Have you been thinking a lot lately about starting a home-based business? You’re itching to prove that you can forego a regular paycheck in exchange for freedom. You like the idea of not getting hurriedly dressed only to stay stuck in rush hour traffic. You’re getting bored and cynical of corporate lingo and hearing words like “scenario”, “productivity”, “pro-activeness”, “performance metrics” and “leadership and motivation role models” which mean nothing - words reeking of hot air with no solid matter.

Starting a home-based business has been a burning desire since your manager told you that salary freezes are on again (for the umpteenth time) and therefore you shouldn’t expect any increases for the next 24 months because…well…the company didn’t hit the sales quota during the last quarter. And yet…you found out through a leaked memo that the corporate bigwigs just signed the purchase contract for a second company jet – complete with a bar and a giant home screen on board. They’ve also hired a very expensive pilot and a beautiful stewardess who will smile 24/7 and keep pouring wine into half-empty wine glasses to help seal the sale of whatever the company is peddling to overseas customers.

Are you ready to jump out the 5th floor of the company building, hoping that Spiderman will come to your rescue and offer you a bagful of home-based opportunities so you can sink your teeth into becoming your own boss and start raking in the profits?

Before starting a home-based business, however, let’s deal with some preliminaries.

Starting a home-based business - # 1 on the agenda is…

...to assess yourself: your traits, your moods, the qualities that make you think you can sail on your own without looking back.

Start with these questions. Answering them honestly will make the decision easier for you. It will also help you focus on what’s essential and what’s not. It will make you aware of what lies ahead so you end up only half a nervous wreck instead of a total nervous wreck:

• How much have you got saved? Ideally, you have a reserve emergency fund for the next six months to weather the initial start-up costs and the dry months as you wait to make that first sale. While some advisers recommend six months, a reserve of 18 months’ pay is much, much better. There’s an added leverage of another year before panic sets in. Provided you have a good plan for starting a home-based business, you may not even need to spend all that 18-month reserve because through smart planning, business will begin to grow.
• How much debt do you have? If you have more liabilities than assets, we’ll say it off the bat right now: postpone writing that resignation letter until you’ve whittled down your debt. Where are you going to get the needed financial backing for your home-based business? Are you going to borrow again? Sorry to rain on your parade, but if you have debt coming out of your ears, stay with the corporate moguls in the meantime and swallow your pride. Corporate hypocrisy is the lesser evil to creditors who come knocking at the door and who won’t stop at anything just to smear your credit score card.
• What we’re hammering at is, even if you have six or 18 months of salary saved but your debts are hovering near that amount, you’re starting a home-based business with little or no capital. All home-based businesses, large or small, require capital to fund start-up expenses.
• Another thing to bear in mind: how much social interaction do you need? Do you like mingling with people, chatting by the water fountain and getting together for lunches? If you can give these up and you’re mentally prepared for being on your own eight hours a day, then starting a home-based business shouldn’t be a social deprivation for you. Dealing with potential clients would more than compensate for this lack of human contact.
• Here is one more question you’ll have to be totally honest about: are you willing to sacrifice your leisure time at least for the first 24 months after starting your home-based business? When we started freelance writing, we gave up a handsome paycheck and the 9 to 5 drag PLUS our weekends. It’s by no means a walk in the park. It’s excruciating to have to work 24/7 just to meet writing deadlines.

So we don’t know how much of a leisure freak you are or how much you value ties with family and friends, but starting a home-based business requires your sustained focus, and if that means giving up your weekends and socializing after hours, so be it.

Starting a home-based business - and # 2 on the agenda is…

…assessing the product or service you’re going to sell. After you’ve assessed what kind of a personality you are and that you’re willing to abandon the perks of corporate life, you have to buckle down and evaluate the type of marketing you need to do.

• Do you know your target market? How well have you studied the feasibility of selling your product or service to this target market? Whether you’re a landscaper, a pet food aficianado, real estate agent or freelance wordsmith, the same fundamentals apply. First, you need to select your market. Are you going to focus on only the online community or on your neighborhood mom and pop stores? Marketing on the internet is certainly a better arrangement than pounding the pavement on a hot, sweltering summer day in July or wading through slush and snow in the dead of winter.
• What’s your competition like? What benefits can you offer to make you stand out and convince potential customers that you’re the best deal in town? How will you communicate these benefits? Via e-mail, newsletters, affiliate marketing, pay-per-click advertising, flyers, sub-agents or door-to-door peddling? How will you draft your sales pitch? If you haven’t kissed the Blarney stone and learned the gift of gab, are you going to hire ghostwriters to do the writing for all your communication needs?
• What extras are you willing to offer customers? Have you thought of discounts for bulk orders? Or promotional rebates? Let’s take an example: you’re a real estate agent. You approach a homeowner whose house one of your contacts wants to buy. The homeowner finds the offer attractive, but she has one fear. Where is she going to live once her house is sold? Do you have a network of contacts who can offer her temporary accommodations while she finds another place to live? Can you give her alternative places to live and are you willing to accompany her to these places? Oh sure, it isn’t your problem, but this is what we call “going the extra mile for clients.”
• Or let’s say you’re a freelance writer. You’ve managed to build a small but loyal client base who appreciate your work. Are you going to take advantage of their trust and confidence by charging double the next time they give you work to do? We’ve heard stories of freelance writers who charge an arm and a leg because they suddenly feel they’re Margaret Atwood or Joanna Rowlings of Harry Potter fame.
• What are your follow-up skills like? If you’ve sent one flyer or one e-mail to customers, are your marketing efforts going to end there? No, you have to keep sending those advertisements because consumers are busy people who have a low attention span. There’s a good chance your flyer will end up in the waste paper basket or your e-mail deleted. It has nothing to do with the usefulness of your product or service. It has to do with fickle and moody consumerism. Customers are a difficult breed to please. You have to keep reminding them that you exist and that you do have something valuable to offer them.
• Have you considered alternative marketing strategies? For example, the first step in your marketing plan is to send an email to a mailing list you purchased from a direct response marketing firm. It reads like a flawlessly written e-mail and a classic attention grabber. After two weeks of waiting you’re not getting a response. Experts say that if you send out 100 e-emails and get a 1-2% response rate, that’s a good sign. But what you really want is a higher rate. Are you going to keep sending the same e-mail or will you tweek it some more to see if it might trigger a higher response rate? We’ve heard of some cases where marketers change the e-mail or sales letter only slightly by adding a sentence or two and the difference was remarkable.
• Taking from our experience in reading heaps of sales letters that land in our box, you what what we’d do? We would prepare two different sales letters (or e-mails). Send the first one to one group and send the second one to a second group. Which sales letter generated the best response rate? Another way of doing it would be to send one letter to all potential customers and then after two weeks, send the second letter to the same group. See if there’s a marked difference in the response rate.

We could write ad nauseam about starting a home-based business, and while we recognize the reality of “different strokes for different folks”, some basics need to be respected. There’s a fine line between following the rules and breaking them. Sometimes, the latter is said to bring more success. You need to test the waters, get a thermometer reading of market fever.

But in starting a home-based business, the crux of the matter is really this: can you afford to stay afloat without a regular income in the first few months? When you’ve answered this in all honesty, take your oars and start paddling your canoe!