Why even write this article? Mainly because most people don’t realize what kinds of businesses are available and most don’t realize that successful home businesses require some work. So that being the case, some advice on how to make this decision could be life changing and lead you closer to making a successful decision.
Let’s start by saying that the home-based business is the last great American tax shelter. It’s an opportunity to turn your ordinary expenses like rent, mortgages, utilities, and lawn maintenance into tax deductible expenses. If you don’t know what that means here’s a quick way to understand it. Your income determines what tax you owe the government. If you’re in the 10% tax bracket and you make $30,000 – then you owe the government $3,000 in taxes. Now if you’re allowed to subtract some of your normal expenses from your income, then your taxable income is lower. Let’s say you have $5,000 in expenses (rent, utilities, etc) – then your new income is $25,000 and now you only owe $2,500 to the government. Just by having a home-based business you will have saved yourself $500 in taxes. That’s cash in your pocket. I don’t give specific tax advice so talk to your accountant about the specifics or buy this great book and learn for yourself.
Now, if your business expenses are tax deductible expenses – wouldn’t it be good to deduct some other things you’re already going to pay for this year? This is the first lesson in choosing your home-based business – figure out what you like to do and already spend time and money doing it. Do you have hobbies? Do you travel? Do you go to cooking shows, take cooking classes? Do you spend time and money going to NASCAR events? Figure this out – it’s important because it ultimately gives you two advantages. If your business is based on things you like doing – you’ll probably spend more time on it and will be more successful. And if your business is also your hobby – pursuing a profit from that hobby makes the expenses tax deductible. That’s a win-win situation.
Now you must decide what format of business to start, this is different than figuring out the subject of your business. You’ve got several options like starting a business from scratch (such as a lemonade stand) like deciding to sell quilts you make. You could become a franchisee or a rep. of a business that already has a business model like selling Pampered Chef equipment. A little less common is becoming an affiliate on-line and making a ‘commission’ by selling other people’s products and services through links. Network marketing is a solid option as well and usually gives you the opportunity to sell products and to get paid by helping the network marketing company grow. And finally you could build a website of your own and combine all of those things. Either way – no matter what you choose the business is yours and you must act like you have a business and run it like you have a business.
So how do you figure this out? Some of this depends on the time you have available – but more importantly what kind of time you’re willing to re-prioritize to the business? If your goal is financial freedom, then you need to consider the residual income opportunities of each model. Making quilts and selling them to neighbors is a good idea if you like making quilts and have run out of room to hang them. But once you’ve made your last quilt – the income ends. That doesn’t mean you should run from the quilt idea. Let’s just figure out how to turn that quilt hobby into a business that will pay you while you sleep. What about creating a website around quilts? There’s a great service out there that will help you do just that. It’s called SiteBuildit and it helps you from beginning to end. They help you figure out what to call it, how to make money from it, how to build it, how to make sure people find it, etc. They’re the best if you have a hobby but don’t know anything about building a website. This is a way to sell your quilts, make money after you’ve made your last quilt, turn your quilt making into a tax deductible activity and profit from something you enjoy.
Building a website does take more prep time than becoming a franchisee, rep or working for a network marketing company. Where building your own website is open to any subject, choosing an existing company that fits is a little bit less open. For instance, I don’t know of a network marketing company that is somehow related to quilts – but there may be. Contact me if you’re interested in this but need help finding one – they’re not necessarily easy to find. They do run the gamut though- from health to travel to auto to kitchen to self-help tools. There really are a lot out there. This model typically provides residual income that keeps paying you long after you’re done working, takes little prep work to get ready and has a good support system in place. If the only thing you can think of when you hear network marketing is Amway, hassling your friends and home parties – think again. The internet has changed all that. Some of the most successful network marketers haven’t had a single party and have only recruited people who were already on-line looking for a network marketing opportunity.
Lastly, and easily combined with the rest is the on-line affiliate. Many, many companies provide personalized links to their products and services. When people click on these links and then buy products at that website – you get paid a commission. Think about it this way, imagine telling your friends that you just say The Curious Case of Benjamin Buttons and then getting paid when those friends see the movie. I mean, if you are doing the marketing for them, shouldn’t you get paid? They’re obviously profiting from your word-of-mouth marketing help. This is the way on-line affiliates work. This is a good option for people who love doing stuff on-line – but doesn’t necessarily provide long term income. This is a good one to combine with the rest.
Start by figuring out what you like to do. Watch that video and decide what kind of business you want to start. Check out SiteBuildIt and learn about building your own site. Talk to your accountant or buy that tax book so you know what kinds of expenses to start tracking AND contact me if you need any help. Having your own business is cool. Having one that is so successful you can quit your job – that’s priceless (as they say on the commercials).