This article provides advice, tips, and the pros and cons of starting a home-based business and becoming economically independent.
Many people dream all their lives about becoming financially independent, preferably by starting their own home-based business. A few even sketch out their dreams, playing with ideas and figures to determine whether or not there's really a chance for them to give up the nine-to-five in favor of striking out on their own. And a very, very few — usually after much initial hemming and hawing — actually do "make the big break," only to find, quite often, that the period following the act of change can be just as emotionally turbulent — perhaps more so — as the time leading up to it.
In some cases, it can be even worse; when the financial instability of establishing a new enterprise compounds the already-existing emotional turmoil which, in turn, is further aggravated by the growing realization that the "real trouble" still lies ahead. Add to all this the reality that almost every small business requires at least three years to break even and you have the makings of the closest thing to a postpartum depression (outside of birth itself) known to humankind.
That's the bad part. The good part is that thousands of people do take the plunge into starting their own home-based businesses every day and a great many of them do eventually succeed with their new enterprises. And the best part of all is that a high percentage of the most successful of all the entrepreneurial ventures which "make it" are based on the hobbies, special interests, or other favored activities of the folks who start them.
Perhaps you, too — at one time or another — have looked at something you especially like to do or which specially interests you and wondered, "Could I make a living at that?" This is a very logical question to ask, for at least three important reasons:
In the first place, it just plain may be physically easier for you to get into home-based business that you already enjoy on a hobby basis. Why? Because, presumably, you already have much of the necessary equipment on hand, as well as the know-how you'll need to buy whatever else you'll have to have with a minimum of costly fumbling and needless expense.
In the second, your proven background of experience (even on a hobby basis) may be useful in convincing your local banker that you have enough expertise in your chosen field to warrant the granting of a business loan.
And, third, the interest and confidence you already have in the product or service you propose to offer frequently can be converted directly into the self-confidence that every new economic enterprise needs. Such confidence and self-confidence — once established — tend to grow together and, as they say, are "good for business." Or, to put it another way, as many successfully self-employed individuals have done, "If you enjoy doing something enough, you'll find a way to master the procedures and formal steps that go with turning it into a prosperous business."
In almost every case, the person who goes into a self-employment venture with quick-money attitudes is doomed to failure. While "get rich quick" may have been the Great American Dream during the first half of this century, it is indeed not one of the realities now. Even the government is dead set against such "nonsense", as federal tax forms show (short-term gains are now taxed at twice the rate of long-term gains).
The people with the healthiest attitude toward money are those who regard it as a tool. A few lucky individuals, moreover, are able to view this tool with a minimum of emotion.
One friend of mine, for instance, uses his extra money to buy good floor coverings, usually Persian rugs that need repair. And, once he's fixed a rug, he enjoys it! The brick walls of his loft are covered with rugs, and so are the floors.
Once, while visiting this friend, I said that I was afraid to walk on his "art collection", especially after he'd told me that some of the Persian carpets are worth as much as $1,500 apiece. "Don't be silly!" he said. "They're made to be walked on. They can take it. When I buy a rug I'm paying for all of the hours and hours that some person dedicated to making it. That time — not the rug — is what has value."
That was an important lesson for me. For, if time truly has value, it's obvious that one of the biggest mistakes you can make when working for yourself is to undervalue your time. Remember, it isn't just the time you spend in the act of performing the work you do, but all the additional time that gets used up as you arrange sales, deliver goods, clean up, and generally ponder your next move.
Which explains why a lot of self-employed people — who usually do not punch out, "turn it all off," and go home at 5 p.m. — so easily get into the rut of working 60- to 80-hour weeks for subsistence pay. Often, this spirit-crushing grind results simply because the entrepreneurs involved fail to add up all the hours that go into their products or services and then fail to raise their prices by the few cents or dollars that their customers would never begrudge them for their quality work.
Remember, then: Money does matter and time is money. The folks who succeed at their own businesses never forget these facts. Which is why so many of the most prosperous entrepreneurs I've interviewed insist that the one universal rule of money management for the small enterprise which must always be observed is: keep a written record of every transaction you make.
Now, granted, the variety of methods for organizing this mass of facts and figures is one of the frightening (to many of us, anyway) aspects of "doing business." All those numbers on all those lined pages in book after book — it's true — can be not only confusing, but dull, if we allow them to be.
The trick is not to allow that to happen. Because the simple fact of the matter is that those facts and figures and numbers are not dull at all! Rather, they're the lifeblood of your business. And, once you've learned to maintain the discipline necessary to record every transaction and then review those records from time to time you'll soon find that those "dull" ledger entries will tell you a story of real interest. Try it!
