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So You Want to Start A Home Business
by Andrew H. Sargent, MbA, JD

So you want to start a home business. Trying to grab your share of the 90's American Dream? Trying to survive after being downsized to death? Hate your boss? Want the Freedom? Why you want to do it does not matter - the issues you face are the same.

Your are starting a BUSINESS not a Home Business.
You are starting a BUSINESS not a home business. Forget the HOME part. Home is only a place to put the business that is cheap. It has no bearing on whether or not you will be successful. If you are not serious about starting a business then forget the whole idea of starting a home business.

A business by definition is a for profit enterprise. Your goal is to make money. If that is not your goal then you have a hobby not a business. Hobbies are wonderful. I have one and spend a lot of money on it. I don't kid myself that it is a business or that it can pay for itself. I support my hobby it does not support me.

Worthless things in your home business.
Your computer is worthless. Most of us have at least one. I have three that work and a collection of old spare parts. Anyone need a Mac Classic or a 286AT laptop? We all have software. Most of us can do graphics, word processing and spread sheets. We are not going to pay you to have these things in your home business. Actually we don't care what you have in your business. We don't pay for your tools - we pay for a service.

What do people buy?
Computer, fax, scanner, printer, digital camera, BMW, hammer, pipe wrench. All these are tools - when I call a plumber I don't care what type of pipe wrench she has or does not have. I could care less if he has a Mercedes truck or a Ford. All I want to know is can he (or she) stop the toilet from running over. The point is - People buy service! - What is your service? Why is it valuable? What makes it unique?

If it ain't wanted it won't sell.
Never mind need? Think want! People buy what they want. They buy goods and services that benefit them and meet their desires. People do not buy based upon features. (Marketing 101 - you do not sell a products features - you sell the benefit to the buyer. You do not sell a bare hamburger - you wrap it in a bun - So every time you mention a feature – You wrap it in a benefit. This is the sales burger. Form the mental picture - it will help you remember NEVER NEVER sell a feature - sell the benefit. If you can not define a benefit to the buyer then the feature is worthless.)

Who am I? What is my benefit?
OK - you want to have a home business. Start by defining what your product is. What is the benefit? How do I do this you ask? Well take a piece of paper and write down who your "typical" customer will be. Describe them. How old? How tall? Male or female? What race? How educated? In your mind, you need to form a mental image of him or her. You need to get into their head and figure out what they want. What is the benefit to them. The better you can visualize your customer the better your chance of success. Let me give you an example.

Years ago, I was working with a small custom boat builder. He designed a neat center console fishing boat for the Southern California market. What was he selling? Not a boat. Not safety. Not workmanship. He was selling a fishing dream. He was selling freedom. He was selling the excitement of the fighting fish on the line. He was selling the brag. My Boat is etc. etc. He was not selling a boat but a dream.

Unfortunately, he thought he was sell custom workmanship. All he could focus on was the quality of his work, the fine joints, the exceptional wood work. He is now out of business and fixing boats in another boat yard. The design, one of the best I have ever seen died in the prototype. He did not understand his customer.

May be Home is not where it is at.
After you have defined your customer and can talk directly to them in your mind, revisit the home issue. Will they come to your home? Is this what they want? I am an attorney. I have had a home office and a real office. I do much (if not all of creative and writing work) at home. I use my real office to meet with clients and for conferences. People want the law office experience. The office meets their safety needs. It is important enough for many of them they will pay a higher fee. It does not meet my working space needs or my needs to work at 3:00 when I wake up and can't sleep. My home office and remote computer hook meet my needs

. A home office still carries a little less prestige. Some clients will expect you to work for less because you have "no overhead" to cover. These feeling are important if your clients have to come to you. If you go to them or deal remotely then this may not be an issue. However, if they come to you it opens up a whole wide world of issues. If home is not "where it is at" then make sure "where it is at" is close to home. Simplify by limiting you commute. Down the block may actually be better then at home. My "real office" is four miles from my home.

Home is where it is at!
Ahhhhh - you are one of the lucky ones. Or are you. Lets look at some other issues. You will have to deal with some if not all of the following:

Zoning
Most cities allow home business in residential areas as long as you do not increase traffic. This means if you try to have a consulting business or design business and the customers come to your home you may have a problem. You need to check with local city or county. You also need to take an objective look at your neighbors. Will they complain? Is the "blank blank" next door out to get you? If so you may have a problem.

Business License
Remember you are running a business. In most jurisdictions, this means a business license. Why? Because business licenses are how cities make money. They don't really regulate businesses - they just collect taxes from them. You may have to get one.

Sales/Use Taxes
If you deliver a product, you may have to collect sales or use taxes, check with your state. Each state defines what is taxable different. California taxes parts but not labor on car repairs. Washington State taxes both the part and the labor. You have to collect and remit the taxes. You can not ignore it - trust me the penalties will be far too high.

Income Tax or Business Tax
You are running a business remember. Even if you are not incorporated, you may have to pay some type of business income tax. Washington State, for example, hits every business for 2% of Gross. They define a business as an enterprise designed to earn more than $12,000 per year. A Los Angels City business license used to be 1% of gross. The point is you may have to pay a tax based upon gross receipts even if you loss money on the venture. If you have not stashed the cash, this can be a major problems at year end.

Insurance
You will need to get business insurance. Your homeowners policy probably will not cover you when your client slips on the porch or Fido bites them. Insurance companies have a way of finding out what the facts are - particularly when the facts mean, they do not have to pay the claim. Business - Sorry your policy is a homeowner policy - It excludes all business claims. Go directly to Bankruptcy Court do not pass go. Pay $200 to the clerk.

Phone Service
In most areas, the phone company charges more for a business line than a residential line. Sooooo – I won't tell them I am in business. I will get by cheaper that way. Yes, you probably can get away that way but what about a listing in the phone book. How about when a client calls information. You don't have a business line you may not have a listing.

Are your customers strange?
Do you really want your customer to know where you live? If they never come to you, then you can get by with a P.O. Box or a "Suite number" - you know what I mean - a rental box in a private mail center may let you use "Suite" instead of a box number. If they ever do come, then they will know where you live and how you live. (I am an attorney and years ago when I handled a divorce for a biker in a motor cycle gang. I did not really want him to know exactly where I lived.)

Is your family strange?
Never mind your customers - will your family cause the problem. Will the front yard be trashed the day the client comes over. Will the kids be quiet (or relatively quiet - mine never were able to be quiet.)

Starting/Stopping/Relaxing
If you business is in your home, you have to have the self discipline to start, stop and relax. Will you have the discipline to do this. Some people actually walk out the door and reenter through the garage. Don't laugh - it works. Will you be able to "put it down" and spend the evening with your family or will you sneak away for a "couple of minutes." Will your family respect that you are at work or will they come in to chat when they have nothing better to do?

Home Business or Business
Starting a (Home) Business is one of the most exciting and challenging things you can ever do. I am not trying to discourage you. These are all issues, not problems. Issues, if addressed get resolved. They only become problems when ignored.

I have been self employed or own my own business for years. It seemed strange when I was "working " for a company I started and actually got regular checks without worrying about it. My advice - Go for it.

Life is an adventure not a guided trip. If you have the desire, give it a try. You may make out better then you ever dreamed. You may fall flat. Regardless of the out come, you will have the experience and have learned a lot about yourself, business and the ways of the world. The next time you succeed because you will have learned what you did wrong. In future articles I will go into more depth on these and other issues and challenges