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SBC Team

The 30 Second Commute

Posted by SBC Team Nov 9, 2007
Before you begin a home based business, make sure you're aware of the personal and professional challenges you'll be facing

Although late night commercials on television and unsolicited emails may tell you how easy it is to start your own home-based business, the reality is that you're likely to work as hard or harder at home than you did before you took the leap and went out on your own. The appeal of such independence is obvious: no boss, no commute, no office politics, greater freedom, and more time with your family. You may even be able to take a portion of your home expenses as a tax deduction since you are now using your house or a portion of it as an office. However, with all those benefits come dangers one rarely has to deal with when employed by someone else. Strictly speaking, working from home isn't for everyone.



According to Millie Szerman, author of A View From The Tub: An Inspiring and Practical Guide to Working from Home (Stairwell Press), the question of whether to open up your own business depends entirely on the person. "Some people need the structure of an office to be happy and successful," Szerman explains, "while those of us who enjoy working independently will be happier on our own."


Dollars and Sense
Indeed, there are numerous factors to take into account when deciding whether or not to break away and start working out of your home. The first basic question is whether you can really afford to start your own business. Not only will you have to dip into a large portion of your personal savings in order to get your new company off the ground, but you may also have to go without a salary for at least a little while before you start making a profit. And don't expect to get free health and dental coverage anymore, either. Now insurance costs comes out of your own pocket. By the way, if you're looking forward to not counting up your vacation days, remember that when you run your own business there are no paid vacations and no one to run your business when you're away.


There are other matters to ponder. Are you motivated enough to maintain an efficient work style without a higher-up constantly checking up on you? Will you be able to work when your kids and other distractions are around and, on the flip side, can you stop working at night when your desk is only 40 feet away? And do you need the camaraderie of your fellow workers nearby?


Know the Law
Once you've decided that you are, in fact, able to work from home, a huge issue is to make sure you can legally operate out of your residence. Zoning laws may prohibit working out of your house, potentially halting your operation before it even gets going. Some believe that it is better to run your office secretly instead of taking the chance of being denied a permit, but Szerman advises honesty.


"The fines and penalties may be exorbitant if you keep it quiet, and then someone discovers what you're doing," she warns. "You can do your research first, to be sure that there are no zoning restrictions, without letting on exactly what you're doing. Do your homework before you begin, and you'll never have to worry about getting caught."


Consider the Setup
Once this sizable hurdle is crossed, you can finally start setting up your office. Try to find a desk in an area away from distractions, and, if possible, away from the busy places in your house, such as the living room or kitchen. You'll need a place to store records, like a computer and a file cabinet and also ways to communicate with customers and vendors. Internet access is vital these days, along with a phone and a fax machine. Setting a similar structure to being at work is essential to being productive; your family must know that just because you're home doesn't mean you can run errands and play, and you'll have to establish regular business hours and stick to them.


In her book, Szerman describes flexibility, motivation, patience, and determination as the key traits an individual must have in order to flourish in a home office setting. It has certainly worked for Szerman. "As an independent worker/thinker, working from home has enhanced my career, and I can't imagine ever going back into someone else's structure."
SBC Team

Opportunity Knocks

Posted by SBC Team Nov 9, 2007
So called "business opportunities" present another way for would be entrepreneurs to strike out on their own

In between starting your own business from scratch and purchasing a franchise, with all its rules and restrictions, is a sort of hybrid category, known as the "business opportunity." In 1979, the Federal Trade Commission (FTC) set out conditions that broadly define a business opportunity. In general, a business opportunity involves the sale or distribution of goods or services provided by a licenser, who must help secure a retail outlet for the goods or services the licensee is selling.


FTC rules require that a cash transaction of at least $500 must occur between the licenser and licensee within six months of the agreement. Finally, all terms of the agreement between licenser and licensee must be in writing. (Be sure to check on any state rules governing business opportunities: A number of states have imposed additional legal requirements, but most have not.) In most instances, a business opportunity consists of the purchase or licensing of products or services from a company to start a business using the trademark of the products or services purchased

Some business opportunities merely involve the purchase of products for resale, with little or no support; others offer training or other forms of support to get the new business running. Unlike franchises, however, business opportunities usually lack the cumbersome operating rules and policies demanded by many franchisors. Business opportunities also generally call for an attractively low initial investment cost anywhere from $50 to $1,000, usually for products or equipment. This broadens their appeal to would be small business owners, who want the security of selling an already established brand, but prefer to forego the high cost and dictatorial nature of many franchises.

Business opportunities come in a variety of forms. You can become a distributor for a particular company's products or services without adopting their trade name, offering only their goods from your retail establishment, home, booth, or kiosk. In some cases, the business opportunity is a turnkey operation, offering you supplies, marketing materials, varying levels of sales support, and even assistance in setting up your outlet. Vending machine operations are another major area of business opportunities. Investment costs are higher with vending machines, since the vending machines must be purchased (usually at a cost of several thousand dollars each) in addition to fees paid to the property owners of the locations where they will be placed (malls, office buildings, stores, schools). Other business opportunities involve becoming essentially a product salesman, keeping a company's products on specifically assigned shelves of various stores in a given area. The company providing the products generally negotiates the store shelf assignments, but is up to the rack jobber to keep the shelves stocked with the right products.


While business opportunities demand less creativity than starting your own business from scratch and more independence than a franchise, they have been notoriously plagued by fraud. In an attempt to combat fraudulent schemes, the FTC has issued mandatory rules governing the issuance of business opportunities, including the provision that an FTC disclosure statement must be provided to the purchaser of a business opportunity a minimum of ten days prior to the close of a contract or binding agreement. If the provider of a business opportunity declines or delays providing an FTC disclosure statement, avoid the deal completely, no matter what other assurances are offered.


In addition to lower initial costs, business opportunities offer some significant advantages over franchises. First, business opportunities don't demand a percentage of your monthly sales (in addition to what you already paid to purchase the goods or services) simply for using the company's name. Second, the company behind a business opportunity may leverage its purchasing power to obtain supplies, equipment, and services for its licensees far below normal costs. Finally, larger providers of business opportunities often offer more favorable financing options and lines of credit than could be obtained by an independent business owner from a financial institution.


However, many business opportunities come with exclusivity arrangements, offer poor locations to licensees, and little recourse if the company decides to end its support. You should have a lawyer scrutinize any contract with a company offering a business opportunity before it is signed or any investment made. And you should regard any claims of fantastic profits from minimal investment with great skepticism.

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