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How to Choose the 'Right' Home Business for You

By: Daegan Smith

All right, so you've decided to jump off the corporate ladder and build your own. Congratulations! You've just joined the growing community of home business owners in the US. 

Expanding at an estimated rate of 10 % per annum, the home business segment is being chosen by millions of people today. Running a home business offers economic self-sufficiency, unparalleled freedom and the satisfaction of finally being in charge of your own life. 

All of this without a boss dangling on your head and without the guilt of ignoring your family and the "me-time" you so badly need.

Choosing Mr. Right

Now that you have decided that a home business is the best thing for you, the first question that springs into your head is 'what is the right business for me to go in to?' For every single idea you think will work, there may be ten that won't. Since you will be investing a lot of time, money and energy into this project, it is imperative that you first evaluate the feasibility of the idea.

In a business, you could be selling a product or a service or a combination of the two. To decide what is the best mode for you, a simple guideline here is to clarify in your own mind, two things:

1. What do I want to do?
2. What I am capable of doing?

Take a stock of your interests and capabilities and then decide on what would you rather be selling. For instance, if you have been in the hospitality industry all your life, it may be a good idea to choose a service-focused business like catering, rather than selling computer peripherals, no matter how profitable that looks. 

But if you've always been interested more in, say, fashion designing and have had some experience in that field, you have more chances of succeeding with starting a boutique for clothes. So, a good recipe for success would be to marry your interests with your core competences. Team it up with hard work, determination and a wide focus vision to go a long way.

Once you have decided what business you want to put all your monies into, you must evaluate the option by measuring it against some parameters:

1. Does it fill a need-gap?

   Does my idea satisfy an existing market need, not fulfilled by any other or many other suppliers?

   Will my idea fulfill an existing need in a much better and cost - effective manner?

   Will my idea 'Create' a new real need for consumers? Along with these, also assess the size of the market. Many a business has failed because the market size was inadequate to keep the business beneficial in the long run.

    

2. What is my level of interest in this idea? Ask yourself if your level of interest in the project will sustain a couple of years down the line. Try to forecast how the idea can grow into something bigger. 

   For instance, if you decide to turn your hobby of landscaping into a serious consulting business, ask yourself where you would want to take it by the end of one year. Do you see yourself doing this for a long time and do you feel there is scope of expanding this business. If you are brimming with ideas here, then yes, you are interested enough in this idea to take it up.

    

3. How well can I manage this business, given my interest and capabilities?

   Do I have the required knowledge on this service or product?

   Do I have significant experience in this field?

   What are my managerial and marketing skills for this business?

   Do I have any additional professional qualification that will help me run this business more efficiently?

    

4. Financial viability of the project

   What is the revenue stream? Where from and how will the money come in?

This is one of the most important aspects you should look at when considering a new venture. Unless you see a clear revenue inflow to the business, discard the idea.

I. Evaluate the options you have. You could either be financing the project from your own savings or through a bank loan. You have to be very clear on how you will manage your personal finances, if a large chunk of your savings gets engaged in the business for a certain period of time. If you will be opting for a bank loan, remember that it has to be re-paid in a certain time period. Would your business start giving enough returns by then?

Each business has an approximate "gestation period". That is the amount of time it takes to break even. Some businesses may need upto one year to mature and start giving returns. Do you have the patience to wait and not get disheartened?

Do I own the space required to run this business?

What equipment do I own which will be needed to run this business efficiently?

Make a laundry list of all the equipment and gadgetry you possess and see what can be used in your business. It would help you later in bringing down the cost of buying new office equipment.

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