Then again, even though the most successful self-employed people are aware of the value of money and time, and they've learned to at least cope with their fears of "boring" bookkeeping, I must mention one other very important fact: Of the many self-employed folks I've talked to, only one even mentioned money as the reason behind his or her decision to trade the "corporate" world for independence! For all the others, it was the nature of their work or the product they made (and their pride in it!) that was the biggest source of motivation.
I know that sounds hard to believe, but maybe you'll accept it if you consider this: The average full-time self-employed person spends 80 hours a week to earn what he or she once made in 40! Moral: If you're thinking of striking out on your own, at least make sure you spend your working hours doing something you love because, if the experience of others is any indication, there may be precious little time left for life's other pleasures!
Your best advertisement is your work itself; even the biggest companies live by that rule. But how will anyone ever find out how good your work is if they never see it?
First, you know that word-of-mouth advertising is the most effective publicity you can get; it really makes a difference. Let's say, for example, you build exceptionally good-quality wooden toys, and your friends have all been enthusiastic about them. It's still worth a whole lot less to you to fill your storage shed with these valuable tot-pleasers than it is to place them strategically among the energetic children of the very friends who have praised your work!
Also think about selling your product, at a small markup, to a few institutions. If you're a potter, go to some neighboring restaurants and offer the manager a complete set of your dishes at your cost (or with a smaller than usual profit.) I'll bet any maitre d' worth his salt will jump at the chance! Then, after he bites, you might add, "My only request is that you permit me to mention your establishment in my promotional messages." You've already given him something . . . how can he turn you down?
Pretty soon, these initial "loss leader" contacts will turn into customers and business accounts, and you'll compile a valuable list of "steadies."
There's a name for a list like that — it's called "goodwill" — and it will rapidly become a growing part of your company's actual value. In fact, it's not at all uncommon to learn that when a company changes hands, the value placed on goodwill amounts to half — or more — of the total asking price.
Because your "family" of customers is such an important and valuable asset, you must keep careful records of the names and addresses of the really good clients who have come back to you repeatedly. (Incidentally, that's one reason why charge accounts are so popular among so many retailers. Not only do the accounts make paying more convenient and help the "impulse" buyer to decide, but they form a record without any extra effort!)
As you build your list of preferred customers, use it. Alert those buyers to new merchandise offers, special sales (and don't be afraid to try sales restricted to "repeat" customers only,) and to any special events (a new expansion, remodeling, etc.) you have coming up.
If you're in a service business, one source of advertising material that you can draw on is a library of photos of work you've done in the past. After all, writers keep carbon copies of what they do, so why shouldn't a bricklayer have a good visual record of every chimney he or she has ever put up?
A form of free advertising that too many small-business people overlook is the "human interest" story about their business that they can provide to a local radio or TV station or newspaper. (In other words, be your own "PR man," "publicist," and "promoter.")
Remember, though, that the less heavy the "salesmanship" is in any publicity presentation, the more likely it will be to attract the attention of both the communications media and potential customers. Use some anecdotes that will interest people, explain some differences between "myth" and fact in your field, provide a little "how-to" message, and generally share your enthusiasm for your business with the audience. Such an approach works!
One of the more than 200 I'm-my-own-boss people I talked to across North America while writing this book was a fellow named Dick Holbrook. Now, Holbrook has been in business at various trades for 20 years and during that period, he's been the business manager for a Vermont college, worked as a chef, managed a small hotel, and — when I caught up with him — was a director of the Appleyard Corporation in Calais, Vermont, a small mail-order recipe business that Holbrook has turned into a community industry!
Dick Holbrook, in other words, has a wide background in an assortment of trades combined with varied and deep business experience. As a result of that backlog of hard-earned lessons, Holbrook's principal advice is what he calls his Theory of Multiple Use: "Make everything serve double duty," he says. "The family car can pick up and deliver for business, the home and the office can share space and utilities, and so on."
Holbrook's theory makes sense in many ways. For one thing, it is certainly worth the effort to plan a new business with an eye toward the sharing of facilities already on hand so that expenses (or "overhead") are kept to a minimum. Then too, it also helps to know that when the family chariot performs business chores or when the bills come in for heat and electricity in the home/office, the parts of those expenses that are business related are honestly tax deductible.
