There is so much more to starting and running a home based business than simply throwing open your doors to a hopefully adoring public who will be clamoring to purchase whatever good or service you are offering. As a matter of fact, in addition to the obvious personality considerations you need to take, there are also financial considerations home business owners must face.
First and foremost, do you have the money you will need to get started? Each and every business requires some startup cash. Granted, some are a lot cheaper to start than others, and there are several home based businesses you can literally start with less than $100, but if you do not even have the $100, what good will be your idea?
Secondly, think long and hard before you rely on dubious sources of funding for your business. Home owners are too quick to draw from their home"s equity and find that when the housing market takes a bit of a dive, they may indeed be upside down in their properties since the equity declined in conjunction with the overall value of their homes. In the same vein, those who may have relied on credit cards to fund their business will be in for a surprise when their payment fails to reach the creditor on time and suddenly their interest rates are going through the roof. This makes for an especially deadly combination when high interest is added to a high limit card that is more or less maxed out.
Even if financing is not a problem, consider how immune you are to market fluctuations. Will a late payment from a customer present a seemingly insurmountable problem? What will you do about the customer who is unable to meet her or his financial obligations to you and declares bankruptcy? If there are goods to be repossessed you may be able to recover at least some equity, but by and large they will be used and no longer useable. If you provide a service, on the other hand, the odds are good that all of that work and time spent will remain unrewarded. Are you fiscally able to sustain your business even if one or more customers cannot or will not pay their bills?
Last but not least, do you have adequate healthcare insurance? This may appear an odd question, but if you consider that entrepreneurs who work alone at a home business do not have a stand in, the need to have some kind of disability insurance in addition to healthcare coverage only makes sense. If you cannot do the job, nobody will step up to stand in for you and you will lose whatever revenue you might have earned during that particular day. Some insurance plans allow for that eventuality, yet they are costly and need to be well planned!
Sitting down with a financial planner and also a seasoned insurance agent to discuss your options, plan for pitfalls, and also protect your personal assets is usually a wise choice before you even throw open the doors and greet your very first customer!
Copyright © Jim Sperlich