"Reviving the Economy: What Should Business Do?"-Home-Based Business
Wednesday, March 25, 2009SUSIE GHARIB: With job cuts on the rise in this recession, many people are looking at starting a business right at home. The average home business nets about $22,000 a year in profits. But with long hours and little pay, start-ups are not for everyone. As we continue our series, "Reviving the Economy: What Should Business Do?" Jeff Yastine gets the basics of starting a home-based business.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Denise Dugan's story is a familiar one.
DENISE DUGAN, HOME-BASED ENTREPRENEUR: I went the corporate route for many years and I was really not happy and satisfied.
YASTINE: So she switched jobs, becoming a health food store manager. Then, she was laid off.
DUGAN: So I just wanted to see how you were doing with your exercise routine.
YASTINE: That's when she got serious about creating a home-based business. She uses her computer, phone and chutzpah to sell nutritional counseling to a growing network of clients. So, how do you start a home- based business? Alan Carsrud, a lecturer on entrepreneurship at Miami's Florida International University, says success starts with a business plan and a budget.
ALAN CARSRUD, GLOBAL ENTREPRENEURSHIP CENTER, FLORIDA INTERNATIONAL UNIV.: One of the things that a lot of these businesses need to do is really sit down, first and foremost, what is it that I'm trying to sell? What is it that I'm really providing?
YASTINE: Libraries and bookstores carry plenty of material on writing an effective business plan. Next you'll need to do some legal paperwork. Does your business have a name? You may need to file it as a DBA or doing business as with local or state authorities and you'll need a business license from city hall depending on what you're selling, also a sales-tax license. Other permits may also be needed. Check with your local and state regulators. The other thing you'll need says Carsrud, is low expectations.
CARSRUD: From some indications several years ago, the average home- based business was making about $28,000, so that's not a - I mean that's revenue, that's not profit, that's revenue. Today it's probably up $40,000 or $50,000, but it's still very, very small.
YASTIINE: Carsrud says there's another important factor in starting a home-based business: marketing. The vast majority of home entrepreneurs are selling a service, not a product. So first and foremost, you'll need to promote yourself.
DUGAN: In all aspects I've turned it around where now I attend more marketing events and attend women's groups, and different lectures. I'm just putting myself out there so people know my name.
YASTINE: Experts say getting out there is key. Because if customers remember you and your home-based business, then, like Denise Dugan, you're already improving your small company's chances for success. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.
