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Starting A Home Business

Reprinted from Countryside Magazine

The first step is often the hardest: What will you sell?
Here are some points to consider

If you want to start a home business, the first task is one of the most important, and the most difficult: You must decide what goods or services you’re going to sell. Forty years ago, traditional homestead jobs were pretty much limited to candle-making, pottery and leather-work. Today we have a vast array of choices, thanks in part to computers and the Internet.

But that’s a mixed blessing. With so many opportunities, how do we make a decision? What criteria should we use, and how do we evaluate our choice to make sure it’s the best one? Here are some factors to consider as you set out to find the ideal home business.

Taking inventory
One of the first steps is to take a personal inventory. Ask yourself questions like these: Why do I want to work for myself, rather than for somebody else? Do I want to work at home literally, or would I be willing to set up a shop in a better location, or would I be willing to drive to where clients or customers need my services? 

This will help narrow your search. If you want to work without leaving home, you won’t be a house painter: you’d only have one customer. If you want retail sales but you live on a dead-end dirt road miles from anywhere, you’ll do better in a location with more traffic.

How much money do I want or need? Someone supplementing a spouse’s paycheck or social security will need less than a person who is a family’s sole provider. A person in debt will have different needs than one who has savings. Someone who already has a job and starts a home business on the side is in another situation. And $10,000 a year might be a lot for some people, but a pittance to others.

This analysis will automatically eliminate many possibilities. You won’t support a family with a seasonal business selling something with a low markup. But this might be ideal for the one who just wants a little extra income without getting into the rat race. How much time, effort and money am I able or willing to invest in my business? Could I, or would I, go into debt to get started? What is the state of my physical, mental, and psychological health? What effect will a business have on my life? On my family? My homestead? And the key questions: What skills or experience do I have, and what do I enjoy doing? The answers will help you focus your search.

Your product or service
The only way to make money is by selling something-either a product or a service. You are in effect selling yourself-your muscles or your brain. Start by deciding what you like to do. But that’s just the beginning. Do What You Love and the Money Will Follow is the name of a book, not a business plan. The catch is, just because you love doing something doesn’t mean somebody will pay you for it. You have to sell something, and at a profit.

This is a common hang-up for people who are engrossed with homestead-type activities. They love goats, and they’d love to sell goat milk. But can they sell it, at a profit? Can someone make money selling tomatoes, sweet corn or pumpkins, when other people are giving them away? Sometimes. But not very often. And seldom without a special twist that sets them apart from the crowd. The same holds true for most other homestead products, crafts, and many other goods and services. Do what you love, but make sure somebody is willing to pay you!

There’s another angle to this. Are there no Jerusalem artichokes in local grocery stores or farm markets because consumers don’t buy them, or don’t they buy them because they’re not available? In many cases like this customers simply don’t know about a product. But can you afford to educate them? Probably not. This requires careful research and planning. If you’re not able or willing to do that, you’ll be better off working for somebody else.

Using skills and talents to make money
What people will pay for, and how much they’ll pay, depends on location, timing, economic conditions and much more. In brief, it’s the law of supply and demand. Supply and demand applies to workers themselves, as well as to their products or services. A person with skills, talents or education that are in demand is more valuable in the marketplace, whether that marketplace is an international corporation or a one-person homestead business. 

There are many hairdressers in rural areas, working from their homes. But they didn’t just decide to open a shop because some people who want to look nice would come to them rather than driving to town. They went to school to learn their trade, and most of them worked in salons in town before starting their own businesses. The demand for their services is quite commonplace: their training, experience and skills are not. There are many similar businesses: small engine repair, auto body repair, stonemasonry and pet grooming, to name a few.

Almost everyone is good at something. But not all skills are equally marketable in all locations. A person who is a wonderful classical oboist would have a hard time getting gigs in a sparsely populated rural area that favors country music. Even an excellent midwife won’t get much business in a geriatric community. And being an expert at growing tomatoes isn’t very profitable if half the people in the county have home gardens with tomatoes rotting on the vines.

Determine what skills you have that are in demand in your area or that could be sold by mail or on the web. The greater your skills, and the greater the demand for them, the better your chance for success. If you come up empty-handed, why not learn a trade? If you like to tinker, maybe you’d enjoy repairing appliances. Go to a trade school, take a correspondence course, or apprentice yourself to someone and learn how to do something people in your area will be happy to pay for. 
You don’t have to be young, or uneducated, to go back to school. A middle-aged doctor wanted to get out of the rat race and into a homestead business. He took the courses required to become a licensed Realtor.

Using money to make money
Some trades and skills that might not require extensive training and education can still be in short supply-and therefore in potentially or relatively high demand-because of their capital requirements.

One example is earthmoving equipment. One of my clients bought a bulldozer for his own use. Pretty soon neighbors were asking him to do grading and excavating for them. Another fellow had the same experience with his backhoe. And the guy who owns a portable lumber mill is almost legendary in many rural areas. Not everyone can operate these machines. Even fewer can afford them. If enough people want what they can do, this is a ripe business opportunity. In farming country, this could extend to custom plowing, planting, haymaking or combining. The seasonality of these jobs is both a plus and a minus. Many farmers, especially smaller ones, don’t want to tie up capital in equipment that is used only a few days a year, and find it more economical to farm out such work. Or their own equipment is so busy they need extra help. The downside is that the custom operator faces the same consideration of having an investment in machinery that stands idle for most of the year. But if you already have the equipment, this could be a natural.

