12 Common Myths About Home-Based Businesses
Starting a home-based business can be a bit scary, but an increasing number of Americans are taking the plunge. Approximately half of all small businesses in the United States are home-based businesses, according to the Small Business Administation. Despite the trend toward home businesses, there are still many myths that can discourage those who long to start their own company, and there are also myths that can cause a new business to fail rapidly. Here are some common myths about home-based business.
Myth #1: A home-based business will allow me to spend more time with my friends and family from the first day.
Actually, until they get their businesses off the ground, most entrepreneurs find that they work longer hours than they did at their traditional jobs and have less time for their family and friends. This can change if your business is successful, primarily because you can hire employees to give you more free time.
Myth #2: All I need is a great idea to build a successful home-based business.
Many successful home-based business owners did not have an innovative or unusual idea, and many people who launched a business based on a truly great idea ended up closing their doors within a year or two. It is nice to have a creative idea, but your business cannot succeed if no one else is interested in paying for the service or product you propose. Successful entrepreneurs discover what people need or want, then they find a way to satisfy those desires better than the competition.
Myth #3: Can, should, and will are synonyms.
In theory, anyone can start a home-based business, but that does not mean that everyone should. Furthermore, just because you can start your own business, there is no guarantee that it will succeed.
Myth #4: It takes a great deal of money to start a home-based business.
The amount of money you need depends on the type of business you plan to start. If you need to buy several pieces of expensive equipment, your costs will be much more than what someone who plans to offer online tutoring would need to spend. Many people have launched a home-based business with little more than a computer, a phone, and an idea.
Myth #5: I do not need business insurance if I have homeowner’s or renter’s insurance.
Before you make that decision, you need to read your insurance policy carefully, including all of the fine print. Your policy may exclude equipment or products used in a business, or it may set the limits so low that you would not be sufficiently compensated for your loss. While you are at it, you might want to check the terms of your auto insurance policy. Furthermore, you should probably consider adding a general liability policy to protect you in the event that someone is injured by a product that you sell or manufacture.
Myth #6: Since I am the boss, I can take off whenever I want.
Although it is true that no one is forcing you to punch a time clock, you are likely to discover that you still have bosses. At least, you have bosses if you want to build a successful business. Your customers and clients are your bosses now, and you must take care of them, communicate with them, and convince them to remain loyal to you. If you have employees, you will need to train them, then you will need to be available when they need help or have questions.
Myth #7: I have to do everything myself.
In the early days, you will probably handle a multitude of tasks. As a one-person business, you will sweep the floor, open the business mail, pack shipments, answer the phone, and perform a variety of chores. However, even when your business is brand-new, you should try to outsource tasks or hire a part-time employee to carry some of the load. As your business grows, it will become increasingly essential that you learn how to delegate tasks to others. You are the strategist, the idea person, and the creative force behind your business. You will need to carve out enough time for you to look for new opportunities, find new markets, and develop new products or services.
Myth #8: I should start a business that is based on something I do well.
It is always nice if your business incorporates a talent or skill that you already possess. However, being good at something does not always mean that you can turn that skill or talent into a viable business. Many talented artists are still selling their paintings at or below the price they paid for the materials, and many great cooks have found it too difficult to start a catering company. However, artists can acquire computer graphics skills, and excellent cooks can provide online classes, allowing each group to earn money from something they enjoy.
Myth #9: I do not need to know anything about accounting.
Even if you hire an accountant, there are some accounting basics that you need to know. At the very least, you need to know how to read financial statements, price your services or products properly, account for your inventory, and understand the difference between a debit and a credit. Without a basic understanding of accounting principles, you can find it difficult to fully understand what your banker, accountant, and other financial advisers are telling you.
Myth #10: My friends and relatives will be my best customers.
Despite their verbal support, your friends and relatives are not likely to be loyal customers. They may make an initial purchase or two, but you would have to be providing something they really want or need for them to continue supporting your business.
Myth #11: All I need to do is build a website, put everything on autopilot, and get rich overnight.
First of all, people have to be able to find your website, and that will require submitting it to the search engines to get it ranked. While that is happening, you will need to market your website yourself by posting guest blogs, including your link in your printed advertising materials, and spreading the word as best you can. Secondly, automation can be a great tool, but it will not free you from the day-to-day business of growing your company. Finally, no matter what you may have seen in an infomercial, most home-based business owners are not millionaires, and most of those who are rich spent years growing their businesses, investing countless hours working toward success.
Myth #12: No one makes a living from a home-based business.
Whether that statement is true or false depends on your definition of a living. According to PayScale, small-business owners, including those operating a home-based business, have an average annual salary of $68,000. Since this is an average salary, some people are making significantly more, and some are making less. Furthermore, this is the salary that the business owners pay themselves, and it does not represent the revenue received or the net profit. If you plan to compare your potential earnings from a home-based business to your current salary, be sure to consider all factors. For example, you may have significant savings in transportation and clothing expenses as a home-based business owner, but you will end up paying a little more in FICA and Medicare taxes.