When there is such an enormous choice of ways to make money at home, it seems strange that so many people fail when they try to start their own home business. Do they all choose the wrong business for them or is there something inherently wrong with the idea of earning money working from home? The statistics produced in regard to home businesses say that 90% will come to an end within the first five years. Ninety percent is a frighteningly high failure rate. If we assume the statistics are correct, should we let them deter us from working from home?
Some people quote a failure rate of 95% or 98% for Internet based businesses but, for now, let's assume the failure rate is at the same 90% level for any home business (online or offline). One thing that the figures don't reflect is that five years is a long time for most of the people who start their own home based business. All sorts of people, for all sorts of reasons, decide to have a try at making money working at home. However, the majority of the people who decide to start a business so they can work at home are mothers of young children. They want to find ways to earn money working at home that they can fit in around the demands of a young family. After five years, their circumstances can be very different.
Five years is a long time in childhood. In that length of time a child's needs will change dramatically. Just picture the difference between a newborn and a five year old, or a four year old and a nine year old. For a really dramatic example think about how a child will change in five years from an eight year old kiddie to a teenager.
After five years working at home, the mother might feel comfortable in arranging for part-time care for the child outside school hours so that she can go back to a career she enjoyed before the responsibilities of motherhood took over. Alternatively the mother might decide to replace her home business with a more challenging one because she finds she has extra time she can commit to working at home. Maybe more children arrive and the mother simply does not have the time or energy to run a business while caring for several small children.
In either of the first two examples, if the business brought in a profit before it ended, it can hardly be deemed a failure but, because the business ended, it will be lumped in with the doom laden figure of 90%. In the third example, it might be fair to say the business failed but again the figures don't tell us that the reason was not because there was anything wrong with the business itself.
Another work at home statistic tells us that 50% of home businesses fail within the first year. Although 50% does not seem as foreboding as figures of 90% and above, for half of all home businesses to end within their first year is still a huge failure rate. The reasons for failure of a home business within the first year are mostly connected with unrealistic expectations or a mistake on the part of the business owner.
Many people fail to understand that the freedom and flexibility of working from home does not mean they won't have to do any real work to earn money. Other people fail to behave in a businesslike way: they treat their home business more like a hobby they can play around with when they feel like it. These people put a minimal amount of effort into their home business and then wonder why they don't make a profit. Other people make an unfortunate choice and, only when it is too late, they realise they are not going to be happy running the business they picked.
People from each of these three groups often get labelled with disparaging names like "quitter" because they drop their home business at a very early stage. Patience and persistence are key to succeeding with a home business but it is also true that there is nothing to be gained in applying the whip if your horse is deceased. If you have no real hope of getting anywhere, it is far better to take a realistic view, cut your losses and use the experience as a lesson.
Personally, I have quite a bit of sympathy for the people in the third group who realise they made a bad choice and give up: it takes courage to admit to making a mistake. The people from this group who reassess their situation and pick another home business to work at often make good use of the lesson to be learned from their early failure. They account for many of the people who end up in the magic 5% - 10% who own a successful home business.
Business planning is crucial. In order to avoid business failure, any entrepreneur must set out to generate a business plan that is realistic and accounts for all facets of their business. The most important element in planning for business is the financial component. To avoid the potential of failure, it is a good idea to have enough capitol on hand to cover for about two years worth of planned or anticipated expense. It is also a must that a business owner keeps about fifty percent of that two year sum as a back-up financial source for unforeseen circumstances that may surprisingly spring up and catch a business owner financially off guard. Business planning doesnt stop with the financial aspect of the enterprise. A business owner must implement and generate a plan that shapes the overall mission and goals of the prospective company. The plan must produce a mission statement, management structure, turn-around options for downward sloping trends, and company polices regarding employees.
Research is essential. In order to avoid failure a business owner, or delegated employees, must understand the product or service that it being offered. Product knowledge accounts for an overwhelming majority of the sales process. Customers need to be able to interact with knowledgeable company representatives who can not only present the product or service effectively, but who can anticipate and answer customer generated questions.
Marketing is imperative in order to avoid business failure. For a business to survive and thrive, its creators must have an extensive knowledge of the specific market that they will be part of. Market saturation and hot new trends may lead to business failure. As a business owner, it is important to study the trends of the market, become familiar with upward and downward trends for the specific company, as well as the market as a whole. Business owners must be in it for the long haul, and comprehend that business success is a fixture of the overall picture, and have an understanding that whats hot today, may fizzle out and fail tomorrow. With this understanding of trending, business owners must adapt to change and have effective and creative problem solving techniques.
When you are beginning a new home business, be sure that you have a good handle on managing your time. Most new home business owners fall into the trap that you can work when you want and still make a ton of money. Well, this isn't always true. If you don't spend the time doing the leg work, your new business will fall flat on its face, so you need to know how to manage your time properly. Get a day timer, calendar, or other form of keeping track of your day to day activities so you are able to jot down what you need to accomplish each day and check it off when you are finished. Knowing that you have set tasks to accomplish will help you to keep on track and keep your new business making money.
While it is easy to embark on the new adventure of starting your own business and becoming your own boss, a clear understanding of how to avoid business failure is a prerequisite to establishing and maintaining success.
Both Elaine Currie & Jim Mack are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Elaine Currie has sinced written about articles on various topics from Internet Marketing, Family Concerns and Web Development. Elaine Currie helps people to and is the author of Ezine Article Writing - 10 Steps To Success. Download a free copy now and. Elaine Currie's top article generates over 135000 views. to your Favourites.
Jim Mack has sinced written about articles on various topics from Blogging is, Body Building and Internet Marketing. Jim Mack is the leading authority in teaching actual methods. In fact, Jim truly lives the principles he teaches and helps his people at my. Jim Mack's top article generates over 9900 views. to your Favourites.