Using time to make money
Capital can involve time as well as money. Starting a Christmas tree plantation takes cash for land and seedlings, but it also takes 5-7 years before the crop can be harvested. If you have land that is idle or underutilized, and you can afford the seedlings, this is a way to make money with time, rather than a large initial investment. The same can be applied to firewood, pulpwood, and in an even longer time-frame, sawlogs. In a shorter time frame it might apply to landscape nursery stock, or perennial flowers or, even more extreme, annual bedding plants. But do you see the pattern? You can make a little money by selling annuals that you have grown for perhaps two months. But you’ll make more with perennials you have grown for a year... and still more with trees or shrubs that have taken several, or many, years to develop. Time is money!

Using your imagination to make money 
Many homesteaders lack all three: Skills, time, and money. That calls for imagination! One woman who lives near a medium-size town made some very attractive large signs with such messages as “Happy Birthday!” “It’s a Girl!” “Welcome Home!” and so on. She rents them.

If all else fails . . . 
There is one more category that has become rather popular during the recent boom times. People who have no time, money, skills or imagination can find something that most people are perfectly capable of doing for themselves but don’t want to do. They are willing to pay others for something they consider not worthy of their time. The classic examples are washing windows (especially for Main Street merchants), cleaning (homes and small businesses), and painting. Today this has expanded to everything from custom shopping to party/event planning to dog walking, mostly for well-to-do people in the rat race.

Location is all-important here. Most tasks like this are more marketable in cities than in the countryside, where most people tend to be pretty self-reliant and frugal. But who knows? You could find yourself in an area where people are looking for somebody to take certain jobs off their hands. In a farming community this might mean trimming cows’ feet or whitewashing. Elderly people (or those with hectic city jobs who live in the country or have second homes there) might want help with gardening, yard work or home maintenance. You’ll never know until you check it out in your own neighborhood.

The business plan
A formal, detailed business plan is generally essential to get a loan. A plan of some kind is essential for success, even for the least imposing possibilities we have discussed here. But a plan can be pretty simple. What is your mission or purpose? Who are your potential customers? How many are there, and where? How will you reach them? What is your competition? How much capital will be needed, and how will it be used? How will you be compensated? Where do you want to be in a year, three years, five years? How will this business affect your life, and your family? What will you live on until it starts to pay? What will you do when (not if!) something goes wrong?

What not to do
The urge to own a business is so strong in some people that they seem to lose their common sense. Don’t you do that. Investigate, research, think . . . and follow a few simple rules you probably -- or should have -- learned as a child. If something seems too good to be true, it probably is. Overnight wealth? Fabulous returns on a small investment? Come on, get real. There is no such thing as a free lunch. If somebody offers something for little or nothing, in money or effort, what’s the catch? Why would anybody pay you to stuff envelopes at home, when there are machines that can do that at lightning speed and at low cost? Why would somebody want you to sell something, but not tell you what it is-until you pay them? Why would a legitimate business want to sell you information for “cash only” -- unless they don’t want to be found? Why would somebody brag about how “legal” their scheme is -- unless it’s an illegal chain letter or pyramid scheme?

If a “business opportunity” depends less on selling products than on signing up other suckers, watch out. If it involves some “amazing new secret,” be skeptical. One of the worst things about scams of any kind is that they usually bilk people who can least afford it. Be skeptical. If something seems suspicious, thoroughly investigate it. (And beware of “testimonials” from people who make outrageous claims.) Better yet, cover your ears and run! It’s common for beginners to copy others who have become successful. This can be very tricky. A few years ago there was a great deal of interest, and profit, in growing ginseng. But so many people started growing the root that the bottom fell out of the market. Even long-established growers went out of business. Ostrich raising and Boer goats are other examples. It doesn’t take much imagination to follow the crowd, but it does take a lot of research and planning.

In summary...
This is only a brief outline of a few things to consider when starting a home business. But if you do the thinking I hope this has forced you into, the rest will follow quite naturally. Yes, for all but the smallest, most informal enterprises, you’ll need a business phone, a business checking account, and a thousand other details. But I’ve dealt with people who got all uptight about furnishing their home offices, even before they have a business plan! Do the groundwork first, and you’ll learn as you go.

Which brings me to the best advice I can offer a beginner: Don’t go into business; grow into it! Some of the most successful small businesses I’ve worked with grew out of the owners’ hobbies or interests. In many cases the ideal situation is to start a part-time business while you’re still employed. Grow, and learn, until the home business is running smoothly enough to allow you to quit the other job. And the most important advice of all? Get started now!

This article, used by permission, is from the July/August 2001 issue of Countryside Magazine, which also features other articles on being self-employed, etc. Please see Countryside’s website, for a complete listing of back issues with these and many more valuable and interesting articles relating to home-centered living of all kinds.