions when you work from home and your working hours aren’t defined for you. Even if you’re only able to dedicate 15-20 hours per week to your business, it’s important that you’re disciplined and use that time as efficiently as possible.One way to avoid getting bogged down by household tasks and family responsibilities is to have a coach who will keep you on task and help you accomplish weekly, daily and monthly goals.
Because, starting a business from scratch can be a challenge, many people seek out franchise or business opportunities to help ensure their success. While both offer support, training and a proven business model, it’s important to know the key differentiations both so that you can decide which system will work best for you.
Below are a few of the key differences:
1. Business name. All franchise owners operate under the same name as opposed to a business opportunity where you are free to use any name you chose for your business.
2. Operating system. Franchises require that every operator follows the exact same operating system. Business opportunities provide detailed suggestions about the most effective way to run your business but you are free to deviate from the business model and incorporate your own ideas.
3. Territory. Franchise owners are restricted to operating in a specific territory. In the case of a business opportunity, you have the freedom to operate in any market, expand and/or move your business without any type of penalty.
4. Royalty payments. Franchisees typically have a contractual commitment to pay the franchisor ongoing fees (royalties). Royalties can be a fixed periodic amount or may be expressed as a percentage of your sales. Business opportunities generally don’t charge any ongoing fees.
5. Ongoing support. Both business opportunities and franchises typically provide ongoing support to business owners. Franchises sometimes offer structured support with different entities within their corporate offices as opposed to business opportunities that offer more informal support on an as needed basis.
6. Investment. The cost to start a franchise can be tens of thousands of dollars in addition to proving that you have liquid assets at hand to support your business. Business opportunities are much less expensive and don’t require detailed financial information.
When it comes to choosing a path for business success, there is no right answer in terms of which strategy is better. It depends on your personality, goals and what you’re able to commit financially. In either case, do your research to determine what business is right for you.
This summer marks the 20th anniversary of my Homeowner Referral Network (HRN) business. 20 years! It’s hard to believe.
So much has changed since 1996. Back then, I worked from an old farm table in my basement with my two daughters at my feet. I purchased my first computer with a $5000 loan from my husband’s retirement savings plan and I didn’t have a website because the internet didn’t even exist back then! I started with just 5 contractors in my network—a pest control specialist, painter, handyman, floor refinisher and a plumber–and printed my direct mail cards to homeowners on a refurbished printer. My first commission check was a whopping $30!
Once my business became profitable, I decided to give myself a gift and hired a few of the incredible contractors in my network to renovate our front porch and convert it into my home office:
This is a clip of the first news article that was written about my business in 1997 in a local newspaper. After this article, my phone didn’t stop ringing with calls from contractors, homeowners and other entrepreneurs who were all interested in my business:
By year two, my income had almost doubled and gained the attention of homeowners and contractors nationwide, not to mention the media:
Now, 20 years later, I have worked with almost 100 contractors and am proud to say that 80% of the ones who first started with me are still in my network (including the contractor who paid me my first $30 commission)! I still work alone but am now connected with 300 other incredible business owners who are operating HRN businesses like mine all across the country.
Over the years, I’ve seen the start of companies like Improvenet, Angie’s List and Home Advisor to name a few—all of whom attempt to satisfy the universal need for homeowners to find trustworthy contractors. I started Home Remedies before all of them and have been able to compete and survive for two basic reasons:
- I kept my business personal and local.
- I remained true to my commitment 20 years ago which was to be a “trustworthy resource for local homeowners and an outsourced sales and marketing force for local contractors”.
I never dreamed that the simple home based business I launched from my basement would have grown into a cottage industry nationwide. The rewards have been tremendous and I am grateful for my clients, my contractors and all of my fellow HRN owners who have helped me achieve this extraordinary milestone!
It makes sense that this is one the questions most frequently asked by new Homeowner Referral Network (HRN) business owners. After all, you want to launch a home-based business for flexibility and independence but ultimately, the goal is to generate more income for your family or possibly transition out of a full time job.
The short answer is that most new HRN business owners turn a profit within the first 6 months of operation. That’s pretty appealing since most new businesses can take up to 3 years to turn a profit! The reason HRN owners are able to make money so soon is that the start-up expenses to launch a contractor referral business are minimal.
To give you an idea, I’ve outlined the major expenses below:*
- Fax and/or Scanner
- Telephone Line
- Answering Machine/Service
- Direct Mail Printing
- Mailing List Subscription (1 year)
- Promotional items
- Fees for Establishing Legal Structure
The expenses listed above will vary based on a few factors. For example, fees to set up a legal structure (LLC, Corporation or Sole Proprietorship) are different from state-to-state, you may currently have an office set up in your home, outsourcing printing or doing it in-house, etc. Each start-up is different but the average HRN business owner can launch with a budget of approximately $750 to start over the first 3 months.
And, the monthly operating costs for an HRN business are minimal as well. This is a word-of-mouth business that doesn’t require expensive advertising, there’s no merchandise or production costs and best of all, operating a business from home can be tax deductible!
Below are few of the monthly HRN business expenses:
- Direct Mail
- Printing Expenses
- Association Membership Fees
- Office Supplies
On average, monthly expenses for HRN owners are no more than $300/month.
Those are the expenses, now let’s discuss income. Contractor commissions vary based on the dollar value of the job and type of service. Also, in some cases material costs will be considered. (Complete commission tables are outlined in the HRN Business Manual.) So, let’s say an average commission paid by a contractor to your HRN business is 10%. If you refer one job for $5000-$10,000, that’s a pretty good profit with no overhead!
So, if you’re still thinking about starting an HRN or Aging-in-Place Referral Network in your area, don’t let the cost deter you. Not only is this a rewarding business personally, but it can be a very rewarding business financially as well!
*Based on HRN owners who start with the Best Value Business Package which includes a website, forms, management software and graphics.
If you think you can’t afford to quit your day job or don’t have the funds to launch a home based business, think again. It may seem like finding the money to start a business of your own is impossible but, if you take a minute to break down your finances (and are willing to cut back a little) launching a home based business might not necessarily be out of your reach.
1. Mortgage: With interest rates so low, it may be time to refinance your mortgage. A lower interest rate could save you several hundred dollars each month.
2. Tax Deductions: Did you know that a portion of your home’s expenses are tax deductible if you’re operating a business from home?
3. Car: If you decide to work from home, you may be able to live with one car which is a significant savings on not only your monthly car payment but gas and insurance.
4. Childcare: Full time childcare may not be necessary if one parent is working from home.
5. Tax Bracket: If you’re a two income family and reduce to one income, your tax bracket may be lowered significantly which translates to more take home pay.
6. Commuting: If you work outside of the home and take public transportation to work every day, take into account how much money you currently spend on your monthly commute.
7. Daily Expenses: Many minor expenses like a work wardrobe, dry cleaning and dining out will be significantly reduced when you work from home which will save several hundred (if not thousand) dollars each month.
Launching a business takes discipline, sacrifice and creativity and the first place to put these skills to work is by revamping your finances to find the funds you need for your business start-up. Take a hard look at your family budget and it may open your eyes to how small the gap is between your current income and what you will need to earn working for yourself!