But there's more to Dick's Theory of Multiple Use than that. For even if you have to rent an office or working space, you can share your loft or storefront or barn or whatever facilities you're leasing with other companies or individuals. And don't overlook the possibility of joining forces with someone whose business might attract customers to yours, and vice versa!
Dick Holbrook's idea shouldn't be limited just to offices and cars, either. The most obvious way to put multiple use to work is to apply it to you. How? By asking yourself what you can do or what additional service you can perform that is related to your business and uses its facilities but adds an extra source of revenue to help cover expenses.
For example: Can you teach your craft, trade, skill, knowledge? Almost any craftsperson, or artist, or agriculture/gardening expert can also give group or private lessons using the homegrown company's own resources! Anyone with a specialty who has access to neighbors or a community where this special knowledge can be shared can also "feed the kitty" at the office by teaching.
OK, now you know the advantages of making your home your office for its financial benefits. Unfortunately, that's only half the story, because there are drawbacks to that system, too, and one of the most significant of these is the difficulty of separating your family from your business obligations.
Probably the greatest difficulty in family business is the day-after-day an night after-night routine of working with the same faces and personalities with no relief and no breaks!
The folks I met who had made a successful go at family enterprise were all sensitive to this problem, but they pointed to the mutual trust that's inherent within a close-knit family as a compensating aspect that actually enhances the desirability of working with your own kin.
Another benefit to husbands, wives, and youngsters all working on the same payroll is that you eliminate the system wherein everybody goes a different direction at 9 a.m. Togetherness isn't measured in dollars, but it has its worth, and if that's not enough solace, let this explanation from one family partner I talked to suffice: "The fights are worse, but the help is cheaper!" So "you pays your money and you takes your choice."
There's no denying that self-employment is not for everyone. It takes a certain "ingredient" that some folks have and others don't (quite possibly because The System has taken it away from them.) Eliot Coleman, a homesteader in Harborside, Maine (and a close neighbor of Helen and Scott Nearing) explained that difference with his own simple eloquence one morning while talking about the reaction of the local townsfolk to a nuclear power plant that's planned for Coleman's neck of the woods:
"They think the nuke plant'll create jobs," he said sadly. "So I'm afraid a lot of people are in favor of it. Some nice looking man in a suit says, 'Nuclear power won't hurt you,' and they stop worrying about the dangers, because jobs will be created. The trouble with some folks is they want the job to come to them. Not enough people look around to see what needs to be done."
The cities are filled with people like those Coleman described, and sad to say, many of them don't realize they have the power to change things — on a national scale, and starting right in their own back yards — by creating their own small-scale enterprises.
The majority of people still haven't caught on to what's happening — that's a fact — but the pendulum — too long in the corner of the multi-national corporations — has begun to swing back toward the independent economics of being your own boss. What turned the tide?
During the 1960's, the impersonality and the efficient coldness of chain businesses began to make themselves felt among millions of employees and millions of customers who were fast becoming "consumers." The franchise system flourished in those boom years, but the real owner was still a thousand miles away, and that fly in your soup was packaged last April.
As resources dwindled and costs climbed, substitution and inferior quality diminished our respect for possessions. Things became "disposable" (a big selling point in the 1970's). Imitation became the key means of concealing substitution in the "goods" we bought from mass producers. (Some of the steel in my car is painted to look like wood, plastic is painted to look like steel, and what I thought was rubber on the bumper scraped off in places as only paint will do!) While traveling cross-country, the tourist now never has to ask where the toilet is, as long as he stops only at Brand X Motor Inn and Restaurant. Marketing, like television programming, has become a cynical measurement of some electrically determined, lowest common denominator. The consumer has lost both his sense of uniqueness and any respect at all for the marketplace. Our "needs" are anticipated and met in increasingly repetitive ways.
The result is a consumer rip-off attitude that prevails among and is expected by a company's employees. Further more, it's reflected by their attitudes toward the company itself. "As long as I don't lose my job," a cashier once told me, "I don't care what happens. If I see someone stealing, that's not my business. I just want my tape to balance with the amount of cash in the till." People tired of buying bad stuff from bored cashiers, and folks fed up with working at unchanging jobs for unseen profiteers — which is a lot of people — are going into business for themselves and doing it right. Compete with plastic and get to know your customers, keep it small so they can get to know you too, and ride the boom-tide return of personal service! If you like your work, your customers will too! And that's the real secret of becoming a success by starting your own home-based business.
Excerpted by permission from Working for Yourself by Geof Hewitt, copyright 1977 by the author. A Rodale Press book. Available from Amazon.
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