How to Start a Home-Based Business That Will Succeed Part 2

Figuring out the profit angle and doing a business plan are two important parts of the process of starting a home-based business – two parts that many people starting a home-based business don’t bother with. But if you want to start a home-based business that will succeed, rather than just being another business failure that drained your time and wallet and left you disappointed, you need to pay particular attention to these two steps of the starting a home-based business process.

5. Figure out the profit angle.

This is the litmus test for anyone wanting to start a home-based business. You may have a great talent for something and the skills that enable you to express it, but if people aren’t willing to pay you for the product or service, it won’t work as a business. For each home based business idea, you need to know the answer to two questions:

How much are people willing to pay me for this product or service?
Can I make a sufficient income from that?
Suppose that you, being a creative person, are able to make beautiful quilts. However, because of the time involved, you’re only able to make two quilts per month. You discover that people are willing to pay $200 for each quilt you produce. The math says that you would have, therefore, an income of $400 per month. (Actually less, as there will be expenses related to quilt production, such as cloth and thread, to deduct from this amount.)

An outrageous example, isn’t it? But many people put themselves in a very similar position by starting home-based businesses without considering the profit angle. Business is about profit, and without sufficient profit, you’ll never have enough income to even pay the bills, let alone generate wealth. (For more on creating a business that actually produces income, see Is Your Business Model Broken?)

Go back to your list of home business ideas and assess the profit-making potential of each. If the answer to either of the two questions above isn’t satisfactory, cross that idea for starting a home-based business off your list.

Note that you decide how much income is enough. Many people run part-time home-based businesses that supplement their income and are perfectly satisfied with that. If you are planning to start a home-based business that will provide all of your income, however, you have to research the profit-making ability of your business idea very seriously.

6. Do a business plan to assess the viability of your new home-based business.

Many people are under the impression that working through a business plan is only necessary if you’re going to be looking for a business loan. But the primary reason to do a business plan is to find out if your business idea has a chance of becoming a successful business.

So once you’ve chosen a home-based business idea you’re passionate about, start working through a business plan. My Business Plan Outline will lead you through the process. The research and thinking that you do as you work through the business plan will do more than anything else to ensure that the home-based business you start succeeds.

And if your work on the business plan shows you that your idea for starting a home-based business is not a good idea, shelve it, choose another home business idea and go through the process again. It’s not uncommon to work through part of at least three business plans before you find the business idea that will blossom into the thriving business you want to run.

So if you want to start a home business, ignore the home-business opportunity ads; there are no shortcuts to starting a successful home-based business. By following the six steps outlined above instead, you’ll end up with an idea for a home-based business that truly has the potential to succeed, bringing you the money and the satisfaction you’ve been dreaming of.