In today's uncertain economy, the challenge for many is simply staying afloat. But in Rich Sloan's opinion, the current recession presents the perfect opportunity for entrepreneurs to start a new home-based business.
"You name it, it's being started up," says the optimistic Sloan. "Because the barriers to starting and running a viable business are lower than ever, people are starting just about every kind of business imaginable."
Sloan's opinions aren't surprising considering that he's the founder of Startup Nation, a Web site that's been tracking trends in entrepreneurship since 2003.
Sloan, who calls himself the Chief Startupologist of the site, says that banks are more likely to support a home-based operation because it doesn't have to pay of fixed overhead costs. "Basing your business at home instead of in a brick-and-mortar facility positions you for a better success rate out of the gate," he says. "When you don't have utilities, insurance and rent to pay on a building you don't have that fixed overhead. While you build your business you can remain responsive and profitable."
What's the best kind of business to create? That's one of the questions most frequently asked by entrepreneurs. Startup Nation reports that a wide variety of startups is taking shape; those that won the site's Home Based 100 contest in 2007 included companies that place home-based nurses, promote safety products for children, clean homes, arrange fishing trips, bake organic snacks, and sell ten-foot drill bits. The successful ones share a single common ingredient, he says: their owner's passion.
Sometimes, that passion springs from success at a traditional "day job" - you develop a service or product that proves so popular that you decide to strike out on your own. Accordingly, the HomeBased 100 contest includes a category called "Boomers Back in Business." Entries for this year's contest are being accepted through the end of September.
But the current recession is causing more and more corporate workers to start up their own home-based businesses because they have been downsized.
"As people leave the corporate environment, either voluntarily or without warning, they're starting up businesses based at home," Sloan comments. "In an ideal scenario, it's better to start a home-based business part-time while you're still doing the corporate gig and only once you've proven your business will work do you make the leap. Not everyone has that option, though."
Successful home-based businesses fall into two general categories, he notes: those that meet a fundamental need, and those that represent unique - even quirky - solutions.
"One very fundamental business is the dog walker: this type of business is doing very well because lots of people need their dog walked and have to go to work," explains Sloan. In the "unique" category, he mentions one of last year's Homebased 100 winners. "David Wachtendonk has a site called Murder Mystery Maniacs," he says. "Dave creates special parties for parties, graduations, and corporate events. A business as unique as that has incredible relevance and staying power."
eBay, Sloan adds, is "going to become more, not less, attractive for sellers" due to the recent changes in listing fees and formats. "I highly recommend that people consider a multiple pronged approach that includes a Web site, an eBay Store, and an Amazon.com store."
Having multiple sales outlets widens a home-based business's customer base, but it's best to promote a single company in all those venues rather than adding another business or diversifying, he cautions. Focusing on a single product mix will leverage resources and inventory across multiple platforms.
Working at home doesn't necessarily translate into working in isolation, according to Sloan. "Isolation will slow your down. You need to be in the mix, to develop contacts, to be inspired to come up with creative solutions." He strongly recommends joining the networking site LinkedIn, which not only builds contacts, but also improves website ranking in Google search results. (He hasn't found the same benefit in joining the popular networking site Facebook, however.) Another way to gain attention is to create a Web site. "Use it either as a brochure or a store, but foremost as a communications tool between you and your customers or prospects. The larger the bonfire you have, the more likely you are to draw some attention your way."
Anyone who has worked at home can tell you that one of the biggest challenges is the lack of fixed hours and boundaries. You may be able to work in your pajamas, but there's a danger the work will never end, and friends and family can intrude on your productivity.
"Many times, the reason we choose to work at home is proximity to the very things that get in the way of what we are trying to achieve - spouse, pets, kids, or whatever you have an attachment to. You have to be extra-disciplined, and you have to create structure for yourself and the people you share your home with. Your family has to know what the rules are and say, "Here's when I'm available, and here's when I'm not available." You're able to give them more quality time when you set up that structure."
A final bit of advice Sloan gives budding home-based entrepreneurs: keep track of your finances regularly. "Hold a weekly financial meeting; you don't want surprises."
Sloan, who is based in San Francisco, is himself a home-based business success story. He and his brother Jeff founded Startup Nation in early 2003. But it wasn't their first joint venture. They created a juggling kit that was the best selling gift of 1993. They also buy and sell Arabian horses around the world. Rich also ran a venture capital development business prior to Startup Nation. "I have never had a paycheck from any entity other than one I have created," he says. We just love following our passions, having fun with business."
